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Carbylan Transaction
12 Months Ended
Apr. 30, 2017
Business Combinations [Abstract]  
Carbylan Transaction

Note 6. Carbylan Transaction

On November 21, 2016, KalVista Pharmaceuticals Limited (“KalVista Limited”) completed a share purchase transaction with Carbylan Therapeutics Inc. (“Carbylan”) whereby immediately following the transaction Carbylan’s equity holders owned 19% and KalVista Limited’s equity holders owned 81% of the combined company, respectively. As a result, Carbylan issued approximately 7.8 million shares of common stock to the stockholders of KalVista Limited in exchange for all shares of KalVista Limited. Approximately 1.9 million shares were retained by the Carbylan stockholders.  The combined company was renamed KalVista Pharmaceuticals, Inc. following the transaction. For accounting purposes, KalVista Limited is considered to be acquiring Carbylan in the transaction, which was determined based upon the terms of the share purchase agreement and other factors including: (i) KalVista Limited security holders own approximately 81% of the voting interests of the combined company immediately following the closing of the transaction; (ii) directors appointed by KalVista Limited hold a majority of board seats in the combined company; and (iii) KalVista Limited management hold all of the key positions in the management of the combined company. As the accounting acquirer, KalVista Limited’s assets and liabilities were recorded at their pre-combination carrying amounts and the historical operations that are reflected in the financial statements are those of KalVista Limited. The Company incurred $5.6 million of nonrecurring expenses for the year ended April 30, 2017, related to severance, legal and other professional services in connection with the transaction.

The Company’s consolidated financial statements reflect Carbylan’s results of operations beginning after November 21, 2016. The results of operations subsequent to November 21, 2016 have not been significant.

KalVista has concluded that the transaction represents a business combination. Under the acquisition method of accounting, the total purchase price is allocated to the acquired tangible and intangible assets and assumed liabilities of Carbylan based on estimated fair values as of the transaction closing date. Carbylan had no significant commercial operations and its only significant pre-combination net assets were cash and cash equivalents, accounts payable and accrued expenses which were already recognized at fair value. The Company is still evaluating the potential use or disposition of the Carbylan intellectual property. Pursuant to this reverse acquisition, the Company recorded the shares of common stock held by Carbylan shareholders at the fair value of Carbylan’s net monetary assets received at November 21, 2016 as these values were considered a more reliable indicator of fair value than the trading value of the shares. No goodwill or intangible assets were recorded in the transaction.

The preliminary allocation of the total purchase price to the acquired assets and liabilities assumed of Carbylan based on the fair values as of November 21, 2016 is as follows (in thousands):

 

Cash and cash equivalents

 

$

34,139

 

Prepaid expenses and other current assets

 

 

70

 

Accounts payable, accrued expenses and other liabilities

 

 

(3,631

)

Net assets acquired

 

$

30,578

 

 

In connection with the share purchase transaction, the Company replaced the options previously granted to purchase shares of KalVista Limited with options to purchase shares of KalVista Pharmaceuticals, Inc. The Company assessed the replacement awards and determined there was no compensation expense to record related to the modification.