BriaCell Therapeutics Corp. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. References to the “Company,” “our,” “us” or “we” refer to BriaCell Therapeutics Corp. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Introduction This Management’s Discussion and Analysis (“MD&A”) should be read together with other information, including our unaudited condensed interim consolidated financial statements and the related notes to those statements included in Part I, Item 1 of this Quarterly Report (the “Condensed Consolidated Financial Statements”), our consolidated financial statements appearing in our Annual Report on Form 10-K for the year ended July 31, 2022 (the “Annual Report”) and Part I, Item 1A, Risk Factors, of the Annual Report. This MD&A provides additional information on our business, recent developments, financial condition, cash flows and results of operations, and is organized as follows: ● Part 1 - Business Overview. This section provides a general description of our business, which we believe is important in understanding the results of our operations, financial condition, and potential future trends. ● Part 2 - Results of Operations. This section provides an analysis of our results of operations for the second quarter of fiscal 2023 in comparison to the second quarter of fiscal 2022. ● Part 3 - Financial Liquidity and Capital Resources. This section provides an analysis of our cash flows and outstanding debt and commitments. Included in this analysis is a discussion of the amount of financial capacity available to fund our ongoing operations and future commitments. We prepare and report our unaudited Condensed Consolidated Financial Statements in accordance with U.S. GAAP. Our unaudited Condensed Consolidated Financial Statements, and the financial information contained herein, are reported in U.S Dollars. Cautionary Note Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings. Overview BriaCell (the “ Company ”) is an immuno-oncology biotechnology company with a strong focus on cancer immunotherapy. Immunotherapies have come to the forefront in the fight against cancer since they harness the body’s own immune system to recognize and destroy cancer cells. BriaCell owns the U.S. patent to SV-BR-1-GM (“ Bria-IMT™ ”), a whole-cell targeted immunotherapy for cancer (U.S. Patent No. 7,674,456), as well as patents related to PKCδ inhibitors (U.S. Patent Nos. 9,364,460 and 9,572,793). The Company is currently advancing our targeted immunotherapy program by prioritizing a Phase I/IIa clinical trial with Bria-IMT™ in combination with an immune checkpoint inhibitor and a companion diagnostic test, BriaDx™, to identify patients most likely to benefit from Bria-IMT™. The Bria-IMT™ regimen was evaluated in four patients in a prior study in 2004-2006 by Dr. Charles Wiseman, the scientific founder, former member of the board of directors of the Company (the “ Board ”) and principal scientific advisor. Encouraging results were obtained, especially in a patient who matched Bria-IMT™ at HLA alleles and had a grade II tumor. In 2017-2018 BriaCell evaluated 23 patients with advanced breast cancer with the Bria-IMT™ regimen and obtained confirmation of the ability of the Bria-IMT™ regimen to induce regression of metastatic breast cancer in patients who match Bria-IMT™ at least at one HLA allele and/or if they had grade I or grade II tumors. A combination study with the immune checkpoint inhibitor pembrolizumab (KEYTRUDA®) was initiated on September 2018. BriaCell purchased the KEYTRUDA® for this study as BriaCell does not have an agreement with Merck & Co., Inc. for the supply of KEYTRUDA®. Eleven patients were dosed in the combination therapy trial with Bria-IMT™ and the immune checkpoint inhibitor KEYTRUDA® and subsequently dosing with this combination was discontinued. The study was modified under an amended protocol which evaluates the combination of the Bria-IMT™ regimen with Incyte Corporation experimental drugs retifanlimab (anti-PD-1 antibody similar to pembrolizumab). The study is ongoing. 16 It is estimated by the National Cancer Institute that in 2022, approximately 287,500 women were diagnosed with breast cancer in the United States. That means that every two minutes an American woman is diagnosed with breast cancer and more than 43,000 died in 2022. Although about 100 times less common than in women, breast cancer also affects men. It is estimated that the lifetime risk of men getting breast cancer is about 1 in 1,000, and the American Cancer Society estimates that approximately 2,710 new cases of invasive male breast cancer will be diagnosed and approximately 530 men will die from breast cancer in 2022. According to the May 2019 “Global Oncology Trends 2021” report by the IQVIA Institute, the global market for cancer drugs (including immunotherapy drugs) is expected to reach nearly $269 billion by the end of 2025, growing at a compound annual growth rate (“ CAGR ”) of 10% between 2021 and 2025, of which about 20% is expected to be immuno-oncology drugs. About 12.9% percent of women will be diagnosed with breast cancer at some point during their lifetime. In 2018, there were an estimated 3,676,262 women living with female breast cancer in the United States. Approximately 81% of cases present as invasive breast cancer. Approximately 6% of new breast cancer diagnoses are Stage IV (metastatic breast cancer (“ MBC ”), which has already spread to other organs). Twenty to thirty percent of all women diagnosed with breast cancer will develop MBC. Breast cancer can be subdivided based on receptor status - the hormone receptors for estrogen (ER) and progesterone (PR), collectively referred to as hormone receptors (HR), and the Her2/neu growth factor co-receptor (HER2). Based on the latest SEER statistics, 74.6% were found to be HR+/HER2−, 10.8% were triple-negative (HR−/HER2−), 10.5% were HR+/HER2+, and 4.0% were HR−/HER2+. 1 It is estimated that over 150,000 women in the US are living with MBC. For those with metastatic disease at diagnosis, their 5-year survival rate is 27%. For patients who develop MBC after initially having localized disease, if they had a good response to treatment (i.e. a disease-free interval of more than 24 months), their survival rate is similar to that of patients with MBC at initial diagnosis, but if their disease-free interval is less than 24 months, their prognosis is worse. 4 We currently propose that the Bria-IMT™ indication will be for the treatment of patients with MBC who have failed other approved therapies. Similarly, another study showed that the median overall survival among patients with de novo stage IV MBC was 39.2 months, while for patients with relapsed disease it was 27.2 months. Median progression free survival after first-line therapy is only 9 months and the survival benefit decreases with subsequent lines of therapy. One study showed that of 386 patients with MBC, 374 (97%) received first-line therapy, 254 (66%) received second-line therapy, 175 (45%) received third-line therapy, and 105 (27%) received therapy beyond third-line. Recent Developments On August 4, 2022, the Company announced that it has secured an exclusive license from University of Maryland, Baltimore County (UMBC) to develop and commercialize Soluble CD80 (sCD80) as a biologic agent for the treatment of cancer. The novel technology, originally developed by Suzanne Ostrand-Rosenberg, Ph.D., Emeritus Faculty at UMBC, and member of BriaCell’s scientific advisory board, is titled “Soluble CD80 as a Therapeutic to Reverse Immune Suppression in Cancer Patients” and covered under USPN 8,956,619 B2, USPN 9,650,429 B2, and USPN 10,377,810 B2. In animal models, sCD80 was well-tolerated and stopped tumor growth by potentially restoring natural anti-tumor immunity (see Lucas A Horn, et al. and Samuel T Haile et al. in collaboration with Dr. Ostrand-Rosenberg). Additionally, strong anti-tumor activity of sCD80 has been reported in multiple tumor types (see Lucas A Horn, et al.). Importantly, as demonstrated in the same studies, sCD80’s unique actions may involve both awakening and boosting the immune system to recognize and destroy tumor cells. 17 Under the terms of the agreement, BriaCell gains the worldwide rights to develop and commercialize sCD80, while UMBC maintains ownership of the patents. BriaCell will pay royalties to UMBC upon the commercialization of the product plus patent management costs. The licensing agreement was coordinated by UMBC’s Office of Technology Development. Bria-IMT™ regimen combined with Incyte’s retifanlimab The Company’s data showed clinical benefit including extended survival time and tumor reductions in heavily pre-treated advanced breast cancer patients who matched our lead candidate, Bria-IMT™, at HLA type/s, and these findings guided the development of further optimized off-the-shelf personalized immunotherapies for advanced breast cancer and other cancers. On September 14, 2022, the Company signed an agreement with Caris Life Sciences® (Caris), a leading molecular science and technology company actively developing and delivering innovative solutions to revolutionize healthcare. The goal is to develop immunotherapies that are personalized for each patient, and Caris’ extensive library of clinical data, cutting-edge biomarker technology, and expertise will be invaluable in achieving our objectives,” The Company expects Caris’ unique platform to help us identify patients who do not respond to existing treatments and are more likely to benefit from the Company’s immunotherapy treatments. Under the terms of the agreement, Caris will help BriaCell with efficient patient identification, accelerating enrollment for its current Phase I/II clinical trial in advanced metastatic breast cancer of certain genetically defined subgroups. The partnership between BriaCell and Caris leverages Caris’ Right-In-Time (RIT) Clinical