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. and Japanese patents to SV-BR-1-GM (“Bria-IMT™”), a whole-cell targeted immunotherapy for cancer (U.S. Patent No. 7,674,456, U.S. Patent No. 11,559,574 B2, Japanese Patent No. 6901505), 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 II clinical trial with Bria-IMT™ in combination with an immune checkpoint inhibitor. 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 and principal scientific advisor. Encouraging results were obtained, especially in a patient who matched Bria-IMT™ at HLA-DR 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 and the first patient dosing in the “combination therapy” clinical trial occurred in 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 completed Phase I and Phase II is ongoing. Bria-IMT™ has obtained Fast Track designation from the U.S. Food and Drug Administration, or FDA, and is progressing to a pivotal study in advanced breast cancer patients following an end of phase II meeting with the FDA with agreement on the primary endpoint. BriaCell is also developing Bria-OTS™, an off-the-shelf personalized approach to whole cell cancer immunotherapy. 16 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, or 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 U.S. Patent Number 8,956,619 B2, U.S. Patent Number 9,650,429 B2, and U.S. Patent Number 10,377,810 B2. In animal models, sCD80 was well-tolerated and stopped tumor growth by potentially restoring natural anti-tumor immunity. 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. 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. 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. 17 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. Researchers also noted that: ● 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. Similarly positive data was presented at the San Antonio Breast Cancer meeting in December 2022. Briefly, ● Positive clinical data reported included tumor shrinkage, disease control, progression free survival, and potential long term survival benefit in advanced metastatic breast cancer patients treated with the Bria-IMT™ combination regimen. ● “Better quality of life” and “less pain” were reported by many gravely ill advanced metastatic breast cancer patients treated with the Bria-IMT™ combination regimen. ● Notably, many patients remained in our study longer than other prior therapies, suggesting excellent tolerability and clinical effectiveness of the Bria-IMT™ combination regimen. ● Treatment remained well-tolerated with no dose-limiting toxicities. 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 at the SITC meeting in November 2022 highlighted 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. 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. 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 our personalized off-the-shelf cell-based immunotherapy for cancer. The patent was issued on January 24, 2023 as US Patent No. 11,559,574, with a term extending to May 25, 2040. Additionally, BriaCell was awarded an Australian patent (Patent No. 2017224232, valid until February 27, 2037) covering composition of matter and method of use for its whole-cell cancer immunotherapy technology in Australia. 18 US Patent No. 11,559,574, titled “Whole-cell cancer vaccines and methods for selection thereof,” was issued 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). On November 24, 2022, 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 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 The 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 the FDA’s requirements, BriaCell expects to initiate the Bria-OTS™ study under an Investigational New Drug Application (IND) in the second 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 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 study will enroll 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. 19 Updated Clinical Data On February 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, sharing that: ● The regimen remains well tolerated with no dose limiting toxicities. ● 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 benefits, including survival and delayed cancer progression in this very difficult to treat patient population. The 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 (Cortes J, et al. Annals of Oncology 2018; O’Shaughnessy J et al. Breast Cancer Res Treat. 2022; Tripathy D, et al. JAMA Oncol. 2022). 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. There were also identified subsets of top-responding patients, This included 4 of 5 patients with Grade I/II cancer, and 6 of 8 patients with hormone receptor positive (HR+) cancer who had either disease control or improved progression free survival compared to their last therapy, suggesting these may represent potentially better responding subgroup/s of patients. These subgroups represent large segments of the advanced breast cancer patient population. On January 24, 2023, Dr. William V. Williams, BriaCell’s CEO, issued a letter to shareholders, sharing that positive FDA feedback on our pivotal study from the end of Phase II meeting for lead clinical candidate Bria-IMT™ in combination with a checkpoint inhibitor could greatly accelerate the path to commercialization. Successful completion of the pivotal study could