Renalytix plc
For the period ended Mar 31, 2024. Filed May 15, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2024 · Filed May 15, 2024
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-12-31; filed 2024-02-14.
0000950170-24-015276
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-03-31; filed 2024-05-15.
0000950170-24-060033
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 134 previous paragraphs and 144 current paragraphs.
89 unchanged; 32 reworded; 21 added; 11 removed; 2 previous and 2 current paragraphs rearranged.
Tables are not compared: 21 previous and 21 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (21)
Current report
KidneyIntelX included as only biomarker test for prognostic risk assessment in landmark update of international clinical practice guidelines (https://kdigo.org/guidelines/)
Current report
Medicare Local Coverage Determination draft issued for FDA-authorized kidneyintelX.dkd by Medicare contractor National Government Services (NGS) with final issuance expected in the near term
Current report
Formal launch of the FDA-authorized kidneyintelX.dkd in April 2024
Current report
Customer experience improvements implemented including simplified physician order requisition, increased patient access to national blood draw network, revamped marketing and education materials
Current report
New primary care sales force completed its first quarter of operations with a 33% quarter over quarter increase in independent primary care physician test order volume during the three months ended March 31, 2024
Current report
Appointed Howard Doran to president concurrent with organizational changes to focus to accelerating sales and marketing of FDA-authorized kidneyintelX.dkd test
Current report
Formal strategic sale process initiated with multiple potential acquirers now in discussions
Current report
Completed common stock equity financings raising aggregate gross proceeds of $13.5 million (including post-period activity)
Current report
Continued operating expense reduction with 50% year-over-year reduction in head count and approximately 40% total lower operating costs
Current report
With FDA and clinical guidelines achieved, process initiated for potential ex-U.S. partners to improve non-dilutive company cash position and expand incremental sales opportunities
Current report
U.S. government added the FDA-authorized kidneyintelX.dkd to 10-year Government-wide Acquisition Contract (GWAC) at a price of $950 per reportable result. The contract covers tests provided by any government healthcare facility
Current report
Total volume of 806 tests during the quarter, of which 82% were billable
Current report
Impairment loss on property, equipment and other long-lived assets
Current report
Impairment Loss on Property, Equipment and Other Long-Lived Assets
Current report
Other (Expense) Income
Current report
Comparison of nine months ended March 31, 2024 and 2023
Current report
Impairment Loss on Property, Equipment and Other Long-Lived Assets
Current report
Foreign Currency Gain
Current report
On March 12, 2024, we entered into a Placing Agreement (the “Placing Agreement”) with Stifel Nicolaus Europe Limited (the “Bookrunner” or “Stifel”), pursuant to which we agreed to allot and issue new ordinary shares, nominal value £0.0025 per ordinary share (the “Placing Shares”) to certain investors (the “Placees”) in an unregistered offering (the “Private Placement”), up to an aggregate of 46,801,872 ordinary shares, in two tranches.We allotted and issued 19,986,031 Placing Shares at a placing price of £0.20 per Placing Share (the “First Tranche”), which closed on March 14, 2024. Subsequent to obtaining the required shareholder approval, we allotted and issued 26,815,841 Placing Shares at a placing price of £0.20 per Placing Share (the “Second Tranche”), which closed on April 24, 2024. We received aggregate gross proceeds of approximately $12 million from the closing of the First Tranche and Second Tranche, before deducting fees and commissions to the Bookrunner and other offering expenses payable by us.
Current report
On April 5, 2024, we entered into a securities purchase agreement (the “DB Capital Purchase Agreement”) with an institutional investor pursuant to which we agreed to issue and sell, in a registered direct offering (the “Registered Direct Offering”) 2,666,667 ordinary shares, nominal value £0.0025 per share. Pursuant to the DB Capital Purchase Agreement, we also granted the investor an option to purchase up to 7,811,696 additional ordinary shares at the offering price of $0.375 per share. The purchase price of each ordinary share is $0.375. On April 18, 2024, the investor partially exercised the option to purchase 1,333,334 ordinary shares. The gross proceeds to the Company from the Registered Direct Offering were approximately $1.5 million, before deducting offering expenses payable by the Company. The Shares were offered by the Company pursuant to an effective shelf registration statement on Form S-3 (File No. 333-274733) that was filed with the SEC on September 28, 2023 and became effective on October 6, 2023, including the base prospectus contained therein, and a related prospectus supplement dated as of April 5, 2024 filed with the SEC.
Current report
During the nine months ended March 31, 2024, net cash used investing activities was immaterial.
