BriaCell Therapeutics Corp. 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 31, 2024 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 001-40101 BRIACELL THERAPEUTICS CORP. (Exact name of registrant as specified in its charter) British Columbia, Canada 47-1099599 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 235 15 th Street , Suite 300 , West Vancouver , BC , V7T 2X1 (Address of Principal Executive Offices, including zip code) 604 - 921-1810 (Registrant’s telephone number, including area code) N/A (Former name, former address and former fiscal year, if changed since last report) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol Name of each exchange on which registered Common shares, no par value BCTX The Nasdaq Stock Market LLC Warrants to purchase common shares, no par value BCTXW The Nasdaq Stock Market LLC Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ☐ Large accelerated filer ☐Accelerated filer ☒ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☒ No ☐ As of March 18, 2024, there were 15,981,726 common shares, no par value per share, of the Company issued and outstanding. BRIACELL THERAPEUTICS CORP. Form 10-Q Table of Contents Page Part I. Financial Information 3 Item 1. Financial Statements 3 Condensed Consolidated Balance Sheets as of January 31, 2024 (unaudited) and July 31, 2023 (unaudited) 3 Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months ended January 31, 2024 4 Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Three and Six Months ended January 31, 2024 5 Unaudited Condensed Consolidated Statement of Cash Flows for the Six Months ended January 31, 2024 6 Notes to Unaudited Condensed Consolidated Financial Statements 7 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 16 Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk 22 Item 4. Controls and Procedures 23 Part II. Other Information 24 Item 1. Legal Proceedings 24 Item 1A. Risk Factors 24 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 24 Item 3. Defaults Upon Senior Securities 24 Item 4. Mine Safety Disclosures 24 Item 5. Other Information 24 Item 6. Exhibits 24 Signatures 25 2 PART I-FINANCIAL INFORMATION Item 1. Financial Statements BRIACELL THERAPEUTICS CORP. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS January 31, 2024 July 31, 2023 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 6,244,528 $ 21,251,092 Amounts receivable 30,145 18,873 Prepaid expenses 5,467,286 5,678,542 Total current assets 11,741,959 26,948,507 NON-CURRENT ASSETS: Investments 2 2 Equity investment in BC Therapeutics 281,655 - Intangible assets, net 207,431 215,068 Total non-current assets 489,088 215,070 Total assets $ 12,231,047 $ 27,163,577 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES: Trade payables $ 3,711,455 $ 1,123,739 Accrued expenses and other payables 212,870 677,718 Total current liabilities 3,924,325 1,801,457 NON-CURRENT LIABILITIES: Warrant liability 16,624,177 29,139,301 Total non-current liabilities 16,624,177 29,139,301 SHAREHOLDERS’ DEFICIT: Share Capital of no par value - Authorized: unlimited at January 31, 2024 and July 31, 2023, Issued and outstanding: 15,981,726 shares January 31, 2024 and July 31, 2023, respectively 69,591,784 69,591,784 Share-based payment reserve 8,419,154 7,421,950 Accumulated other comprehensive loss ( 138,684 ) ( 138,684 ) Non-controlling Interest ( 244,418 ) - Accumulated deficit ( 85,945,291 ) ( 80,652,231 ) Total shareholders’ deficit ( 8,317,455 ) ( 3,777,181 ) Total liabilities and shareholders’ deficit $ 12,231,047 $ 27,163,577 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 BRIACELL THERAPEUTICS CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE THREE AND SIX MONTHS ENDED JANUARY 31, 2024 (Unaudited) 2024 2023 2024 2023 Three months ended January 31, Six months ended January 31, 2024 2023 2024 2023 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Operating Expenses: Research and development expenses $ 8,257,455 $ 3,053,357 $ 15,114,712 $ 6,308,572 General and administrative expenses 1,571,991 1,432,966 3,217,762 3,580,902 