Quarterly Report for Quarter Ending July 31, 2024 (Form 10-Q)

10-Q

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, 2024

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 30, 2024, the registrant had 43,215,472 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	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	19
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)

(Unaudited)

		July 31,			April 30,
		2024			2024
Assets
Current assets:
Cash and cash equivalents		$	31,848			$	31,789
Marketable securities			142,424				178,612
Research and development tax credit receivable			9,908				8,439
Prepaid expenses and other current assets			7,454				6,850
Total current assets			191,634				225,690
Property and equipment, net			2,100				2,227
Right of use assets			5,859				6,920
Other assets			605				567
Total assets		$	200,198			$	235,404
Liabilities and stockholders' equity
Current liabilities:
Accounts payable		$	10,792			$	9,107
Accrued expenses			10,355				12,398
Lease liability - current portion			1,264				1,302
Total current liabilities			22,411				22,807
Long-term liabilities:
Lease liability - net of current portion			4,988				6,015
Total long-term liabilities			4,988				6,015
Commitments and contingencies (Note 6)
Stockholders' equity
Common stock, $0.001par value, 100,000,000authorized
Shares issued and outstanding: 43,081,922at July 31, 2024 and 42,521,975at April 30, 2024			43				42
Additional paid-in capital			685,794				679,754
Accumulated deficit			(510,169	)			(469,726	)
Accumulated other comprehensive loss			(2,869	)			(3,488	)
Total stockholders' equity			172,799				206,582
Total liabilities and stockholders' equity		$	200,198			$	235,404

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
		July 31,
		2024			2023
Revenue		$	-			$	-
Operating expenses:
Research and development			26,614				19,307
General and administrative			17,601				9,786
Total operating expenses			44,215				29,093
Operating loss			(44,215	)			(29,093	)
Other income:
Interest income			1,692				923
Foreign currency exchange gain			514				456
Other income			1,566				2,397
Total other income			3,772				3,776
Net loss		$	(40,443	)		$	(25,317	)
Other comprehensive (loss) income:
Foreign currency translation (loss) gain			(128	)			91
Unrealized holding gain on marketable securities			1,064				392
Reclassification adjustment for realized (gain) loss on marketable securities included in net loss			(317	)			(314	)
Other comprehensive income			619				169
Comprehensive loss		$	(39,824	)		$	(25,148	)
Net loss per share to common stockholders, basic and diluted		$	(0.87	)		$	(0.74	)
Weighted average common shares outstanding, basic and diluted			46,232,977				34,414,226

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)

	Three Months Ended July 31, 2024
													Accumulated
							Additional						Other			Total
	Common Stock			Paid-in			Accumulated			Comprehensive			Stockholders'
	Shares			Amount			Capital			Deficit			Loss			Equity
Balance at May 1, 2024		42,521,975			$	42			$	679,754			$	(469,726	)		$	(3,488	)		$	206,582
Issuance of common stock from equity incentive plans		385,234				1				3,000				-				-				3,001
Release of restricted stock units		174,713				-				-				-				-				-
Stock-based compensation expense		-				-				3,040				-				-				3,040
Net loss		-				-				-				(40,443	)			-				(40,443	)
Foreign currency translation (loss) gain		-				-				-				-				(128	)			(128	)
Unrealized holding gain from marketable securities		-				-				-				-				1,064				1,064
Reclassification adjustment for realized (gain) on marketable securities included in net loss		-				-				-				-				(317	)			(317	)
Balance at July 31, 2024		43,081,922			$	43			$	685,794			$	(510,169	)		$	(2,869	)		$	172,799

	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 gain from marketable securities		-				-				-				-				392				392
Reclassification adjustment for realized (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

KalVista Pharmaceuticals, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)