Removed paragraphs (11)
Previous report
In July 2019, we sold an additional 5.6 million of our ordinary shares in a secondary offering for approximately $17.3 million. In July 2020, we closed our global offering and listed our American Depositary Shares ("ADS") on the Nasdaq Global Market, in which we issued and sold 12.6 million ordinary shares which converted into 6.3 million ADSs at a public offering price of $13.50 per share. In addition, we completed a concurrent private placement in Europe and other countries outside of the United States of 30,000 ordinary shares at a price of £5.37 per ordinary share (at an exchange rate of GBP:USD 1:1.2563). We received gross proceeds of approximately $85.1 million as a result of the offering.
Previous report
During the three months ended December 31, 2023, we recognized $0.7 million of revenue related to sales of KidneyIntelX, compared to the previous quarter reported revenue of $0.5 million.
Previous report
KidneyIntelX™ and kidneyintelX.dkd included in the proposed Local Coverage Determination (LCD) published by National Government Services (NGS) on February 8, 2024, and on the agenda for the LCD open public meeting on February 29, 2024.
Previous report
NGS has resumed consistent payment for tests under individual claims review (ICR), allowing revenue recognition of 318 tests billed to Medicare (including prior period tests). Total billable volume of 734 tests during the second quarter (representing 69% of all tests in the period, including non-billable study tests).
Previous report
Real-world evidence continues to demonstrate the benefits of KidneyIntelX early risk assessment as published in the Journal of Primary Care and Community Health, in which 12 months of care following KidneyIntelX prognostic testing was associated with clinical actions that led to significant improvement in care and outcomes including a 61% increase in kidney protective drug prescriptions among patients in the high-risk group.
Previous report
Operating cost reductions commenced during the fiscal second quarter continued with a fiscal third quarter cash burn target approximately 33% less than in the prior quarter and approximately 50% less than in the first quarter of fiscal 2024.
Previous report
Comparison of six months ended December 31, 2023 and 2022
Previous report
Foreign Currency Gain (Loss)
Previous report
Other Income (Expense)
Previous report
During the six months ended December 31, 2023, no cash was used in investing activities.
Previous report
Net cash used in financing activities
Reworded paragraphs (32)
Previous wording
Since our inception in March 2018, we have focused primarily on organizing and staffing our company, raising capital, developing the KidneyIntelX platform, conducting clinical validation studies for KidneyIntelX, establishing and protecting our intellectual property portfolio and commercial laboratory operations, pursuing regulatory approval and developing our reimbursement strategy. We have funded our operations primarily through equity financings. In November 2018, we sold 18.4 million of our ordinary shares in our initial public offering (the "IPO"), and our ordinary shares were admitted to trading on AIM, a market operated by the London Stock Exchange, resulting in gross proceeds of approximately $29.1 million. Prior to our IPO on the London Stock Exchange, EKF provided debt financing, referred to as our related-party note payable. All borrowings with EKF were repaid in their entirety upon completion of the equity offering in November 2018.
Current wording
Since our inception in March 2018, we have focused primarily on organizing and staffing our company, raising capital, developing the KidneyIntelX platform, conducting clinical validation studies for KidneyIntelX, establishing and protecting our intellectual property portfolio and commercial laboratory operations, pursuing regulatory approval and developing our reimbursement strategy. We have funded our operations primarily through equity and debt financings.
Previous wording
During the six months ended December 31, 2023, we continued to deploy KidneyIntelX to patient populations with DKD, on a regional basis through partnerships with healthcare systems and insurance payors that provide coverage to those healthcare systems’ patients. If these strategic partners fail to meet their key contractual obligations or to purchase KidneyIntelX tests, that will likely have an adverse effect on us and our ability to achieve our commercial objectives, potentially including the attainment of sales volumes leading to profitability.
Current wording
During the nine months ended March 31, 2024, we continued to deploy KidneyIntelX to patient populations with DKD, on a regional basis through partnerships with healthcare systems and insurance payors that provide coverage to those healthcare systems’ patients. If these strategic partners fail to meet their key contractual obligations or to purchase KidneyIntelX tests, that will likely have an adverse effect on us and our ability to achieve our commercial objectives, potentially including the attainment of sales volumes leading to profitability.
Previous wording
During the six months ended December 31, 2023, cost of revenue consists of costs directly attributable to the KidneyIntelX testing and services rendered, including labor, lab consumables and sample collection costs directly related to revenue generating activities.
Current wording
During the nine months ended March 31, 2024, cost of revenue consists of costs directly attributable to the KidneyIntelX testing and services rendered, including labor, lab consumables and sample collection costs directly related to revenue generating activities.
Previous wording
In October 2020, the Company completed a spin off VericiDx, a developer of advanced clinical diagnostics for organ transplant and retained 9,831,681 ordinary shares of VericiDx. The Company accounts for the investment in VericiDx equity securities at fair value, with changes in fair value recognized in the income statement.