Total operating expenses 9,829,446 4,486,323 18,332,474 9,889,474 Operating loss ( 9,829,446 ) ( 4,486,323 ) ( 18,332,474 ) ( 9,889,474 ) Financial expenses, net ( 1,486,119 ) ( 7,395,439 ) 12,975,781 ( 3,098,829 ) Share of loss on equity investment ( 18,345 ) - ( 18,345 ) - Net loss for the period $ ( 11,333,910 ) $ ( 11,881,762 ) $ ( 5,375,038 ) ( 12,988,303 ) Net loss attributable to non-controlling interest ( 39,307 ) - ( 81,978 ) - Net loss and Comprehensive loss for the period attributable to BriaCell ( 11,294,603 ) ( 11,881,762 ) ( 5,293,060 ) ( 12,988,303 ) Net loss per share attributable to BriaCell – basic and diluted $ ( 0.71 ) $ ( 0.77 ) $ ( 0.33 ) $ ( 0.84 ) Weighted average number of shares used in computing net basic earnings per share of common stock 15,981,726 15,518,018 15,981,726 15,518,018 Weighted average number of shares used in computing net diluted earnings per share of common stock 15,981,726 15,518,018 15,981,726 15,518,018 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 BRIACELL THERAPEUTICS CORP. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT) (Unaudited) FOR THE THREE AND SIX MONTHS ENDED JANUARY 31, 2024 Number Amount capital loss deficit interest (deficit) Share capital Additional paid in Accumulated other comprehensive Accumulated Non- controlling Total shareholders’ equity Number Amount capital loss deficit interest (deficit) Balance, October 31, 2023 15,981,726 $ 69,591,784 $ 7,918,999 $ ( 138,684 ) $ ( 74,650,688 ) $ ( 205,111 ) $ 2,516,300 Issuance of options - - 500,155 - - - 500,155 Loss for the period - - - - ( 11,294,603 ) ( 39,307 ) ( 11,333,910 ) Balance, January 31, 2024 15,981,726 $ 69,591,784 $ 8,419,154 $ ( 138,684 ) $ ( 85,945,291 ) $ ( 244,418 ) $ ( 8,317,455 ) Share capital Additional paid in Accumulated other comprehensive Accumulated Non- controlling Total shareholders’ Number Amount capital loss deficit interest deficit Balance, July 31, 2023 15,981,726 $ 69,591,784 $ 7,421,950 $ ( 138,684 ) $ ( 80,652,231 ) - $ ( 3,777,181 ) Instruments issued to minority shareholders at the Arrangement Date - - ( 36,767 ) - - ( 162,440 ) ( 199,207 ) Issuance of options - - 1,033,971 - - - 1,033,971 Loss for the period - - - - ( 5,293,060 ) ( 81,978 ) ( 5,375,038 ) Balance, January 31, 2024 15,981,726 $ 69,591,784 $ 8,419,154 $ ( 138,684 ) $ ( 85,945,291 ) $ ( 244,418 ) $ ( 8,317,455 ) Number Amount capital loss deficit (deficit) Share capital Additional paid in Accumulated other comprehensive Accumulated Total shareholders’ equity Number Amount capital loss deficit (deficit) Balance, October 31, 2022 15,518,018 $ 65,589,293 $ 6,340,101 $ ( 138,684 ) $ ( 61,456,378 ) $ 10,334,332 Issuance of options - - 266,844 - - 266,844 Loss for the period - - - - ( 11,881,762 ) ( 11,881,762 ) Balance, January 31, 2023 15,518,018 $ 65,589,293 $ 6,606,945 $ ( 138,684 ) $ ( 73,338,140 ) $ ( 1,280,586 ) Share capital Additional paid in Accumulated other comprehensive Accumulated Total shareholders’ equity Number Amount capital loss deficit (deficit) Balance, July 31, 2022 15,518,018 $ 65,589,293 $ 5,228,160 $ ( 138,684 ) $ ( 60,349,837 ) $ 10,328,932 Balance 15,518,018 $ 65,589,293 $ 5,228,160 $ ( 138,684 ) $ ( 60,349,837 ) $ 10,328,932 Issuance of options - - 1,378,785 - - 1,378,785 Loss for the period - - - - ( 12,988,303 ) ( 12,988,303 ) Income (loss) for the period - - - - ( 12,988,303 ) ( 12,988,303 ) Balance, January 31, 2023 15,518,018 $ 65,589,293 $ 6,606,945 $ ( 138,684 ) $ ( 73,338,140 ) $ ( 1,280,586 ) Balance 15,518,018 $ 65,589,293 $ 6,606,945 $ ( 138,684 ) $ ( 73,338,140 ) $ ( 1,280,586 ) The accompanying notes are an integral part of the condensed consolidated financial statements. 5 BRIACELL THERAPEUTICS CORP. