KALVISTA PHARMACEUTICALS, INC. 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,
the success, cost and timing of our product development activities and clinical
trials as well as other activities we may undertake, the impact of the COVID-19
pandemic, 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
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Management Overview
We are a clinical stage pharmaceutical company focused on the discovery, development and commercialization of small molecule protease inhibitors for diseases with significant unmet need. We apply our insights into the chemistry and biology of proteases to develop orally delivered, small molecule inhibitors with high selectivity, potency and bioavailability that we believe will make them successful treatments for diseases. We have used these capabilities to develop a proprietary portfolio of novel, small molecule plasma kallikrein inhibitors targeting hereditary angioedema ("HAE") and diabetic macular edema ("DME"). In late 2020, we also announced a novel, oral Factor XIIa ("Factor XIIa") inhibitor program, which initially is being advanced to provide a next generation of HAE therapeutics and which also offers the opportunity for expansion into other high unmet need indications in the future.
Our primary focus is currently on developing oral plasma kallikrein inhibitors for HAE, for which we have two drug program candidates in clinical trials. HAE is a rare and potentially life-threatening condition with symptoms that include episodes of debilitating and often painful swelling in the skin, gastrointestinal tract or airways. Despite having multiple therapies approved, we believe HAE patients are in need of alternatives that better meet their objectives for quality of life and ease of disease control. Other than one therapy recently approved for prophylaxis, currently marketed therapies are all administered by injection, which patients can find challenging despite their efficacy because they can be painful, time consuming to deliver and difficult to store. We anticipate that there will be strong interest in safe and effective, orally delivered, small molecule treatments, and our strategy is to develop oral drug candidates for both on-demand and prophylactic use with the goal of providing patients with a complete set of oral options to treat their disease.
Our strategy is based upon extensive patient, physician and payer research to
identify the key needs in the market. According to our market research, oral
therapy remains the highest unmet need, with 93% of patients surveyed by
We have advanced our candidate KVD900 into late stage clinical development as a potential oral, on-demand therapy for HAE attacks. Earlier this year, we announced data from a Phase 2 efficacy trial in which KVD900 demonstrated statistically and clinically significant responses across all primary and secondary endpoints. KVD900-201 was a double blind, placebo-controlled, crossover trial investigating the safety and efficacy of a single dose of 600 mg KVD900 as an on-demand treatment for HAE attacks in patients with Type 1 or Type 2 HAE. Following an open label phase, in which pharmacokinetic samples were collected over four hours, all patients progressed into the randomized phase of the trial. In this "at home" part of the trial, patients treated two attacks, one with 600 mg KVD900 and one with placebo in a randomized sequence. Patients administered treatment for each attack within one hour of attack onset, following confirmation with their physician, and then recorded symptoms and, if needed, the time to use of rescue (the patient's
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conventional attack treatment). The time to use of rescue treatment within 12 hours was the primary outcome of the trial. Secondary outcomes included assessment of attack severity using categorical ("PGI-S") and visual analogue scale ("VAS") measures and the patient's global impression of change ("PGI-C"). A total of 53 patients completed the trial of 68 enrolled, with one patient withdrawing consent and 14 patients discontinued due to completion of the trial. No patients withdrew due to adverse events.
The trial met its primary endpoint comparing the time to use of rescue treatment within 12 hours on KVD900 versus placebo (p=0.001) with rates of use at 12 hours of 15.1% following treatment with KVD900 versus 30.2% after placebo. The trial also met all secondary endpoints: reduced worsening of attacks (p<0.0001; based on PGI-S or use of rescue) and reduced time to onset of symptom relief measured using both PGI-C (p<0.0001) and VAS (p<0.0001). The trial included 126 administrations of KVD900 and 55 of placebo. During the uncontrolled, open label phase, 5 of 68 patients dosed reported 8 adverse events suspected to be related to treatment. During the randomized, placebo-controlled phase, 5 patients reported adverse events suspected to be treatment-related (3 of 58 dosed with KVD900 and 2 of 55 dosed with placebo).