Trial Network, a group of over 495 oncology sites that are able to quickly identify and enroll eligible patients in biomarker-directed clinical trials. This service offers patients and physicians access to the most cutting-edge precision medicine in development. Additionally, through Caris’ comprehensive molecular profiling (Whole Exome and Whole Transcriptome Sequencing), Caris will perform tumor profiling for the patients enrolled in the clinical trial. On October 12, 2022, the Company added Mayo Clinic, Jacksonville, Florida as a clinical site in the Phase I/II study of BriaCell’s lead candidate, Bria-IMT™, with Incyte’s PD-1 inhibitor, retifanlimab, in advanced breast cancer. On November 10, 2022, the Company announced positive initial efficacy data in its 2021-2022 cohort of 12 advanced breast cancer patients. Disease control, tumor shrinkage, and potential survival benefit were observed amongst 12 patients in the Phase I/IIa clinical study of Bria-IMT™ in combination with Incyte’s retifanlimab. ● Bria-IMT™ regimen in combination with Incyte’s retifanlimab produced evidence of disease control, tumor shrinkage, and potential survival benefit amongst BriaCell’s recent 12 patient cohort in advanced breast cancer. ● The regimen remains well tolerated as recently reported in Phase I evaluation. ● 70% of patients showed either disease control or progression-free survival (PFS) benefits compared with their last therapy. ● Prior to enrollment, the 12 patients in the cohort had already been unsuccessfully heavily pre-treated with at least 2 prior therapy regimens, further underscoring BriaCell’s positive patient outcomes. 18 In summary, these findings show evidence of clinical and survival benefits in heavily pre-treated advanced breast cancer patients, suggesting an additive or synergistic effect of Bria-IMT™ in combination with PD-1 inhibitors, and supporting the strategy of using the Bria-IMT™ combination regimen with retifanlimab for the treatment of advanced breast cancer patients. Evidence of immune system activation by Bria-OTS+™ and Bria-PROS™ BriaCell’s poster presentation highlights the development details and activities of BriaCell’s next generation (enhanced version) off-the-shelf personalized immunotherapies. BriaCell has recently developed its novel next generation off-the-shelf personalized immunotherapies, including Bria-OTS+™, and Bria-PROS™, that are designed to produce several immune activating molecules in addition to their original immune activating mechanisms for increased efficacy. This represents a significant advancement in BriaCell’s novel off-the-shelf personalized immunotherapy technology. Both Bria-OTS+™ for advanced breast cancer, and Bria-PROS™ for advanced prostate cancer, were able to activate naïve T cells, suggesting their potential capabilities to produce very strong immune responses in patients. Results show that the very strong immune responses observed may be due to: 1) direct activation of the components of the immune system such as naïve T cells, and 2) indirect activation of the immune system components via production of immune activating molecules. BriaCell is impressed with the data showing very strong immune responses for both Bria-OTS+™ and Bria-PROS™. We expect both Bria-OTS+™ and Bria-PROS™ to boost the immune system response and produce strong anti-tumor responses in patients with advanced breast cancer and prostate cancer, respectively. 19 Patent Issuance On January 10, 2023, the Company announced that it received an Issue Notification from the United States Patent and Trademark Office for the composition of matter and method of use of its personalized off-the-shelf cell-based immunotherapy for cancer. The patent issued on January 24, 2023 as US Patent No. 11,559,574 with the term extending to May 25, 2040. Additionally, BriaCell was awarded an Australian patent (Patent No. 2017224232, extends to February 27, 2037) covering composition of matter and method of use for its whole-cell cancer immunotherapy technology in Australia. Intellectual Property: US Patent No. 11,559,574, titled “Whole-cell cancer vaccines and methods for selection thereof,” will issue on January 24, 2023, and covers the composition of matter and method of use of BriaCell’s personalized off-the-shelf whole-cell immunotherapies. The novel technology involves the development of several HLA specific whole-cell immunotherapies in advance, and selection of the appropriate off-the-shelf (i.e. pre-made) immunotherapies for each patient (i.e. personalized therapy) based on the patient’s HLA type using a fast and easy saliva test. Once issued, the patent will provide intellectual property protection through May 25, 2040, and a patent term extension under Hatch-Waxman potentially applies (which would extend such protection for an additional five years). Additionally, BriaCell was awarded Australian Patent No. 2017224232, titled “Whole-cell cancer vaccines and methods