be followed by a Biologics License Application submission and commercialization. The pivotal study’s primary endpoint is to be linked to survival improvement compared to treatment of physician’s choice. On March 15, 2023, BriaCell announced that it would present four posters at the American Association for Cancer Research (AACR) 2023 Annual Meeting. On April 17, 2023, the data presented at the AACR meeting was announced. This included positive data demonstrating survival and clinical benefits in advanced metastatic breast cancer: ● 15 of 18 patients remained alive of those recruited since the study reopened in 2021. ● Longer than expected patient survival data highlights tolerability and clinical effectiveness of BriaCell’s combination treatment. ● The Bria-IMT ™ combination regimen activated the immune system even in anergic patients with very weak immune systems. ● Continued positive clinical data suggests more meaningful survival and clinical benefits in advanced metastatic breast cancer. 20 Results of Operations for the Three Months Ended April 30, 2023, and 2022 Three months ended April 30, 2023 2022 (Unaudited) (Unaudited) Operating Expenses: Research and development expenses $ 3,860,568 $ 2,268,805 General and administrative expenses 1,816,461 1,854,455 Total operating expenses 5,677,029 4,123,260 Operating loss (5,677,029 ) (4,123,260 ) Financial income (expenses), net Interest income 253,489 35,987 Change in fair value of warrant liability 539,427 (5,928,528 ) Foreign exchange gain (11,323 ) 228 Total financial income (expenses), net 781,593 (5,892,313 ) Loss and Comprehensive loss for the period $ (4,895,436 ) $ (10,015,573 ) Net loss per share – basic and diluted $ (0.32 ) $ (0.65 ) Weighted average number of shares used in computing net basic and diluted earnings per share of common stock 15,518,072 15,358,947 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 April 30, 2023 2022 Clinical trials $ 1,617,172 $ 1,400,942 Pre-clinical projects 901,800 387,952 Chemical, Manufacturing and Control Costs (“CMC Costs”) 674,591 220,514 Other 667,006 259,397 $ 3,860,568 $ 2,268,805 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 additional 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 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. 21 The following is a breakdown of our research and development costs by nature of expenses: Three months ended April 30, 2023 2022 Clinical trial sites and investigational drug costs $ 2,469,105 $ 1,364,090 Wages and salaries 947,509 580,506 Laboratory Rent 49,440 34,400 Supplies 155,079 131,605 Share-based compensation 239,435 158,204 $ 3,860,568 $ 2,268,805 For the three-month period ended April 30, 2023, research costs totaled $3,860,568, compared to $2,268,805 for the same period in 2022. The increase primarily resulted from the expansion of the Company’s Bria-IMT™ trial and higher clinical trials and investigational drug costs, which rose from $1,364,090 in 2022 to $2,469,105 in 2023. Laboratory costs also increased due to the hiring of additional employees and higher supplies, growing from $580,506 to $947,509 and $131,605 to $155,079, respectively. Additionally, non-cash share-based compensation expenses rose from $158,204 in 2022 to $239,435 in 2023, contributing to the overall increase in research and development expenses. General and Administrative Expenses For the three-month period ended April 30, 2023, general and administrative expenses totaled $1,816,461, compared to $1,854,455 for the same period in 2022. The decrease is primarily attributed to a reduction in non-cash share-based compensation expenses, which declined from $705,423 in 2022 to $41,754 in 2023. Financial income (expenses), net For the three-month period ended April 30, 2023, financial income, net, amounted to $781,593, as compared to a loss of $5,892,313 for the three-month period ended April 30, 2022. The large difference is due to the change in value of the Company’s warrant liability which amounted to a gain of $539,427 in the three-month period ended April 30, 2023, and a loss of $5,928,528 in the three-month period ended April 30, 2022. Loss for the period For the three-month period ended April 30, 2023, the Company reported a loss of $4,895,436, compared to a loss of $10,015,573 for the same period in 2022. The loss in 2023 primarily resulted from increased operational spending, partially offset by a small gain due to the decrease in fair value of the warrant liability. In contrast, the significant loss in the prior period was primarily due to a large change in the value of the Company’s warrant liability. Results of Operations for the Nine Months Ended April 30, 2023 and 2022 Nine months ended April 30, 2023 2022 (Unaudited) (Unaudited) Operating Expenses: Research and development expenses 10,169,140 4,852,620 General and administrative expenses 5,397,363 5,202,258 Total operating expenses 15,566,503 10,054,878 Operating loss (15,566,503 ) (10,054,878 ) Interest income 682,437 54,373 Interest expense - (979 ) Change in fair value of warrant liability (2,972,285 ) (16,384,676 ) Gain of government grant - 3,388 Foreign exchange loss (27,388 ) (5,779 ) Total financial expenses, net (2,317,236 ) (16,333,673 ) Loss and Comprehensive loss for the period $ (17,883,739 ) $ (26,388,551 ) Net loss per share – basic and