	Three Months Ended
	July 31,
	2024			2023
Cash flows from operating activities
Net loss	$	(40,443	)		$	(25,317	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		224				193
Stock-based compensation expense		3,040				3,254
Realized (gain) from sale of marketable securities		(317	)			(314	)
Non-cash operating lease (benefit) expense		(5	)			6
Amortization of premium on marketable securities		5				62
Foreign currency exchange (gain)		(414	)			(395	)
Changes in operating assets and liabilities:
Research and development tax credit receivable		(1,253	)			(2,084	)
Prepaid expenses and other assets		(783	)			(1,003	)
Accounts payable		1,502				108
Accrued expenses		(1,776	)			(1,240	)
Net cash used in operating activities		(40,220	)			(26,730	)
Cash flows from investing activities
Purchases of marketable securities		(983	)			(25,767	)
Sales and maturities of marketable securities		38,230				45,386
Acquisition of property and equipment		(21	)			(6	)
Capitalized website development costs		(64	)			-
Net cash provided by investing activities		37,162				19,613
Cash flows from financing activities
Issuance of common stock from equity incentive plans		3,000				204
Net cash provided by financing activities		3,000				204
Effect of exchange rate changes on cash and cash equivalents		117				84
Net increase (decrease) in cash and cash equivalents		59				(6,829	)
Cash and cash equivalents at beginning of period		31,789				56,238
Cash and cash equivalents at end of period	$	31,848			$	49,409

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

Notes to the Condensed Consolidated Financial Statements (unaudited)

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with our unaudited interim condensed financial statements and related notes included elsewhere in this report. This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts contained in this report are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "could," "will," "would," "should," "expect," "plan," "anticipate," "believe," "estimate," "intend," "predict," "seek," "contemplate," "potential" or "continue" or the negative of these terms or other comparable terminology. These forward-looking statements, include, but are not limited to, statements regarding the success, cost and timing of our product development activities and clinical trials as well as other activities we may undertake, macroeconomic conditions, including rising inflation and changing interest rates, labor shortages, supply chain issues, and global conflicts such as the war in Ukraine and conflicts in the Middle East, our business strategy, our ability to receive, maintain and recognize the benefits of certain designations received by product candidates and the receipt and timing of potential regulatory designations, approvals and commercialization of product candidates. Any forward-looking statements in this Quarterly Report on Form 10-Q reflect our current views with respect to future events or our future financial performance, are based on assumptions, and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under "Risk Factors" in our Annual Report on Form 10-K or described elsewhere in this Quarterly Report on Form 10-Q. These forward-looking statements speak only as of the date hereof. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. Unless the context indicates otherwise, in this Quarterly Report on Form 10-Q, the terms "KalVista," "Company," "we," "us" and "our" refer to KalVista Pharmaceuticals, Inc. and, where appropriate, its consolidated subsidiaries.

Management Overview

We are a clinical stage pharmaceutical company focused on the discovery, development and commercialization of drug therapies for diseases with significant unmet need. We have used our capabilities to develop sebetralstat, a novel, small molecule plasma kallikrein inhibitor targeting the disease hereditary angioedema ("HAE").

HAE is a rare and potentially life-threatening, genetically driven disease that features episodes of debilitating and often painful swelling in the skin, gastrointestinal tract or airways. Although multiple therapies have been approved for the disease, we believe people living with HAE are in need of alternatives that better meet their objectives for quality of life and ease of disease control. Other than one oral therapy approved for prophylaxis, currently marketed therapies are all administered by injection, which patients find challenging despite their efficacy because they are painful, time consuming to prepare and administer, and difficult to transfer and store. As a result, many attacks are treated too late to prevent significant symptoms, and a large percentage are not treated at all, leading to needless suffering. We anticipate that there will be strong interest in a safe and effective, orally delivered on-demand treatment, which would provide patients a new and compelling option with which to treat their disease.