for selection thereof,” for claims covering composition of matter and method of use for BriaCell’s whole-cell immunotherapy for cancer in Australia. BriaCell currently holds multiple issued patents and pending patent applications to cover its whole-cell immunotherapy’s composition of matter and method of use worldwide. For a summary of BriaCell’s issued patents, please visit https://briacell.com/patents/ . Bria-OTS™ Program Timelines FDA has provided guidance regarding the development of cells and final cell-bank testing for BriaCell’s Bria-OTS™ clinical-grade cell lines. Once completed in accordance with FDA’s requirements, BriaCell expects to initiate the Bria-OTS™ study under an Investigational New Drug Application (IND) in the first half of 2023. Clinical Sites The following clinical sites are actively enrolling patients for BriaCell’s ongoing Phase II combination study: ● Carle Cancer Institute, Urbana, Illinois ● American Oncology Network, LLC (AON), Baltimore, Maryland ● Mayo Clinic, Jacksonville, Florida ● Hoag, Newport Beach, California ● Sylvester Comprehensive Cancer Center, part of UHealth – the University of Miami Health System, Miami, Florida ● Atlantic Health System, Morristown and Overlook Hospitals, Morristown and Summit, New Jersey ● Tranquil Clinical Research, Webster, Texas ● Mary Crowley Cancer Research center, Dallas, Texas ● Providence Medical Group, Santa Rosa, California ● Cancer Center of Kansas, Wichita, Kansas 20 End of Phase II Meeting with the Food and Drug Administration On January 18, 2023 BriaCell received agreement and positive feedback from its End of Phase II meeting with the FDA regarding BriaCell’s lead clinical candidate, Bria-IMT™ in combination with a checkpoint inhibitor (under Fast Track designation), in advanced metastatic breast cancer. BriaCell and the FDA have agreed on the primary end point, the essential elements of the study design, and the type of patients to be enrolled in BriaCell’s upcoming pivotal clinical study. This pivotal registration study will be enrolling advanced metastatic breast cancer patients for whom no approved treatment options exist. Registration study success could lead to a Biologics License Application (BLA) submission for the approval of the combination regimen for commercialization in advanced metastatic breast cancer. Updated Clinical Data On Feb. 23, 2023 BriaCell reported updated survival data from its previously disclosed group of 12 patients (11 patients enrolled in 2021/2022) in the ongoing Phase II clinical trial evaluating Bria-IMT™ in combination with Incyte’s retifanlimab for the treatment of advanced metastatic breast cancer. 9 of 11 (82%) patients remain alive from 2021/2022 dosing, suggesting strong survival benefits. 7 of 11 (64%) patients showed either disease control or progression-free survival (“PFS”) benefits compared with their most recent prior therapy regimen suggesting clinical benefit, including survival and delayed cancer progression in this very difficult to treat patient population. Median PFS of 3.5 months (with one subject ongoing) compares favorably with other recent studies of patients with advanced disease including other approved agents in earlier lines of therapy (Tripathy “ATTAIN” 2022, Perez 2015 “BEACON”, Cortes 2018, O’Shaughnessy 2022 “ASCENT”). Regimen remains well tolerated with no dose limiting toxicities. This clinical data from BriaCell’s combination regimen highlights survival benefits in a cohort (3 rd line or later) with a life expectancy of merely months or weeks in some cases. Patients in this cohort had failed a median of 5 other treatments prior to enrolling in BriaCell’s study. Other reportable benefits such as less pain and better quality of life were also observed in these patients. Subsets of top-responding patients: 4 of 5 patients with Grade I/II cancer, and 6 of 8 hormone receptor positive (HR+) patients had either disease control or improved PFS suggesting potentially better responding subgroup/s of patients. These subgroups represent large segments of the advanced breast cancer patient population. Enrollment update: 9 additional patients have been screened/enrolled in the study, incremental to the 12 patients announced in December 2022. With patients continuing to enroll and remain on the treatment, more data including overall survival data will be disclosed at regular intervals. 