v3.25.2
Fair Value Measurements
 3 Months Ended
Jul. 31, 2025
Fair Value Disclosures [Abstract]  
Fair Value Disclosures [Text Block]
3.
Fair Value Measurements

The following tables present information about financial assets and liability that have been measured at fair value and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value as of July 31, 2025 and April 30, 2025 (in thousands):

 

 

 

 

 

 

 

 

 

 

Balance at

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

July 31, 2025

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

$

86,586

 

 

$

—

 

 

$

—

 

 

$

86,586

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

—

 

 

 

56,660

 

 

 

—

 

 

 

56,660

 

U.S. government agency securities

 

—

 

 

 

10,501

 

 

 

—

 

 

 

10,501

 

Total financial assets

$

86,586

 

 

$

67,161

 

 

$

—

 

 

$

153,747

 

Liability:

 

 

 

 

 

 

 

 

 

 

 

Derivative liability

$

—

 

 

$

—

 

 

$

9,410

 

 

$

9,410

 

 

 

 

 

 

 

 

 

 

 

 

Balance at

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

April 30, 2025

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

$

98,644

 

 

$

—

 

 

$

—

 

 

$

98,644

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

—

 

 

 

75,243

 

 

 

—

 

 

 

75,243

 

U.S. government agency securities

 

—

 

 

 

13,759

 

 

 

—

 

 

 

13,759

 

Total financial assets

$

98,644

 

 

$

89,002

 

 

$

—

 

 

$

187,646

 

Liability:

 

 

 

 

 

 

 

 

 

 

 

Derivative liability

$

—

 

 

$

—

 

 

$

6,440

 

 

$

6,440

 

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

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

The estimated fair value of the derivative liability as of July 31, 2025 relates to the Purchase and Sale Agreement that the Company, as guarantor, and KalVista Pharmaceuticals Limited, a wholly owned subsidiary of the Company (the “Subsidiary”), entered into with DRI Healthcare Acquisitions LP, an affiliate of DRI Healthcare Trust (“DRI”) in November 2024 (the “PSA”) and was determined using Level 3 inputs. Refer to Note 7, Purchase and Sale Agreement, for a description of the PSA. The fair value measurement of the derivative liability is sensitive to changes in the unobservable inputs used to value the financial instrument. Changes in the inputs could result in changes to the fair value of each financial instrument.

The embedded derivative liability associated with the royalty obligation contained in the PSA, as discussed further in Note 7, Purchase and Sale Agreement, is measured at fair value using an option pricing Monte Carlo simulation model and is included as a component of the royalty obligation on the consolidated balance sheet. The embedded derivative liability is subject to remeasurement at the end of each reporting period, with changes in fair value recognized as a component of other income, net. The assumptions used in the option pricing Monte Carlo simulation model incorporates certain Level 3 inputs including: (1) the risk-adjusted discount rate and (2) the probability of a change in control occurring during the term of the instrument.

The Company recorded $4.4 million for the initial fair value of the derivative liability upon the closing of the PSA and subsequently recorded an incremental $2.0 million when the $22.0 million drawdown was recorded by Company. The initial fair value allocated to the derivative liability was recorded against the royalty obligation as a debt discount, which is being amortized in interest expense on the condensed consolidated statement of operations over the expected term using the effective interest method. The embedded derivative is subsequently remeasured at fair value each reporting period, with the change in fair value being recorded as a component of other income, net on the condensed consolidated statement of operations. For the three months ended July 31, 2025 and July 31, 2024, the Company recognized $1.1 million as a component of other income, net as the change in fair value for the $9.4 million embedded derivative liability, recorded as a component of the royalty obligation on the consolidated balance sheet as of July 31, 2025. Refer to Note 7, Purchase and Sale Agreement, for details regarding the valuation methodology related to the embedded derivative and its related inputs.

Marketable Securities

The following tables summarize the fair values of the Company’s marketable securities by type as of July 31, 2025 and April 30, 2025 (in thousands):

 

July 31, 2025

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Estimated

 

 

Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

Corporate debt securities

$

55,984

 

 

$

678

 

 

$

(2

)

 

$

56,660

 

Obligations of the U.S. Government and its agencies

 

10,430

 

 

 

72

 

 

 

(1

)

 

 

10,501

 

Total

$

66,414

 

 

$

750

 

 

$

(3

)

 

$

67,161

 

 

 

April 30, 2025

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Fair

 

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

Corporate debt securities

$

74,150

 

 

$

1,093

 

 

$

-

 

 

$

75,243

 

Obligations of the U.S. Government and its agencies

 

13,594

 

 

 

165

 

 

 

—

 

 

 

13,759

 

Total investments

$

87,744

 

 

$

1,258

 

 

$

-

 

 

$

89,002

 

The following table summarizes the scheduled maturity for the Company’s marketable securities at July 31, 2025 (in thousands):

 

July 31, 2025

 

Maturing in one year or less

$

35,107

 

Maturing after one year through two years

 

28,658

 

Maturing after two years through four years

 

3,396

 

Total

$

67,161