Current wording
In October 2020, we completed a spin off VericiDx plc. ("VericiDx"), a developer of advanced clinical diagnostics for organ transplant and retained 9,831,681 ordinary shares of VericiDx. We account for the investment in VericiDx equity securities at fair value, with changes in fair value recognized in the income statement. In March 2024, we sold 750,000 ordinary shares of VericiDx for net proceeds of $0.1 million and a realized loss of $0.1 million. As of March 31, 2024, we own 9,081,681 shares of VericiDx.
Previous wording
During the three months ended December 31, 2023, we recognized $0.7 million of revenue related to sales of KidneyIntelX. During the three months ended December 31, 2022, we recognized $1.0 million revenue related to sales of KidneyIntelX and $0.2 million of revenue of pharmaceutical services revenue related to services performed for AstraZeneca. The $0.5 million decrease in revenue was primarily driven by a $0.3 million decrease in KidneyIntelX billable testing volumes due to the transition to a commercial billing structure under our arrangement with Mount Sinai and a decrease of $0.2 million of pharmaceutical services revenue.
Current wording
During the three months ended March 31, 2024, we recognized $0.5 million of revenue related to sales of KidneyIntelX and $0.04 million of pharmaceutical services revenue related to services performed for Eli Lilly and Company. During the three months ended March 31, 2023, we recognized $0.7 million revenue related to sales of KidneyIntelX and zero pharmaceutical services revenue. The $0.2 million decrease in revenue was primarily driven by a decrease in KidneyIntelX billable testing volumes due to the transition to a commercial billing structure under our arrangement with Mount Sinai.
Previous wording
During the three months ended December 31, 2023, we recognized cost of revenue of $0.5 million primarily attributable to KidneyIntelX testing, including labor, lab consumables and sample collection costs related to revenue generating activities. We recognized $0.7 million of cost of revenue for the three months ended December 31, 2022. The $0.2 million decrease in cost of revenue was primarily driven by a decrease in KidneyIntelX billable testing volumes.
Current wording
During the three months ended March 31, 2024, we recognized cost of revenue of $0.6 million primarily attributable to KidneyIntelX testing, including labor, lab consumables and sample collection costs related to revenue generating activities. We recognized $0.6 million of cost of revenue for the three months ended March 31, 2023.
Previous wording
Research and development expenses decreased by $0.1 million from $3.3 million for the three months ended December 31, 2022 to $3.2 million for the three months ended December 31, 2023. The decrease was attributable to a $1.2 million decrease in compensation and related benefits, offset by a $1.1 million increase related to external R&D projects and studies with Mount Sinai, Wake Forest and Joslin.
Current wording
Research and development expenses decreased by $1.7 million from $3.9 million for the three months ended March 31, 2023 to $2.2 million for the three months ended March 31, 2024. The decrease was attributable to a $1.3 million decrease related to external R&D projects and studies with Mount Sinai, Wake Forest and Joslin, a decrease of $0.3 million in employee compensation and related benefits, and a $0.1 million decrease in other operating expenses as we continued to implement cost-saving measures.
Previous wording
General and administrative expenses decreased $1.5 million from $6.8 million for the three months ended December 31, 2022 to $5.3 million for the three months ended December 31, 2023. The decrease was driven by even further cost cutting measures, which resulted in a $1.7 million decrease in compensation and related benefits, including share-based payments, due to decreased headcount, and a $0.5 million decrease in other operating expenses, offset by a $0.5 million increase in legal fees and a $0.2 million increase in consulting and professional fees. We have implemented a plan to further reduce payroll expense and total general and administrative expenses while preserving our sales capacity.
Current wording
General and administrative expenses decreased $3.2 million from $7.1 million for the three months ended March 31, 2023 to $3.9 million for the three months ended March 31, 2024. The decrease was driven by even further cost cutting measures, which resulted in a $2.6 million decrease in employee compensation and related benefits, a $0.4 million decrease in other operating expenses, and a $0.3 million decrease in insurance costs. We have implemented a plan to further reduce payroll expense and total general and administrative expenses while preserving our sales capacity.
Previous wording
As part of our cost saving plan, we consolidated lab operations which resulted in the $0.3 million impairment of property and equipment at our Utah lab for the six months ended December 31, 2023. There was no impairment loss on property and equipment in the six months ended December 31, 2022.
Current wording
As part of our cost saving plan, we consolidated lab operations which resulted in a $0.3 million impairment of property and equipment at our Florida lab and a $0.1 million impairment of the Utah right-of-use asset for the three months ended March 31, 2024. There was no impairment loss on property, equipment and other long-lived assets in the three months ended March 31, 2023.