We have completed an end-of-phase 2 meeting with the FDA which confirmed that our Phase 3 trial design, which is similar to our successful Phase 2 trial design, is expected to be appropriate to support an NDA submission. That Phase 3 clinical trial protocol is being finalized and the trial is expected to dose patients in the first quarter of calendar year 2022.
The planned Phase 3 clinical trial of KVD900 is a crossover design evaluating dose levels of 300 mg and 600 mg KVD900 against placebo. The primary endpoint of this Phase 3 trial is time to beginning of symptom relief using the PGI-C scale that was one of the endpoints in the Phase 2 study. The trial is expected to be conducted at more than 50 sites worldwide and recruit approximately 100 patients, consistent with late stage trials of approved on-demand treatments for HAE. The trial is intended to evaluate all HAE attacks, including laryngeal attacks and breakthrough attacks for patients using prophylaxis. Similar to the Phase 2 trial for KVD900, patients will administer treatment as soon as they recognize the onset of an attack.
KVD900 has received Fast Track designation from the FDA. A Pediatric
Investigational Plan ("PIP") has also been approved by the
KVD824 is our oral product candidate being developed for potential prophylactic treatment of HAE. Our work to optimize the exposure profile of KVD824 has yielded a formulation that maintains the plasma concentrations we believe are required to deliver efficacy that will compete with approved injectable therapies. Twice-daily dosing of this formulation of KVD824 up to 14 days has shown what we believe to be an encouraging safety and tolerability profile.
KOMPLETE is the ongoing worldwide Phase 2 clinical trial of KVD824, and is a randomized, double-blind, parallel group design evaluating twice-daily dosing of 300 mg, 600 mg, and 900 mg KVD824 against placebo for 12 weeks. The trial will enroll 48 HAE patients randomized into four equal arms after they report experiencing a minimum of three attacks during an eight week run-in period. Patients will take two doses of their assigned medication daily, in the morning and evening. The primary endpoint of the trial is the rate of investigator confirmed HAE attacks during the treatment period. Secondary endpoints include the proportion of subjects without investigator confirmed HAE attacks, the rate of investigator confirmed HAE attacks that require conventional treatment, angioedema quality-of-life (AE-QoL) and angioedema control test (AECT) scores, and the proportion of participants with an AECT score greater than or equal to 12. KOMPLETE will be conducted at approximately 36 sites in 13 countries.
Our oral Factor XIIa inhibitor program represents what we believe is a major breakthrough in development of a therapeutic against an important target. Factor XIIa is an enzyme that plays a key role in HAE as the most upstream mechanism in the biochemical pathway that initiates HAE attacks. For this reason, we believe that inhibition of Factor XIIa will block the underlying causes of HAE attacks, including the uncontrolled generation of both plasma kallikrein and bradykinin, which cause swelling and pain. Clinical studies of an injectable Factor XIIa-inhibitory antibody have demonstrated a high degree of efficacy in preventing HAE attacks, and there are no known safety implications of long-term inhibition of this enzyme. We believe that our program has the potential to be the first orally delivered Factor XIIa inhibitor to enter clinical development, initially for HAE and over time for additional indications that are supported by scientific evidence.
Our internal research team has discovered multiple series of low nanomolar potency Factor XIIa inhibitors that are both selective and orally bioavailable. We are pursuing comprehensive intellectual property protection for this advanced medicinal chemistry program that is currently in lead optimization and moving to IND-enabling studies.
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
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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.
The extent of the impact of the novel strain of coronavirus, SARS-CoV-2
("COVID-19") on our operational and financial performance will depend on certain
developments, including the duration and spread of the outbreak, impact on our
preclinical and clinical trials, employee or industry events, effect on our
suppliers and manufacturers, and impact on the healthcare systems, all of which
are uncertain and cannot be predicted. The COVID-19 pandemic and its adverse
effects continue to affect the locations where we, our manufacturers, suppliers
or third-party business partners conduct business. Although we have continued
our operations and clinical trials to date, we have experienced, and if there
are renewed or continued closures of business in the
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.