21 Other Corporate Matters On Feb. 09, 2023 BriaCell announced the results of its annual general and special meeting of shareholders of the Company (the “Shareholders”) for the year ended July 31, 2022 held on February 9, 2023 (the “Meeting”). A total of 6,663,370 common shares of the Company (the “Common Shares”) were voted, representing 42.94% of the Company’s issued and outstanding Common Shares. At the Meeting, the Shareholders overwhelmingly voted in favor of all proposed resolutions that consisted of the following: 1. Appointment of MNP LLP as auditors of the Company for the ensuing year and authorizing the directors to fix their remuneration; 2. Election of Dr. William V. Williams, Mr. Jamieson Bondarenko, Mr. Marc Lustig, Dr. Jane A. Gross, Dr. Rebecca Taub, Mr. Vaughn C. Embro-Pantalony, and Mr. Martin E. Schmieg as directors of the Company; 3. Approval of the Company’s new omnibus equity incentive plan (the “Omnibus Plan”); 4. Ratification of restricted share units awarded under the Omnibus Plan; and 5. Approval and adoption of an amendment to the Articles of the Company to require the presence, in person or by proxy, of two or more shareholders representing at least 33 1/3% of the outstanding shares entitled to be voted in order to constitute a quorum at any meeting of shareholders, and to remove the quorum exception for succeeding meetings of shareholders. Having received Shareholder approval, the Company’s Omnibus Plan remains subject to final approval from the Toronto Stock Exchange. The formal report on voting results with respect to all matters voted upon during the Meeting will be filed on the Company’s SEDAR profile at www.sedar.com . 22 Results of Operations for the Three Months Ended January 31, 2023 and 2022 Three months ended January 31, 2023 2022 (Unaudited) (Unaudited) Operating Expenses: Research and development expenses $ 3,053,357 $ 1,708,179 General and administrative expenses 1,432,966 1,938,630 Total operating expenses 4,486,323 3,646,809 Operating loss (4,486,323 ) (3,646,809 ) Financial income (expenses), net Interest income 240,595 12,081 Change in fair value of warrant liability (7,629,502 ) 14,797,888 Gain on government grant - 3,388 Foreign exchange gain (6,532 ) (6,041 ) Total financial income (expenses), net (7,395,439 ) 14,807,316 Prodit (loss) and Comprehensive profit (loss) for the period $ (11,881,762 ) $ 11,160,507 Net loss per share – basic and diluted $ (0.77 ) $ 0.71 Weighted average number of shares used in computing net basic and diluted earnings per share of common stock 15,518,018 15,788,827 Research and Development Costs Research costs are comprised primarily of (i) salaries and wages to Company employees at our laboratory; and (ii) clinical trials and investigational drug costs, which include the testing and manufacture of our investigational drugs and costs of our clinical trials. The following is a breakdown of our research and development costs by project: Three months ended January 31, 2023 2022 Clinical trials $ 1,438,231 $ 635,195 Pre-clinical projects 745,236 599,007 Chemical, Manufacturing and Control Costs (“CMC Costs”) 331,590 178,012 Other 538,300 295,965 $ 3,053,357 $ 1,708,179 Our clinical trial expenses include our immunotherapy program, Bria-IMT™, a 46-subject Phase I/IIa clinical trial. Clinical trial expenses increased in 2023 as we recruited more patients into the Bria-IMT™ trial and began setting up the Bria-OTS™ trial. Pre-clinical projects include expenses incurred in our off-the-shelf personalized immunotherapies, including Bria-OTS+™, and Bria-PROS™. Our pre-clinical costs have increased in 2023 as we hired more staff to accelerate our existing pre-clinical program and added an addition pre-clinical program (sCD80). CMC costs include the manufacturing of Bria-IMT™ and Bria-OTS™ and all quality control and quality assurance testing on the investigational product. CMC costs increased in 2023 to support the addition patients in our trials. Other costs are ancillary expenses we incur such as costs to maintain our patents, investigation of early-stage projects, scientific advisory board expenses, contracts with vendors for pre-clinical work, and administration costs associated with all our research and development expenditure. Other costs increased in 2023 as we investigated additional potential pre-clinical projects. The following is a breakdown of our research and development costs by nature of expenses: Three months ended January 31, 2023 2022 Clinical trial sites and investigational drug costs $ 1,288,577 $ 1,022,705 Wages and salaries 1,282,441 524,108 Laboratory Rent 48,000 25,800 Supplies 207,061 20,762 Professional fees 2,187 5,351 Insurance product - - Share-based compensation 225,091 109,453 $ 3,053,357 $ 1,708,179 For the three-month period ended January 31, 2023, total research costs amounted to $3,053,357, as compared to $1,708,179 for the three-month period ended January 31, 2022. The rise in these costs is primarily attributed to the continued expansion of the Company’s clinical trials, specifically our Bria-IMT™ trial. Clinical Trials and investigational drug costs increased from $1,022,705 in 2022 to $1,288,577 in 2023. Laboratory costs increase during 2023 as well, including the hiring of additional lab employees which increased from $524,108 in 2022 to $1,282,441 in 2023 and increased supplies from $20,762 in 2022 to $207,061 in 2023. Finally, the increase in share based compensation (non-cash) expenses, from $109,453 in 2022 to $225,091 in 2023 also