Previous wording
During the three months ended December 31, 2023, we recognized a foreign currency loss of $0.1 million due to exchange rate fluctuations on transactions denominated in a currency other than our functional currency. During the three months ended December 31, 2022, we recognized a foreign currency loss of $0.1 million primarily attributable to cash balances denominated in currencies other than our functional currency, GB Pounds.
Current wording
During the three months ended March 31, 2024, we recognized a foreign currency gain of $0.02 million due to exchange rate fluctuations on transactions denominated in a currency other than our functional currency, GB Pounds. During the three months ended March 31, 2023, we recognized a foreign currency loss of $0.5 million primarily attributable to cash balances denominated in currencies other than our functional currency.
Previous wording
We account for the investment in VericiDx equity securities at fair value, with changes in fair value recognized in the income statement. During the three months ended December 31, 2023, we recorded a gain of $0.2 million to adjust the VericiDx investment to fair value. During the three months ended December 31, 2022, we recorded a loss of $0.3 million to adjust the VericiDx investment to fair value.
Current wording
We account for the investment in VericiDx equity securities at fair value, with changes in fair value recognized in the income statement. During the three months ended March 31, 2024, we recorded a gain of $0.04 million to adjust the VericiDx investment to fair value. During the three months ended March 31, 2023, we recorded a gain of $0.1 million to adjust the VericiDx investment to fair value.
Previous wording
We elected to account for the Bonds (as defined below) at fair value with qualifying changes in fair value recognized through the statements of operations until the notes are settled. This excludes fair value adjustments related to instrument-specific credit risk, which are recognized in Other Comprehensive Income (Loss). For the three months ended December 31, 2023, we recorded a loss of $0.1 million to adjust the bonds to fair value. For the three months ended December 31, 2022 we recorded a loss of $0.4 million to adjust the bonds to fair value. The change in fair value of the bond was driven by a decrease in term to maturity, increase in risk free rate and change in stock price.
Current wording
We elected to account for the Bonds at fair value with qualifying changes in fair value recognized through the statements of operations until the notes are settled. This excludes fair value adjustments related to instrument-specific credit risk, which are recognized in Other Comprehensive Income (Loss). For the three months ended March 31, 2024, we recorded a loss of $1.2 million to adjust the Bonds to fair value. For the three months ended March 31, 2023, we recorded a loss of $1.2 million to adjust the Bonds to fair value. The change in fair value of the bond was driven by a decrease in term to maturity, increase in risk free rate and change in stock price.
Previous wording
During the three months ended December 31, 2023 we recognized $0.2 million of other income which included $0.1 million of grant income and $0.1 million of interest income earned on our cash deposits. During the three months ended December 31, 2022, we realized $ 0.1 million of other income for additional services performed outside the scope of the operating agreement.
Current wording
During the three months ended March 31, 2024, we recognized $0.05 million of other expenses which included $0.03 million of grant income and $0.02 million of interest income earned on our cash deposits, offset by $0.1 million of realized loss on the sale of VericiDx shares. During the three months ended March 31, 2023, we realized $0.3 million of other income related expense reimbursement and $0.03 million of interest income.
Previous wording
During the six months ended December 31, 2023, we recognized $1.2 million of revenue related to sales of KidneyIntelX. During the six months ended December 31, 2022, we recognized $2.0 million revenue related to sales of KidneyIntelX and $0.2 million of revenue of pharmaceutical services revenue related to services performed for AstraZeneca. The $1.0 million decrease in revenue was primarily driven by a $0.8 million decrease in KidneyIntelX billable testing volumes due to the transition to a commercial billing structure under our arrangement with Mount Sinai and a decrease of $0.2 million of pharmaceutical services revenue.
Current wording
During the nine months ended March 31, 2024, we recognized $1.7 million of revenue related to sales of KidneyIntelX and $0.04 million of pharmaceutical services revenue related to services performed for Eli Lilly and Company. During the nine months ended March 31, 2023, we recognized $2.7 million revenue related to sales of KidneyIntelX and $0.2 million of pharmaceutical services revenue related to services performed for AstraZeneca. The $1.2 million decrease in revenue was primarily driven by a $1.0 million decrease in KidneyIntelX billable testing volumes due to the transition to a commercial billing structure under our arrangement with Mount Sinai and a decrease of $0.2 million of pharmaceutical services revenue.
Previous wording
During the six months ended December 31, 2023, we recognized cost of revenue of $1.0 million primarily attributable to KidneyIntelX testing, including labor, lab consumables and sample collection costs related to revenue generating activities. We recognized $1.4 million of cost of revenue for the six months ended December 31, 2022. The $0.4 million decrease in cost of revenue was primarily driven by a decrease in KidneyIntelX billable testing volumes.
