Quarterly report pursuant to Section 13 or 15(d)

Cash, Cash Equivalents, Investment Securities and Liquidity

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Cash, Cash Equivalents, Investment Securities and Liquidity
9 Months Ended
Apr. 30, 2018
Cash and Cash Equivalents [Abstract]  
Cash, Cash Equivalents, Investment Securities and Liquidity

Note 3—Cash, Cash Equivalents, Investment Securities and Liquidity

 

The Company considers all liquid investments with maturities of three months or less when purchased to be cash equivalents. At April 30, 2018 and July 31, 2017, cash and cash equivalents were primarily comprised of cash in savings, checking accounts and short-term investments with maturities of three months or less.

 

As of April 30, 2018, the Company had a cash, cash equivalents and total investment securities balance of $33.3 million. The Company had cash of $5.3 million and cash equivalents of $4.8 million for a total cash and cash equivalent balance of $10.1 million. In addition, the Company had short-term investment securities of $20.2 million. The Company also has long-term investment securities of $3.0 million with maturities of 13 to 15 months.

 

The Company currently estimates its operating expenses and working capital requirements for the current fiscal year ending July 31, 2018 to be approximately $24.0 million, although the Company may modify or deviate from this estimate and it is likely that actual operating expenses and working capital requirements will vary from this estimate. Based on these expectations regarding future expenses, as well as the current cash levels and rate of cash consumption, the Company believes that current cash resources are sufficient to meet the Company’s anticipated needs for the 12 months following the issuance of this report. The Company will continue to assess its cash resources and anticipated needs on a quarterly basis.

  

The following table lists the Company’s investment securities that are classified as held-to-maturity as of April 30, 2018:

 

Description   Amortized Cost     Gross Unrealized Gain/(Loss)     Fair Value  
                         
Investment securities                        
U.S. treasury securities with maturities of one year or less   $ 20,165,100     $ (18,297 )   $ 20,146,803  
                         
U.S. treasury securities with maturities of greater than one year     2,975,524       (5,176 )     2,970,348  
Total   $ 23,140,624     $ (23,473 )   $ 23,117,151  

 

The Company has sustained losses in all reporting periods since inception, with an inception-to date-loss of $121.6 million as of April 30, 2018. Further, the Company has never generated any cash from its operations, does not expect to generate such cash in the near term, and does not presently have any firm commitments for future capital. Consequently, the Company will need additional capital to continue operating its business and fund its planned operations, including research and development, clinical trials and, if regulatory approval is obtained, commercialization of its product candidates. In addition, the Company will require additional financing if it desires to in-license or acquire new assets, research and develop new compounds or new technologies and pursue related patent protection, or obtain any other intellectual property rights or other assets.

 

Historically, the Company has raised the majority of the funding for its business through offerings of its common stock and warrants to purchase its common stock. The Company’s most recent February 2018 offering consisted of common stock only. If the Company issues equity or convertible debt securities to raise additional funds, its existing stockholders would experience further dilution, and the new equity or debt securities may have rights, preferences and privileges senior to those of its existing stockholders. If the Company incurs debt, its fixed payment obligations, liabilities and leverage relative to our equity capitalization would increase, which could increase the cost of future capital. Further, the terms of any debt securities the Company issues or borrowings it incurs, if available, could impose significant restrictions on its operations, such as limitations on its ability to incur additional debt or issue additional equity or other operating restrictions that could adversely affect its ability to conduct its business, and any such debt could be secured by any or all of the Company’s assets pledged as collateral. Additionally, the Company may incur substantial costs in pursuing future capital, including investment banking, legal and accounting fees, printing and distribution expenses and other costs.

 

Moreover, equity or debt financings or any other source of capital may not be available when needed or at all, or, if available, may not be available on commercially reasonable terms. Weak economic and capital market conditions generally or uncertain conditions in the Company’s industry could increase the challenges it faces in raising capital for its operations. In recent periods, the capital and financial markets for early and development-stage biotechnology and life science company stocks have been volatile and uncertain. If the Company cannot raise the funds that it needs, it could be forced to delay or scale down some or all of its development activities or cease all operations, and its stockholders could lose all of their investment in the Company.