diluted $ (1.15 ) $ (1.70 ) Weighted average number of shares used in computing net basic and diluted earnings per share of common stock 15,518,036 15,486,028 22 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: Nine months ended April 30, 2023 2022 Clinical trials $ 4,656,919 $ 2,996,397 Pre-clinical projects 2,513,141 829,768 CMC Costs 1,416,198 471,645 Other 1,582,882 554,809 $ 10,169,140 $ 4,852,620 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 additional 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: Nine months ended April 30, 2023 2022 Clinical trial sites and Investigational drug costs $ 5,799,621 $ 2,861,870 Wages and salaries 2,946,494 1,390,154 Laboratory Rent 145,440 90,354 Supplies 455,504 211,996 Professional fees 7,299 30,589 Share-based compensation 814,782 267,657 $ 10,169,140 $ 4,852,620 For the nine-month period ended April 30, 2023, research costs amounted to $10,169,140, compared to $4,852,620 for the nine-month period ended April 30, 2022. The increase in research costs is primarily attributed to the continued expansion of the Company’s clinical trials, specifically the Bria-IMT™ trial. Clinical trials and investigational drug costs rose from $2,861,870 in 2022 to $5,799,621 in 2023, reflecting a substantial increase. Laboratory costs also experienced growth during 2023, including the addition of new lab personnel, resulting in an increase from $1,390,154 in 2022 to $2,946,494 in 2023. Furthermore, supplies expenses rose from $211,996 in 2022 to $455,504 in 2023. Finally, the increase in share-based compensation (non-cash) expenses contributed to the overall rise in research and development expenses, with expenses increasing from $267,657 in 2022 to $814,782 in 2023. 23 General and Administrative Expenses For the nine-month period ended April 30, 2023, general and administrative expenses amounted to $5,397,363, compared to $5,202,258 for the nine-month period ended April 30, 2022. The increase in general and administrative expenses primarily stems from higher insurance premiums, professional fees, and salaries, offset by a decrease in share-based compensation expenses. Financial income (expenses), net For the nine-month period ended April 30, 2023, financial expense, net, amounted to $2,317,236, in contrast to $16,333,673 for the nine-month period ended April 30, 2022. The substantial variance primarily arises from the fluctuation in the value of the Company’s warrant liability, resulting in a loss of $2,972,285 in the nine-month period ended April 30, 2023, and a loss of $16,384,676 in the nine-month period ended April 30, 2022. Additionally, interest income recorded for the nine-month period ended April 30, 2023, amounted to $682,437, compared to $54,373 for the nine-month period ended April 30, 2022. Loss for the period The Company recorded a loss of $17,883,739 for the period ended April 30, 2023, compared to a loss of $26,388,551 for the period ended April 30, 2022. The loss in 2023 primarily stems from a substantial increase in the fair value of the warrant, along with higher operational spending. Conversely, the higher loss in the prior period can be attributed to a larger increase in the fair value of the warrant liability. These factors account for the variance in the reported losses between the two periods, highlighting the impact of changes in warrant valuation and operational spending on the Company’s financial performance. Going Concern Uncertainty The Company continues to devote substantially all of its efforts toward research and development activities. In the course of such activities, the Company has sustained operating losses and expects such losses to continue in the foreseeable future. The Company’s accumulated deficit as of April 30, 2023, was $78,233,576 and negative cash flows from operating activities during the nine-month period ended April 30, 2023 was $12,825,853. The Company is planning to finance its operations from its existing and future working capital resources and to 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 condensed consolidated financial statements. As of April 30, 2023, the Company has total assets of $29,721,868 (July 31, 2022 - $42,577,041) and a positive working capital balance of $28,119,886 (July 31, 2022 -$41,405,613). Liquidity and Capital Resources As of April 30, 2023, the Company has working capital of $29,119,886 (July 31, 2022 - $41,405,613) and an accumulated deficit of $78,233,576 (July 31, 2022 - $60,349,837). As of April 30, 2023, the Company’s capital resources consist primarily of cash and cash equivalents, comprised 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. 24 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 nine-month period ended April 30, 2023, the Company’s overall position of cash and cash equivalents decreased by $12,871,553 from the nine-month period ended April 30, 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 nine-month period ended April 30, 2023, was $12,825,853, as compared to $9,158,647 for the nine-month period ended April 30, 2022. Cash used in financing activities for the nine-month period ended April 30, 2023, was $45,700, as compared to $3,582,874 for the nine-month period ended April 30, 2022. 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 three and nine-month periods ended April 30, 2023.