Current wording
During the nine months ended March 31, 2024, we recognized cost of revenue of $1.6 million primarily attributable to KidneyIntelX testing, including labor, lab consumables and sample collection costs related to revenue generating activities. We recognized $2.0 million of cost of revenue for the nine months ended March 31, 2023. The $0.4 million decrease in cost of revenue was primarily driven by a decrease in KidneyIntelX billable testing volumes.
Previous wording
Research and development expenses decreased by $1.1 million from $7.1 million for the six months ended December 31, 2022 to $6.0 million for the six months ended December 31, 2023. The decrease was attributable to a $1.9 million decrease in compensation and related benefits, offset by a $0.4 million increase related to external R&D projects and studies with Mount Sinai, Wake Forest and Joslin, a $0.3 million increase related to consulting and professional fees, and $0.1 million increase in other miscellaneous expenses.
Current wording
Research and development expenses decreased by $2.8 million from $11.0 million for the nine months ended March 31, 2023 to $8.2 million for the nine months ended March 31, 2024. The decrease was attributable to a $2.2 million decrease in employee compensation and related benefits, a $1.0 million decrease related to external R&D projects and studies with Mount Sinai, Wake Forest and Joslin, offset by a $0.2 million increase related to consulting and professional fees, and $0.2 million increase in other miscellaneous expenses.
Previous wording
General and administrative expenses decreased $3.7 million from $15.1 million for the six months ended December 31, 2022 to $11.4 million for the six months ended December 31, 2023. The decrease was driven by even further cost cutting measures, which resulted in a $2.7 million decrease in compensation and related benefits, including share-based payments, due to decreased headcount, $0.6 million decrease in insurance costs, $0.4 million decrease in consulting and professional fees, $0.5 million decrease in other operating expenses, and a $0.2 million decrease in marketing, offset by a $0.7 million increase in legal fees. We have implemented a plan to further reduce payroll expense and total general and administrative expenses while preserving our sales capacity.
Current wording
General and administrative expenses decreased $6.9 million from $22.2 million for the nine months ended March 31, 2023 to $15.3 million for the nine months ended March 31, 2024. The decrease was driven by even further cost cutting measures, which resulted in a $5.2 million decrease in employee compensation and related benefits, including share-based payments, due to decreased headcount, $1.0 million decrease in insurance costs, $0.7 million decrease in other operating expenses, $0.5 million decrease in consulting and professional fees, and a $0.3 million decrease in marketing expenses, offset by a $0.8 million increase in legal fees. We have implemented a plan to further reduce payroll expenses and total general and administrative expenses while preserving our sales capacity.
Previous wording
As part of the our cost saving plan, we consolidated lab operations which resulted in the $0.3 million impairment of property and equipment at our Utah lab for the six months ended December 31, 2023. There was no impairment loss on property and equipment in the six months ended December 31, 2022.
Current wording
As part of our cost saving plan, we consolidated lab operations which resulted in a $0.6 million impairment of property and equipment at our Utah and Florida labs and a $0.1 million impairment of the Utah right-of-use asset for the nine months ended March 31, 2024. There was no impairment loss on property, equipment and other long-lived assets in the nine months ended March 31, 2023.
Previous wording
During the six months ended December 31, 2023, we recognized a foreign currency gain of $0.2 million due to exchange rate fluctuations on transactions denominated in a currency other than our functional currency. During the six months ended December 31, 2022, we recognized a foreign currency gain of $0.7 million primarily attributable to cash balances denominated in currencies other than our functional currency, GB Pounds.
Current wording
During the nine months ended March 31, 2024, we recognized a foreign currency gain of $0.2 million due to exchange rate fluctuations on transactions denominated in a currency other than our functional currency, GB Pounds. During the nine months ended March 31, 2023, we recognized a foreign currency gain of $0.2 million primarily attributable to cash balances denominated in currencies other than our functional currency.
Previous wording
We account for the investment in VericiDx equity securities at fair value, with changes in fair value recognized in the income statement. During the six months ended December 31, 2023, we recorded a loss of $0.2 million to adjust the VericiDx investment to fair value. During the six months ended December 31, 2022, we recorded a loss of $1.2 million to adjust the VericiDx investment to fair value.
Current wording
We account for the investment in VericiDx equity securities at fair value, with changes in fair value recognized in the income statement. During the nine months ended March 31, 2024, we recorded a loss of $0.2 million to adjust the VericiDx investment to fair value. During the nine months ended March 31, 2023, we recorded a loss of $1.1 million to adjust the VericiDx investment to fair value.
Previous wording
We elected to account for the Bonds (as defined below) at fair value with qualifying changes in fair value recognized through the statements of operations until the notes are settled. This excludes fair value adjustments related to instrument-specific credit risk, which are recognized in Other Comprehensive Income (Loss). For the six months ended December 31, 2023, we recorded a loss of $1.3 million to adjust the bonds to fair value. For the six months ended December 31, 2022, we recorded a loss of $0.7 million to adjust the bonds to fair value. The change in fair value of the bond was driven by a decrease in term to maturity, increase in risk free rate and change in stock price.