In February 2024, we announced topline data from the Phase 3 KONFIDENT clinical trial to evaluate the safety and efficacy of sebetralstat as the first potential oral, on-demand therapy for HAE. KONFIDENT was the largest and most representative trial ever conducted in HAE, enrolling a total of 136 patients from 66 clinical sites across 20 countries. Eligible participants included adults and adolescents 12 years of age and older, with or without use of long-term prophylaxis, and evaluated all attack severities and locations. The clinical trial met all primary and key secondary endpoints and demonstrated a safety profile similar to placebo.

In June 2024, we filed a New Drug Application ("NDA") with the U.S. Food and Drug Administration ("FDA") seeking marketing approval of sebetralstat as the first oral, on-demand therapy for HAE. In August 2024, we were notified that the FDA has accepted the NDA filing for review, with a PDUFA notification date of June 17, 2025. This application is seeking approval for sebetralstat as the first oral, on-demand HAE therapy for adults as well as adolescents ages 12 and above with HAE. We believe the adolescent population has a particularly high unmet need, as patients in this age group frequently experience attacks yet currently only have approved access to intravenously delivered therapies.

Also in August 2024, the European Medicines Agency ("EMA") validated the submission of our Marketing Authorization Application ("MAA") for sebetralstat. This application is currently being reviewed by the EMA's Committee for Medicinal Products for Human Use ("CHMP") under the centralized licensing procedure for all 27 Member States of the European Union, as well as the EEA countries Norway, Iceland and Liechtenstein. We expect to file for approval in the U.K., Japan, and other countries later in 2024.

An MAA submission to the United Kingdom Medicines and Healthcare products Regulatory Agency ("MHRA") and a Japanese New Drug Application ("JNDA") submission to the Japanese Pharmaceuticals and Medical Devices Agency ("JPMDA") are both planned in 2024. Regulatory review timelines enable potential launches of sebetralstat in these territories in calendar 2025 and early 2026. To enable the broadest possible global availability of sebetralstat, if approved, we intend to engage commercial partners in other international markets.

In August 2022, we initiated KONFIDENT-S, a two-year open-label extension trial assessing the long-term safety and tolerability of sebetralstat. In addition, this study is examining the potential use of sebetralstat as short-term prophylaxis in the setting of medical and dental procedures, where HAE attacks are known to be triggered. In total, more than 1700 attacks have been treated across KONFIDENT and KONFIDENT-S to date, and KONFIDENT-S includes numerous patients who have taken multiple doses for treatment.

In June 2024, we initiated a pediatric clinical trial (KONFIDENT-KID), using an orally disintegrating tablet ("ODT") formulation of sebetralstat developed specifically for pediatric use. If approved, sebetralstat ODT would be the first oral therapy for pediatric patients aged 2 to 11 years old. In addition, sebetralstat would be only the second FDA-approved on-demand therapy of any type in this population. We intend to begin conversion of adolescent and adult participants in the ongoing KONFIDENT-S study to an ODT formulation in Q4 2024, enabling a potential 2026 supplemental NDA ("sNDA") approval by the FDA. If approved, the ODT formulation would provide people living with HAE with an additional novel option for oral on-demand treatment.

Sebetralstat has received Fast Track and Orphan Drug designations from the FDA, as well as Orphan Drug Designation and an approved Pediatric Investigational Plan from the EMA. In November 2023, sebetralstat was granted Orphan Drug Status in Switzerland. In February 2024, the U.K. Medicines and Healthcare products Regulatory Agency ("MHRA") awarded the Innovation Passport for sebetralstat.

We believe our preclinical oral Factor XIIa inhibitor program has the potential to be the first orally delivered Factor XIIa inhibitor for indications across a wide variety of therapeutic areas that are supported by scientific evidence. We are undertaking a strategic review of this program, to evaluate the potential for further progress and indications for future development, and we intend to make further decisions on this program following completion of this process.