contributed to the increase in research and development expenses. General and Administrative Expenses For the three-month period ended January 31, 2023, general and administrative expenses amounted to $1,432,966 as compared to $1,938,630 for the three-month period ended January 31, 2022. The decrease relates primarily to decrease in share based compensation (non-cash) expense. Financial income (expenses), net For the three-month period ended January 31, 2023, financial expense, net, amounted to $7,395,439, as compared to income of $14,807,316 for the three-month period ended January 31, 2022. The large difference is due to the change in value of the Company’s warrant liability which amounted to a loss of $7,629,502 in the three-month period ending January 31, 2023, and a gain of $14,797,888 in the three-month period ending January 31, 2022. Loss for the period The Company reported a loss for the three-month period ended January 31, 2023, of $11,881,762, as compared to a gain of $11,160,507 for the three-month period ended January 31, 2022. The loss in 2023 is due to a significant increase in the fair value of the warrant liability with the addition of increased operational spending. The gain in the prior period is due to the large decrease in fair value of the warrant liability. 23 Results of Operations for the Six Months Ended January 31, 2023 and 2022 Six months ended January 31, 2023 2022 (Unaudited) (Unaudited) Operating Expenses: Research and development expenses 6,308,572 2,583,815 General and administrative expenses 3,580,902 3,347,803 Total operating expenses 9,889,474 5,931,618 Operating loss (9,889,474 ) (5,931,618 ) Interest income 428,948 18,386 Interest expense - (979 ) Change in fair value of warrant liability (3,511,712 ) (10,456,148 ) Gain of government grant - 3,388 Foreign exchange gain (16,065 ) (6,007 ) Total financial expenses, net (3,098,829 ) (10,441,360 ) Loss and Comprehensive loss for the period $ (12,988,303 ) $ (16,372,978 ) Net loss per share – basic and diluted $ (0.84 ) $ (1.05 ) Weighted average number of shares used in computing net basic and diluted earnings per share of common stock 15,518,018 15,547,497 Research and Development Costs Research costs are comprised primarily of (i) salaries and wages to Company employees at our laboratory; and (ii) Clinical trials and investigational drug costs, which include the testing and manufacture of our investigational drugs and costs of our clinical trials. The following is a breakdown of our research and development costs by project: Six months ended January 31, 2023 2022 Clinical trials $ 3,041,327 $ 960,804 Pre-clinical projects 1,608,402 906,067 CMC Costs 741,608 269,264 Other 917,235 447,679 $ 6,308,572 $ 2,583,815 Our clinical trial expenses include our immunotherapy program, Bria-IMT™, a 46-subject Phase I/IIa clinical trial. Clinical trial expenses increased in 2023 as we recruited more patients into the Bria-IMT™ trial and began setting up the Bria-OTS™ trial. Pre-clinical projects include expenses incurred in our off-the-shelf personalized immunotherapies, including Bria-OTS+™, and Bria-PROS™. Our pre-clinical costs have increased in 2023 as we hired more staff to accelerate our existing pre-clinical program and added an addition pre-clinical program (sCD80). CMC costs include the manufacturing of Bria-IMT™ and Bria-OTS™. CMC costs increased in 2023 to support the additional patients in our trials. Other costs are ancillary expenses we incur such as costs to maintain our patents, investigation of early-stage projects, scientific advisory board expenses, contracts with vendors for pre-clinical work, and administration costs associated with all our research and development expenditure. Other costs increased in 2023 as we investigated additional potential pre-clinical projects. The following is a breakdown of our research and development costs by nature of expenses: Six months ended January 31, 2023 2022 Clinical trial sites and Investigational drug costs $ 3,330,516 $ 1,497,780 Wages and salaries 1,998,985 809,648 Laboratory Rent 96,000 55,954 Supplies 300,425 80,391 Professional fees 7,299 28,933 Insurance product - 1,656 Share-based compensation 575,347 109,453 $ 6,308,572 $ 2,583,815 For the six-month period ended January 31, 2023, research costs amounted to $6,308,572, as compared to $2,583,815 for the six-month period ended January 31, 2022. The rise in these costs is primarily attributed to the continued expansion of the Company’s clinical trials, specifically our Bria-IMT™ trial. Clinical Trials and investigational drug costs increased from $1,497,780 in 2022 to $3,330,516 in 2023. Laboratory costs increase during 2023 as well, including the hiring of additional lab employees which increased from $809,648 in 2022 to $1,998,985 in 2023 and increased supplies from $80,391 in 2022 to $300,425 in 2023. Finally, the increase in share based compensation (non-cash) expenses, from $109,453 in 2022 