Current wording
We elected to account for the Bonds at fair value with qualifying changes in fair value recognized through the statements of operations until the notes are settled. This excludes fair value adjustments related to instrument-specific credit risk, which are recognized in Other Comprehensive Income (Loss). For the nine months ended March 31, 2024, we recorded a loss of $2.5 million to adjust the Bonds to fair value. For the nine months ended March 31, 2023, we recorded a loss of $1.9 million to adjust the Bonds to fair value. The change in fair value of the bond was driven by a decrease in term to maturity, increase in risk free rate and change in stock price.
Previous wording
During the six months ended December 31, 2023, we recorded $0.3 million of other expenses which included $0.1 million of grant income and $0.2 million of interest income earned on our cash deposits. During the six months ended December 31, 2022, we recognized $0.2 million of other income for additional services performed outside the scope of the operating agreement.
Current wording
During the nine months ended March 31, 2024, we recorded $0.2 million of other income which included $0.2 million of interest income earned on our cash deposits and $0.1 million of grant income, offset by $0.1 million of realized loss on the sale of VericiDx shares. During the nine months ended March 31, 2023, we recognized $0.5 million of other income which included $0.4 million of other income related to Kantaro and expense reimbursement and $0.1 million of interest income.
Previous wording
Since our inception, we have incurred net losses. We incurred net losses of $18.6 million and $ 22.4 million for the six months ended December 31, 2023 and 2022, respectively. As of December 31, 2023, we had an accumulated deficit of $197.0 million.
Current wording
Since our inception, we have incurred net losses. We incurred net losses of $26.4 million and $34.5 million for the nine months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, we had an accumulated deficit of $204.7 million.
Previous wording
To date, we have primarily financed our operations through equity and debt financings. As of December 31, 2023, we had cash and cash equivalents of $5.6 million. We have incurred recurring losses and negative cash flows from operations since inception and had an accumulated deficit of $197.0 million as of December 31, 2023. We anticipate incurring additional losses until such time, if ever, that we can generate significant sales of KidneyIntelX or any future products currently in development. As a result of our losses and our projected cash needs, substantial doubt exists about our ability to continue as a going concern within 12 months after the date that the financial statements are issued.
Current wording
To date, we have primarily financed our operations through equity and debt financings. As of March 31, 2024, we had cash and cash equivalents of $4.7 million. We have incurred recurring losses and negative cash flows from operations since inception and had an accumulated deficit of $204.7 million as of March 31, 2024. We anticipate incurring additional losses until such time, if ever, that we can generate significant sales of KidneyIntelX or any future products currently in development. As a result of our losses and our projected cash needs, substantial doubt exists about our ability to continue as a going concern within 12 months after the date that the financial statements are issued.
Previous wording
During the six months ended December 31, 2023, net cash used in operating activities was $17.4 million and was primarily attributable to our $18.6 million net loss as well as $2.6 million of noncash charges and $1.4 million net change in our operating assets and liabilities. Noncash charges were primarily related to $1.1 million fair value adjustment related to the bonds, $0.9 million in share-based compensation expense, $0.3 million of loss on write off of assets, $0.2 million fair value adjustment on our VericiDx investment, and $0.2 million of depreciation and amortization expense. The change in our operating assets and liabilities was primarily attributable to $0.9 million decrease in accrued expenses and other current liabilities, $0.5 million decrease in accounts receivables, prepaids and other current assets.
Current wording
During the nine months ended March 31, 2024, net cash used in operating activities was $22.3 million and was primarily attributable to our $26.4 million net loss as well as $4.8 million of noncash charges and $0.7 million net change in our operating assets and liabilities. Noncash charges were primarily related to $2.3 million fair value adjustment related to the Bonds, $1.3 million in share-based compensation expense, $0.7 million of loss on write off of assets, $0.3 million of depreciation and amortization expense, and $0.2 million fair value adjustment on our VericiDx investment. The change in our operating assets and liabilities was primarily attributable to a $1.1 million decrease in accrued expenses and other current liabilities, offset by a $0.4 million increase in accounts receivables, prepaids and other current assets.
Previous wording
During the six months ended December 31, 2022, net cash used in operating activities was $15.4 million and was primarily attributable to our $22.4 million net loss including a $3.0 million net change in our operating assets and liabilities and $4.0 million in noncash charges. The change in our operating assets and liabilities was primarily attributable to a $2.5 million increase in accounts payable and accrued expenses and other current liabilities and a $0.5 million increase in prepaid expenses and other current assets. Noncash charges were primarily related to $1.6 million in share-based compensation, $1.2 million fair value adjustment of our VericiDx securities, $0.7 million fair value adjustment of our convertible debt, a $0.3 million unrealized foreign exchange loss and $0.2 million of depreciation and amortization.