On February 14, 2024, we entered into an underwriting agreement with Jefferies LLC, Leerink Partners LLC, Stifel, Nicolaus & Company, Incorporated, and Cantor Fitzgerald & Co., as the representatives of several underwriters to sell an aggregate of 7,016,312 shares of our common stock at price of $15.25 per share and pre-funded warrants to purchase up to 3,483,688 shares of common stock at a price of $15.249 per pre-funded warrant (the "February 2024 Offering"). The net proceeds from the offering, after deducting estimated expenses, were approximately $150.1 million.

On July 11, 2024, we filed a shelf registration statement on Form S-3 with the SEC (the "Registration Statement") pursuant to which the Company may offer and sell securities having an aggregate public offering price of up to $300 million.

We have devoted substantially all our efforts to research and development, including clinical trials of our product candidates. We have not completed the development of any product candidates. Pharmaceutical drug product candidates, like those being developed by us, 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 our business and financial results. We are 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 our potential products, to the protection of proprietary technology and to our dependence on key individuals.

Financial Overview

Revenue

We have not generated any revenue in the current fiscal year. To date, we have not generated any revenues from the sale of products, and we do not have any products that have been approved for commercialization. We do not expect to generate product revenue unless and until we obtain regulatory approval for, and commercialize, one of our current or future product candidates.

Research and Development Expenses

Research and development expenses primarily consist of costs associated with our research activities, including the preclinical and clinical development of product candidates. We contract with clinical research organizations to manage our clinical trials under agreed

upon budgets for each study, with oversight by our clinical program managers. All research and development costs are expensed as incurred.

Costs for certain research and development activities, such as manufacturing development activities and clinical studies are recognized based on the contracted amounts, as adjusted for the percentage of work completed to date. Payments for these activities are based on the terms of the contractual arrangements, which may differ from the pattern of costs incurred, and are reflected on the consolidated balance sheets as prepaid or accrued expenses. We defer and capitalize non-refundable advance payments made for research and development activities until the related goods are delivered or the related services are performed.

We expect to continue to incur substantial expenses related to development activities for the foreseeable future as we conduct clinical development, manufacturing, and toxicology studies. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials, additional drug manufacturing requirements, and later stage toxicology studies such as carcinogenicity studies. The process of conducting preclinical studies and clinical trials necessary to obtain regulatory approval is costly and time consuming. The probability of success for each product candidate is affected by numerous factors, including preclinical data, clinical data, competition, manufacturing capability and commercial viability. Accordingly, we may never succeed in achieving marketing approval for any of our product candidates.

Completion dates and costs for clinical development programs as well as our research program can vary significantly for each current and future product candidate and are difficult to predict. As a result, we cannot currently estimate with any degree of certainty the costs associated with development of our product candidates. We anticipate making determinations as to which programs and product candidates to pursue and how much funding to direct to each program and product candidate on an ongoing basis in response to the scientific success of early research programs, results of ongoing and future clinical trials, our ability to enter into collaborative agreements with respect to programs or potential product candidates, as well as ongoing assessments as to the commercial potential of each current or future product candidate.

General and Administrative Expenses

General and administrative expenses consist primarily of the costs associated with general management, obtaining and maintaining our patent portfolio, commercial planning, professional fees for accounting, auditing, consulting and legal services, and general overhead expenses.

We expect ongoing general and administrative expenses to increase in the future as we expand our operating activities, including commercial planning, maintaining and expanding the patent portfolio and incurring additional costs associated with the management of a public company such as maintaining compliance with exchange listing and SEC requirements. These potential increases will likely include management costs, legal fees, accounting fees, directors' and officers' liability insurance premiums, and expenses associated with investor relations, among others.

Other Income

Other income consists of interest income earned on bank interest and marketable securities, research and development tax credits from the United Kingdom government's tax incentive programs set up to encourage research and development in the United Kingdom, realized gains and losses from marketable securities and realized and unrealized exchange rate gains and losses on cash held in foreign currencies and transactions settled in foreign currencies.