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JANUARY 31, 2024 (Unaudited) 2024 2023 Six months ended January 31, 2024 2023 Cash flow from operating activities Net loss $ ( 5,375,038 ) $ ( 12,988,303 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 7,637 7,635 Share-based compensation 1,033,971 1,378,785 Share of loss on equity investment 18,345 - Change in fair value of warrants ( 12,714,331 ) 3,511,712 Changes in assets and liabilities: Increase in amounts receivable ( 11,272 ) 15,175 Decrease in prepaid expenses ( 88,744 ) 851,548 Increase in trade payable 2,587,716 119,171 Decrease in accrued expenses and other payables ( 464,848 ) ( 389,845 ) Total cash flow from operating activities ( 15,006,564 ) ( 7,494,122 ) Cash flows from investing activities Equity Investment in BC Therapeutics ( * ) - - Total cash flow from investing activities - - Cash flows from financing activities Share and warrant buyback program - ( 47,294 ) Total cash flow from financing activities - ( 47,294 ) Decrease in cash and cash equivalents ( 15,006,564 ) ( 7,541,416 ) Cash and cash equivalents at beginning of the period 21,251,092 41,041,652 Cash and cash equivalents at end of the period $ 6,244,528 $ 33,500,236 (*) $ 125,000 of this amount was loaned to BC Therapeutics during the year ended July 31, 2023 and an additional $ 175,000 was loaned to BC Therapeutics between August 1, 2023 and December 20, 2023. The total amount ($ 300,000 ) was converted into an investment). The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 6 BriaCell Therapeutics Corp Notes to the Condensed Consolidated Financial Statements (Unaudited, expressed in US Dollars, except share and per share data and unless otherwise indicated) NOTE 1: GENERAL AND GOING CONCERN a. BriaCell Therapeutics Corp. (“BriaCell” or the “Company”) was incorporated under the Business Corporations Act (British Columbia) on July 26, 2006 and is listed on the Toronto Stock Exchange (“TSX”) under the symbol “BCT” and on the Nasdaq Capital Market (“NASDAQ”) under the symbols “BCTX” and “BCTXW”. b. BriaCell Therapeutics Corporation. (the “Company”), is an immuno-oncology biotechnology company. The Company is currently advancing its Bria-IMT targeted immunotherapy program against end-stage breast cancer to Phase 3 study which has been approved by the FDA and is expected to start before end of 2023. BriaCell is also developing a personalized off-the-shelf immunotherapy, Bria-OTS™, and a soluble CD80 protein therapeutic which acts both as a stimulator of the immune system as well as an immune checkpoint inhibitor. c. Basis of presentation of the financial statements: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X promulgated by the U.S Securities and Exchange Commission (the “SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments consisting of a normal recurring nature which are necessary for a fair presentation of the financial position, operating results, and cash flows for the periods presented. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report for the year ended July 31, 2023, filed with the SEC on October 25, 2023. The interim period results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. d. 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 January 31, 2024 was $ 85,945,291 and negative cash flows from operating activities during the six-month period ended January 31, 2024 was $ 15,006,564 . 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’s ability to continue as a going concern is dependent upon its ability to attain future profitable operations and to obtain the necessary financing to meet its obligations arising from normal business operations when they come due. The uncertainty of the Company’s ability to raise such financial capital casts significant doubt on the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that might be necessary should the Company not be able to continue as a going concern. 