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General and Administrative Expenses
General and administrative expenses consist primarily of the costs associated with general management, obtaining and maintaining our patent portfolio, 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, maintain and expand the patent portfolio
and incur additional costs associated with the management of a public company
and maintain compliance with exchange listing and
Other Income
Other income consists of interest income earned on bank interest and marketable
securities, research and development tax credits from the
Income Taxes
We historically have incurred net losses and had no corporation tax liabilities.
We file
Results of Operations
Comparison of the three months ended
The following table sets forth the key components of our results of operations
for the three months ended
Three Months Ended
October 31, Increase
2021 2020 (decrease)
Revenue $ - $ - -
Operating expenses
Research and development expenses 17,546 9,148 8,398
General and administrative expenses 6,057 3,633 2,424
Other income
Interest, exchange rate gain and other income 3,953 2,355 1,598
Revenue. No revenue was recognized in the quarters ended
Research and Development Expenses. Research and development expenses increased
Research and development expenses by major programs or categories were as follows (in thousands):
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Three Months Ended
October 31,
2021 2020
KVD001 $ 41 $ 58
KVD900 5,193 2,757
KVD824 4,099 2,381
Preclinical activities 8,213 3,952
Total $ 17,546 $ 9,148 Expenses for the KVD001 program were essentially flat due to the completion of the KVD001 Phase 2 clinical trial in DME. We anticipate that expenses will remain at a low rate as we determine next steps for the KVD001 program.
Expenses for the KVD900 program increased primarily due to the ongoing preparation for the Phase 3 trial. We anticipate that these expenses will increase above current levels as we initiate the Phase 3 clinical trial of KVD900 in early 2022.
Expenses for KVD824 increased primarily due to the activities related to the ongoing Phase 2 KOMPLETE clinical trial. We anticipate that these expenses will increase above current levels as this clinical trial continues to enroll.
Expenses for preclinical activities increased primarily due to additional projects and higher headcount compared to the same period in the prior year. We anticipate that these expenses will continue to increase as we continue to progress our Factor XIIa program and conduct other preclinical activities.
General and Administrative Expenses. General and administrative expenses
increased
Other Income. Other income increased
Comparison of the six months ended
The following table sets forth the key components of our results of operations
for the six months ended
Six Months Ended
October 31, Increase
2021 2020 (decrease)
Revenue $ - $ - -
Operating expenses
Research and development expenses 31,215 20,313 10,902
General and administrative expenses 11,903 6,912 4,991
Other income
Interest, exchange rate gain and other income 7,360 5,984 1,376
Revenue. No revenue was recognized in the six months ended
Research and Development Expenses. Research and development expenses increased
Research and development expenses by major programs or categories were as follows (in thousands):
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Six Months Ended
October 31,
2021 2020
KVD001 $ 73 $ 144
KVD900 9,290 7,209
KVD824 6,479 4,669
Preclinical activities 15,373 8,291
Total $ 31,215 $ 20,313 Expenses for the KVD001 program decreased primarily due to the completion of the KVD001 Phase 2 clinical trial in DME. We anticipate that expenses will remain at a low rate as we determine next steps for the KVD001 program.
Expenses for the KVD900 program increased primarily due to the ongoing preparation for the Phase 3 trial. We anticipate that these expenses will increase above current levels as we initiate the Phase 3 clinical trial of KVD900 in early 2022.
Expenses for KVD824 increased primarily due to the activities related to the ongoing Phase 2 KOMPLETE clinical trial. We anticipate that these expenses will increase above current levels as this trial continues to enroll.
Expenses for preclinical activities increased primarily due to additional projects and higher headcount compared to the same period in the prior year. We anticipate that these expenses will continue to increase as we continue to progress our Factor XIIa program and conduct other preclinical activities.
General and Administrative Expenses. General and administrative expenses
increased
Other Income. Other income increased
Liquidity and Capital Resources
We have funded operations primarily through the issuance of capital stock. 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.
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