Income Taxes

We historically have incurred net losses and had no corporation tax liabilities. We file U.S. Federal tax returns, as well as certain state returns. We also file returns in the United Kingdom. Under the U.K. government's research and development tax incentive scheme, we have incurred qualifying research and development expenses and filed claims for research and development tax credits in accordance with the relevant tax legislation. The research and development tax credits are paid out to us in cash and reported as other income. Because of the operating losses and the full valuation allowance provided on all deferred tax assets, including the net operating losses, no tax provision has been recognized in the three months ended July 31, 2024.

For tax purposes, pursuant to the Tax Cuts and Jobs Act of 2017, we are required to capitalize and subsequently amortize all R&D expenditures over five years for research activities conducted in the U.S. and over fifteen years for research activities conducted outside of the U.S. We adopted ASU 2019-12 as of January 1, 2022.

Results of Operations

Comparison of the three months ended July 31, 2024 and 2023

The following table sets forth the key components of our results of operations for the three months ended July 31, 2024 and 2023 (in thousands):

		Three Months Ended
		July 31,			Increase
		2024			2023			(decrease)
Revenue		$	-			$	-			$	-
Operating expenses
Research and development expenses			26,614				19,307				7,307
General and administrative expenses			17,601				9,786				7,815
Other income
Interest, exchange rate gain and other income			3,772				3,776				(4	)

Revenue.No revenue was recognized in the quarters ended July 31, 2024 or 2023.

Research and Development Expenses.Research and development expenses increased $7.3 million to $26.6 million for the three months ended July 31, 2024 compared to $19.3 million in the same period in the prior fiscal year due to increases in spending on the sebetralstat program of $3.3 million, personnel costs of $2.3 million and preclinical and other activities of $1.9 million offset by decreases in spending on KVD824 of $0.3 million compared to the same period in the prior fiscal year. The impact of exchange rates on research and development expenses resulted in an increase to expenses of $0.1 million in the three months ended July 31, 2024 compared to the same period in the prior fiscal year, which is reflected in the figures above.

Research and development expenses by major programs or categories were as follows (in thousands):

		Three Months Ended
		July 31,			Increase
		2024			2023			(decrease)
Program-specific costs
Sebetralstat		$	11,980			$	8,639				3,341
KVD824			2				254				(252	)
Unallocated costs
Personnel			9,142				6,826				2,316
Preclinical and other activities			5,490				3,588				1,902
Total		$	26,614			$	19,307			$	7,307

Expenses for the sebetralstat program increased primarily due to the Phase 3 KONFIDENT and KONFIDENT-S trials. We anticipate that these expenses will remain at or slightly below current levels due to the completion of the Phase 3 KONFIDENT trial in February 2024, while the KONFIDENT-S trial continues to enroll participants and we initiate other clinical studies to support the expansion of the sebetralstat commercial opportunity.

Expenses for KVD824 decreased due to the termination of the Phase 2 KOMPLETE clinical trial in October 2022. These expenses have ceased as we do not anticipate any further development of KVD824.

Personnel expenses increased primarily due to higher research and development and medical headcount compared to the same period in the prior year. We anticipate that these expenses will continue to increase for the medical team as we support ongoing development activities and prepare for the planned eventual commercialization of sebetralstat.

Expenses for preclinical and other activities increased primarily due to spending in support of HAE awareness within the medical community. We anticipate that these expenses will continue at or above current levels as we continue development on other preclinical activities.

General and Administrative Expenses.General and administrative expenses increased by $7.8 million primarily due to increases in commercial expenses of $4.5 million, employee related expenses of $2.5 million, patient advocacy expenses of $0.3 million, and other administrative expenses of $0.5 million.

Other Income.Other income stayed relatively the same compared to the same period in the prior fiscal year. Income from research and development tax credits decreased $0.8 million and interest income increased $0.8 million.