7 BriaCell Therapeutics Corp Notes to the Condensed Consolidated Financial Statements (Unaudited, expressed in US Dollars, except share and per share data and unless otherwise indicated) NOTE 1: GENERAL AND GOING CONCERN (Cont.) e. The Company has two wholly-owned U.S. subsidiaries: (i) BriaCell Therapeutics Corp. (“BTC”), which was incorporated in April 3, 2014, under the laws of the state of Delaware. (ii) BTC has a wholly-owned subsidiary, Sapientia Pharmaceuticals, Inc. (“Sapientia”), which was incorporated in September 20, 2012, under the laws of the state of Delaware. The Company also has one Canadian subsidiary: BriaPro Therapeutics Corp, (“BriaPro”) which was incorporated on May 15, 2023, was incorporated under the Business Corporations Act (British Columbia). As of July 31, 2023, BriaPro was a wholly-owned subsidiary. f. On August 31, 2023, the Company closed a plan of arrangement spinout transaction (the “Arrangement”) pursuant to which certain pipeline assets of the Company, including Bria-TILsRx™ and protein kinase C delta (PKCδ) inhibitors for multiple indications including cancer (the “BriaPro Assets”), were spun-out to BriaPro Therapeutics Corp. (“BriaPro”), resulting in a 2/3rd owned subsidiary of the Company with the remaining 1/3rd held by BriaCell shareholders (“BriaCell Shareholders”). Pursuant to the terms of the Arrangement, BriaPro has acquired the entire right and interest in and to the BriaPro Assets in consideration for the issuance by BriaPro to the Company of BriaPro common shares. Under the terms of the Arrangement, for each BriaCell share held immediately prior to closing, BriaCell Shareholders receive one (1) common share of BriaPro, and one (1) new common share of BriaCell (retiring their old share) having the same terms and characteristics as the existing BriaCell common shares. The Company will remain listed on the NASDAQ Stock Market and Toronto Stock Exchange, and BriaPro is an unlisted reporting issuer in Canada. Immediately following the closing of the Arrangement, the Company controls 2/3rd of the BriaPro common shares representing approximately 66.6 % of the issued and outstanding common shares of BriaPro. As a result of the Arrangement, there are 47,945,178 BriaPro common shares issued and outstanding. The Company now beneficially owns or controls approximately 31,963,452 BriaPro common shares, representing 2/3rd of the issued and outstanding BriaPro common shares. Pursuant to the Arrangement, each BriaCell warrant shall, in accordance with its terms, entitle the holder thereof to receive, upon the exercise thereof, one BriaCell Share and one BriaPro Share for the original exercise price. Upon the exercise of BriaCell Warrants, BriaCell shall, as agent for BriaPro, collect and pay to BriaPro an amount for each one (1) BriaPro Share so issued that is equal to the exercise price under the BriaCell Warrant multiplied by the fair market value of one (1) BriaPro Share at the Effective Date divided by the total fair market value of one (1) BriaCell Share and one (1) BriaPro Share at the Effective Date (“BriaPro Warrant Shares”). Pursuant to the Arrangement, all Briacell option holders received the same amount of BriaPro options (“BriaPro Option”) and under the BriaPro incentive plan. The exercise price of the BriaCell options was apportioned between the BriaCell options and the BriaPro options, as follows: Each one (1) BriaPro Option to acquire one (1) Share shall have an exercise price equal to the product obtained by multiplying the original exercise price of the BriaCell Option by the quotient obtained by dividing (A) the fair market value of a BriaPro Share at the Effective Date by (B) the aggregate fair market value of a BriaCell Share and a BriaPro Share at the Effective Date. Pursuant to the Arrangement, all BriaCell Restricted Shares Units (“RSU”) holders received the same amount of BriaPro RSU’s under the BriaPro incentive plan. Transition Services Agreement On August 31, 2023, the Company and BriaPro executed a transition services agreement (the “Agreement”), pursuant to which BriaCell will provide certain research and development and head office services (the “Services”) to BriaPro for a fixed monthly fee of $ 20,000 . Briacell and BriaPro acknowledged the transitional nature of the Services and accordingly, as promptly as practicable, BriaPro agreed to use commercially reasonable efforts to transition each Service to its own internal organization or to obtain alternate third party providers to provide the Services. In accordance with US GAAP’s Accounting Standards Codification 505 “Equity”, the Arrangement was determined to be a spinoff of nonmonetary assets which did not constitute a business. However, since the assets were transferred to an entity under the Company’s control, the assets is being recorded on the Company’s basis (carry value) and not at fair market value. 