Current wording
During the nine months ended March 31, 2023, net cash used in operating activities was $25.5 million and was primarily attributable to our $34.5 million net loss including a $3.0 million net change in our operating assets and liabilities and $6.1 million in noncash charges. The change in our operating assets and liabilities was primarily attributable to a $2.9 million increase in accounts payable and accrued expenses and other current liabilities and a $0.1 million increase in accounts receivable, prepaid expenses and other current assets. Noncash charges were primarily related to $2.4 million in share-based compensation, $1.1 million fair value adjustment of our VericiDx securities, $1.9 million fair value adjustment of our convertible debt, a $0.3 million unrealized foreign exchange loss, $0.3 million of depreciation and amortization and $0.1 million of non-cash lease expense.
Previous wording
During the six months ended December 31, 2022, net cash used in investing activities was $0.1 million, attributable to the purchase of long term assets.
Current wording
During the nine months ended March 31, 2023, net cash used in investing activities was $0.1 million, attributable to the payment of long term deferred expenses.
Previous wording
Net cash provided by and used in investing activities
Current wording
Net cash provided by financing activities
Previous wording
During the six months ended December 31, 2023, net cash used in financing activities was $1.6 million and was primarily attributable to $1.7 million in cash used to pay down the principal of the Bonds, offset by $0.1 million in proceeds from the issuance of ordinary shares under our employee stock purchase program.
Current wording
During the nine months ended March 31, 2024, net cash provided by financing activities was $2.5 million and was primarily attributable to $5.1 million in proceeds from the closing of the First Tranche of the Private Placement, $0.1 million in proceeds from the issuance of ordinary shares under our employee stock purchase program, offset by $1.7 million in cash used to pay down the principal of the Bonds and $1.0 million in cash paid for offering costs related to the issuance of ordinary shares.
Previous wording
During the six months ended December 31, 2022, net cash used in financing activities was $0.9 million and was primarily attributable to $1.0 million in cash used to pay down the principal of the Bonds, offset by $0.1 million in proceeds from the issuance of ordinary shares under our employee stock purchase program.
Current wording
During the nine months ended March 31, 2023, net cash from financing activities was $16.5 million and was primarily attributable to $20.3 million in gross proceeds from the issuance of ordinary shares and $0.1 million in proceeds from the issuance of ordinary shares under our employee stock purchase program offset by $3.2 million in cash used to pay down the principal and interest of the convertible debt and $0.7 million in cash paid for offering costs related to the issuance of ordinary shares.
Previous wording
In April 2022, we issued amortizing senior convertible bonds with a principal amount of $21.2 million in amortizing senior convertible bonds due in April 2027 (the “Bonds”) to Heights Capital Ireland LLC (the “Convertible Bond Investor”). The Bonds were issued at 85% par value with total net proceeds of $18.0 million and accrue interest at an annual rate of 5.5%, payable quarterly in arrears, in cash or ADSs valued at the ADS Settlement Price at our option. The principal and interest payments are due in equal quarterly installments starting in July 2022. The Bonds contain various conversion and redemption features. The initial conversion price for the Convertible Bonds of $8.70 has been set at a 20 percent premium to the Reference ADS Price. The Conversion Price may reset down at 12, 24 and 36 months, depending on share price performance, the Bonds have a hard floor in the conversion price of $7.25. As a result of the February 2023 private placement and pursuant to conditions of the bond agreement, the conversion price was adjusted to $8.2508 (previously $8.70) and the floor price was adjusted to $6.8757 (previously $7.25). Further, pursuant to conditions of the agreement, effective April 7, 2023, the conversion price was adjusted from $8.2508 to $7.7924. Between amortization dates, Heights Convertible Bond Investor retains the right to advance future amortization payments, provided that (a) there shall be no amortization advancements during the first 12 months, (b) no more than 2 amortization advancements may occur in any 12 month period, and (c) no more than 1 amortization advancement may occur in any 3 month period.