Liquidity and Capital Resources

Since inception, we have not generated any revenue from product sales and have incurred losses since inception and cash outflows from operating activities for the three months ended July 31, 2024 and 2023. We have funded operations primarily through the issuance of capital stock and pre-funded warrants. Our working capital, primarily cash and marketable securities, is anticipated to fund our operations for at least the next twelve months from the date these unaudited interim condensed consolidated financial statements are issued.

In February 2024, we entered into an underwriting agreement with Jefferies LLC, Leerink Partners LLC, Stifel, Nicolaus & Company, Incorporated, and Cantor Fitzgerald & Co., as the representatives of several underwriters to sell an aggregate of 7,016,312 shares of our common stock at price of $15.25 per share and pre-funded warrants to purchase up to 3,483,688 shares of common stock at a price of $15.249 per pre-funded warrant. The net proceeds from the February 2024 Offering, after deducting estimated expenses, were approximately $150.1 million. As of July 31, 2024 no pre-funded warrants from the February 2024 Offering have been exercised.

In July 2024, we filed the Registration Statement pursuant to which we may offer and sell securities having an aggregate public offering price of up to $300 million. During the three months ended July 31, 2024, we did not offer or sell any shares pursuant to the Registration Statement.

Cash Flows

The following table shows a summary of the net cash flow activity for the three months ended July 31, 2024 and 2023 (in thousands):

		Three Months Ended
		July 31,
		2024			2023
Cash flows used in operating activities		$	(40,220	)		$	(26,730	)
Cash flows provided by investing activities			37,162				19,613
Cash flows provided by financing activities			3,000				204
Effect of exchange rate changes on cash and cash equivalents			117				84
Net increase (decrease) in cash and cash equivalents		$	59			$	(6,829	)

Net cash used in operating activities

Net cash used in operating activities was $40.2 million for the three months ended July 31, 2024 and primarily consisted of a net loss of $40.4 million adjusted for stock-based compensation of $3.0 million, an increase in the research and development tax credit receivable of $1.3 million, an increase in prepaid expenses and other assets of $0.8 million, and other changes in net working capital. The research and development tax credit receivable increased due to the accrual of tax credits in the three months ended July 31, 2024. Net cash used in operating activities was $26.7 million for the three months ended July 31, 2023 and primarily consisted of a net loss of $25.3 million adjusted for stock-based compensation of $3.3 million, an increase in the research and development tax credit receivable of $2.1 million, an increase in prepaid expenses and other assets of $1.0 million, and other changes in net working capital.

Net cash provided by investing activities

Net cash provided by investing activities for the three months ended July 31, 2024 was $37.2 million and primarily consisted of the sales and maturities of marketable securities of $38.2 million offset by purchases of marketable securities of $1.0 million, as compared to $19.6 million provided by investing activities during the same period in the prior year primarily due to sales and maturities of marketable securities of $45.3 million offset by purchases of marketable securities of $25.8 million.

Net cash provided by financing activities

Net cash provided by financing activities during the three months ended July 31, 2024 was $3.0 million and consisted of the issuance of common stock from equity incentive plans, compared to $0.2 million in the same period in the prior year which also consisted of the issuance of common stock from equity incentive plans.

Operating Capital Requirements

To date, we have not generated any revenues from the sale of products, and we do not have any products that have been approved for commercialization. We do not expect to generate product revenue unless and until we obtain regulatory approval for, and commercialize, one of our current or future product candidates. We anticipate that we will continue to incur losses for the foreseeable future, and we expect the losses to increase as we continue the development of, and seek regulatory approvals for, product candidates, and begin to commercialize any approved products. We are subject to all of the risks inherent in the development of new therapeutic products, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. We currently anticipate that, based upon our operating plans and existing capital resources, we have sufficient funding to operate for at least the next twelve months. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our preclinical and clinical development efforts, future growth to support commercial sales of any approved products, and other activities we may choose to undertake.