to $575,347 in 2023 also contributed to the increase in research and development expenses. General and Administrative Expenses For the six-month period ended January 31, 2023, general and administrative expenses amounted to $3,580,902 as compared to $3,347,803 for the six-month period ended January 31, 2022. These increases relate primarily to increased insurance premiums, professional fees, and salaries. Financial income (expenses), net For the six-month period ended January 31, 2023, financial expense, net, amounted to $3,098,829, as compared to $10,441,360 for the six-month period ended January 31, 2022. The large difference is due to the change in value of the Company’s warrant liability which amounted to a loss of $3,511,712 in the six-month period ending January 31, 2023, and a loss of $10,456,148 in the six-month period ending January 31, 2022. The Company recorded $428,948 in interest income in the six-month period ending January 31, 2023, as compared to $18,386 in the six-month period ending January 31, 2022. 24 Loss for the period The Company reported a loss for the period ended January 31, 2023, of $12,988,303, as compared to $16,372,978 for the period ended January 31, 2022. The loss in 2023 is due to a significant increase in the fair value of the warrant with the addition of increased operational spending. The higher loss in the prior period is due to the larger increase in fair value of the warrant liability. Going Concern Uncertainty The financial statements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The continuing operations of the Company are dependent upon its ability to continue to raise adequate financing and to commence profitable operations in the future. As of January 31, 2023, the Company has total assets of $34,161,267 (July 31, 2022 - $42,577,041) and a positive working capital balance of $33,268,148 (July 31, 2022 -$41,405,613). The Company is planning to finance its research and developmental activities from its existing and future working capital resources and will continue to evaluate additional sources of capital and financing. The Company believes that its existing capital resources will be adequate to satisfy its expected liquidity requirements for at least twelve months from the issuance of the consolidated financial statements. Liquidity and Capital Resources As of January 31, 2023, the Company has working capital of $33,268,148 (July 31, 2022 - $41,405,613) and an accumulated deficit of $73,338,140 (July 31, 2022 - $60,349,837). As of January 31, 2023, the Company’s capital resources consist primarily of cash and cash equivalents, comprising mostly of cash on deposit with banks, investments in money market funds, investments in U.S. government securities, U.S. government agency securities, and investment grade corporate debt securities. Our investment policy and strategy are focused on preservation of capital and supporting our liquidity requirements. Historically, the Company has financed its operation through private and public placement of equity securities, as well as debt financing. The Company’s ability to fund its longer-term cash requirements is subject to multiple risks, many of which are beyond its control. The Company intends to raise additional capital, either through debt or equity financings in order to achieve its business plan objectives. Management believes that it can be successful in obtaining additional capital; however, there can be no assurance that the Company will be able to do so. There is no assurance that any funds raised will be sufficient to enable the Company to attain profitable operations or continue as a going concern. To the extent that the Company is unsuccessful, the Company may need to curtail or cease its operations and implement a plan to extend payables or reduce overhead until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful During the six-month period ended January 31, 2023, the Company’s overall position of cash and cash equivalents decreased by $14,481,449 from the six-month period ended January 31, 2022 (including effects of foreign exchange). This decrease in cash can be attributed to the following: The Company’s net cash used in operating activities during the six-month period ended January 31, 2023, was $7,494,122, as compared to $4,334,808 for the six-month period ended January 31, 2022. Cash used in financing activities for the six-month period ended January 31, 2023, was $47,294, as compared to $4,952,192 for the six-month period ended January 31, 2022. 25 Off-Balance Sheet Arrangements None. Tabular Disclosure of Contractual Obligations None. Critical Accounting Policies and Estimates There have been no material changes to our critical accounting policies and estimates from the information provided in the MD&A section in our Annual Report. New Accounting Policies Adopted The Company did not adopt any new accounting policies during the six-month period ended January 31, 2023.