Current wording
In April 2022, we issued amortizing senior convertible bonds with a principal amount of $21.2 million in amortizing senior convertible bonds due in April 2027 (the “Bonds”) to CVI Investments, Inc. (the “Convertible Bond Investor”). The Bonds were issued at 85% par value with total net proceeds of $18.0 million and accrue interest at an annual rate of 5.5%, payable quarterly in arrears, in cash or ADSs valued at the ADS Settlement Price at our option. The principal and interest payments are due in equal quarterly installments starting in July 2022. The Bonds contain various conversion and redemption features. The initial conversion price for the Convertible Bonds of $8.70 has been set at a 20 percent premium to the Reference ADS Price. The Conversion Price may reset down at 12, 24 and 36 months, depending on share price performance, the Bonds have a hard floor in the conversion price of $7.25. As a result of the February 2023 private placement and pursuant to conditions of the bond agreement, the conversion price was adjusted to $8.2508 (previously $8.70) and the floor price was adjusted to $6.8757 (previously $7.25). Further, pursuant to conditions of the agreement, effective April 7, 2023, the conversion price was adjusted from $8.2508 to $7.7924. Between amortization dates, Heights Convertible Bond Investor retains the right to advance future amortization payments, provided that (a) there shall be no amortization advancements during the first 12 months, (b) no more than 2 amortization advancements may occur in any 12 month period, and (c) no more than 1 amortization advancement may occur in any 3 month period. On March 28, 2024, the Company entered into a second amendment and restatement agreement with the Convertible Bond Investor, which amended the terms of the Company’s existing bond agreement, dated March 31, 2022. The Company performed an analysis and determined that the financial impact was immaterial as the amended and restated agreement was not substantially different than the previous agreement.
Previous wording
The Convertible Bond Investor is also permitted to defer up to two amortization payments to a subsequent amortization date. We retain the option to repay any deferred amortization in cash at 100 percent of the nominal amount. In July 2022, we made a cash amortization payment of $1.4 million, which consisted of $1.1 million of principal and $0.3 million of interest. In October 2022, the Convertible Bond Investor deferred the October amortization payment to maturity of the bond and we made an interest payment of $0.3 million. In January 2023, we made a cash amortization payment of $1.4 million, which consisted of $1.1 million of principal and $0.3 million of interest. In April 2023, we made a cash amortization payment of $1.4 million, which consisted of $1.1 million of principal and $0.3 million of interest. In October 2023, we made an amortization payment of $1.3 million, which consisted of $1.1 million of principal and $0.2 million of interest, through the issuance of 2,335,388 ordinary shares in the form of 150,000 Ordinary Shares and 1,092,694 ADSs. In December 2023, we made an amortization payment of $1.3 million, which consisted of $1.1 million of principal and $0.2 million of interest, through the issuance of 2,500,000 ordinary shares and a cash payment of $0.6 million. As of December 31, 2023, $13.8 million of principal was outstanding.
Current wording
The Convertible Bond Investor is also permitted to defer up to two amortization payments to a subsequent amortization date. We retain the option to repay any deferred amortization in cash at 100 percent of the nominal amount. In July 2022, we made a cash amortization payment of $1.4 million, which consisted of $1.1 million of principal and $0.3 million of interest. In October 2022, the Convertible Bond Investor deferred the October amortization payment to maturity of the bond and we made an interest payment of $0.3 million. In January 2023, we made a cash amortization payment of $1.4 million, which consisted of $1.1 million of principal and $0.3 million of interest. In April 2023, we made a cash amortization payment of $1.4 million, which consisted of $1.1 million of principal and $0.3 million of interest. In October 2023, we made an amortization payment of $1.3 million, which consisted of $1.1 million of principal and $0.2 million of interest, through the issuance of 2,335,388 ordinary shares in the form of 150,000 Ordinary Shares and 1,092,694 ADSs. In December 2023, we made an amortization payment of $1.3 million, which consisted of $1.1 million of principal and $0.2 million of interest, through the issuance of 2,500,000 ordinary shares and a cash payment of $0.6 million. As of March 31, 2024, $13.8 million of principal was outstanding. On April 11, 2024, we issued 3,636,162 Ordinary Shares in the form of 1,818,081 ADSs to the Convertible Bond Investor (the “April Repayment”), which settled the principal and interest amount due under the bonds on April 7, 2024. After settlement of the Repayment, the principal remaining under the Bonds was reduced by $1.06 million to $12.72 million. The Shares were issued without registration in reliance upon the exemption provided in Section 3(a)(9) of the Securities Act.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
We elected to account for the Bonds (as defined below) at fair value with qualifying changes in fair value recognized through the statements of operations until the notes are settled.
Current report — wording carried from elsewhere
Net cash used in investing activities
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
KidneyintelX.dkd, the first U.S. Food and Drug Administration (“FDA”), authorized in vitro prognostic test that uses an artificial intelligence-enabled algorithm to aid in assessment of the risk of progressive decline in kidney function, officially included in the lab fee schedule by Centers for Medicare & Medicaid Services (CMS) at $950 per test.
Previous report — wording carried elsewhere
We elected to account for the bonds at fair value with qualifying changes in fair value recognized through the statements of operations until the notes are settled.