Until such time, if ever, as we can generate substantial revenues, we expect to finance our cash needs through a combination of equity and 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 will 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 our 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 our ability to conduct business. Additional fundraising through collaborations, strategic partnerships or licensing arrangements with third parties may require us to relinquish valuable rights to product candidates, including our other technologies, future revenue streams or research programs, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds when needed, we 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 we would otherwise prefer to develop and commercialize such product candidates internally.

Contractual Obligations and Commitments

We enter into contracts in the normal course of business with contract research organizations and clinical trial sites for the conduct of clinical trials, preclinical and clinical studies, professional consultants and other vendors for clinical supply manufacturing or other services. These contracts generally provide for termination on notice, and therefore are cancelable contracts and not included in the table of contractual obligations and commitments in our Annual Report on Form 10-K for the fiscal year ended April 30, 2024, filed with the SEC on July 11, 2024. We are party to several operating leases for office and laboratory space as of July 31, 2024.

Critical Accounting Policies and Significant Judgments and Estimates

Our management's discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with U.S. GAAP. The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of our financial statements and the reported revenue and expenses during the reported periods. We evaluate these estimates and judgments on an ongoing basis. We base our estimates on historical experience, known trends and events, contractual milestones and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. See Note 2 to the unaudited interim condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for a description of our significant accounting policies and assumptions used in applying those policies. The accounting policies and estimates that we deem to be critical are discussed in more detail in our Annual Report on Form 10-K for the fiscal year ended April 30, 2024, filed with the SEC on July 11, 2024.

Recently Issued Accounting Pronouncements

See Note 2 in the Interim Financial Statements for a description of recent accounting pronouncements, including the expected dates of adoption and expected effects on results of operations and financial condition, if known.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

Item 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of July 31, 2024. The term "disclosure controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute assurance of achieving the desired objectives. Also, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer has concluded that our disclosure controls and procedures were effective as of July 31, 2024.

Changes in Internal Controls over Financial Reporting

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended July 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PARTII

OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.

Item 1A. RISK FACTORS

There have been no material changes to the risk factors described in the section captioned "Part I, Item 1A, Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended April 30, 2024.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in the section captioned "Part I, Item 1A, Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended April 30, 202 filed with the SEC on July 11, 2024, which may materially affect our business, financial condition, or future results. The risks described in our Annual Report on Form 10-K and in our Quarterly Reports on Form 10-Q are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may have a material adverse effect on our business, financial condition, or operating results.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Sales of Unregistered Securities

Not applicable.

Use of Proceeds

None.

Issuer Purchases of Equity Securities

Not applicable.

Item 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

Item 5. OTHERINFORMATION

(c) Insider Trading Arrangements and Policies

In the first quarter of fiscal 2025,no director or officer of the Company adopted, modified, or terminateda "Rule 10b5-1 trading agreement; or a "non-Rule 10b5-1 trading agreement' as each term is defined in Item 408(a) of Regulation S-K.

Item 6. EXHIBITS

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File No.	Exhibit	Filing Date	Filed Herewith
10.1+	Office Lease Agreement by and between the Registrant and OC 990 Corporate Center Associates, LLC dated July 22, 2024.					X
10.2*	Separation Agreement by and between the Registrant and T. Andrew Crockett, dated March 6, 2024.					X
31.1	Certification of Chief Executive Officer (Principal Executive and Financial Officer) pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
32.1#	Certification of Chief Executive Officer (Principal Executive and Financial Officer) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
101.INS	Inline XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

+ Certain of the schedules to this exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K.

* Exhibit 10.2 was inadvertently omitted from our Annual Report on Form 10-K for the year ended April 30, 2024.

# This certification is deemed not filed for purpose of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: September 5, 2024	By:	/s/ Benjamin L. Palleiko
		Benjamin L. Palleiko Chief Executive Officer (Principal Executive, Financial and Accounting Officer)

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