8 BriaCell Therapeutics Corp Notes to the Condensed Consolidated Financial Statements (Unaudited, expressed in US Dollars, except share and per share data and unless otherwise indicated) NOTE 2: SIGNIFICANT ACCOUNTING POLICIES a. Use of estimates : The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company’s management believes that the estimates, judgment and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities at the dates of the consolidated financial statements, and the reported amount of expenses during the reporting periods. Actual results could differ from those estimates. b. Equity method investments : Investments in entities over which the Company does not have a controlling financial interest but has significant influence, are accounted for using the equity method, with the Company’s share of losses reported in loss from equity method investments on the statements of loss and comprehensive loss. Equity method investments are recorded at cost, plus the Company’s share of undistributed earnings or losses, and impairment, if any, within interest in equity investees on the statements of financial position. c. Recently issued and adopted accounting standards : As an “emerging growth company,” the Jumpstart Our Business Startups Act (“JOBS Act”) allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. The Company has elected to use this extended transition period under the JOBS Act. The adoption dates discussed below reflects this election. The pronouncements below relate to standards that impact the Company. 1. In March 2022, the FASB issued ASU 2022-02 - Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. This standard eliminates the accounting guidance on TDRs for creditors in ASC 310-40 and amends the guidance on “vintage disclosures” to require disclosure of current period gross write-offs by year of origination. The ASU also updates the requirements related to accounting for credit losses under ASC 326 and adds enhanced disclosures for creditors with respect to loan refinancings and restructurings for borrowers experiencing financial difficulty. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, for any entities that have adopted ASU 2016-13 - Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The adoption of this standard did not result in amended disclosures in the Company’s Condensed Consolidated Financial Statements, nor did this standard have a material impact the Company’s results of operations. 9 BriaCell Therapeutics Corp Notes to the Condensed Consolidated Financial Statements (Unaudited, expressed in US Dollars, except share and per share data and unless otherwise indicated) NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (Cont.) 2. In July 2023, the FASB issued 2023-03 — Presentation of Financial Statements (Topic 205), Income Statement — Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation — Stock Compensation (Topic 718): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022, EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280 — General Revision of Regulation S-X: Income or Loss Applicable to Common Stock (SEC Update). The adoption of this standard did not result in amended disclosures in the Company’s Condensed Consolidated Financial Statements, nor did this standard have a material impact the Company’s results of operations. NOTE 3: INVESTMENT IN BC THERAPEUTICS INC. On December 21, 2021, the Company and BC Therapeutics, Inc. (“BC Therapeutics” or “the Investee”) entered a share purchase agreement (“SPA”), pursuant to which the Company invested $ 300,000 at $ 1.25 per BC Therapeutics share for a 37.5 % interest in the Investee. Pursuant to the SPA, Briacell also received two options to invest an additional $ 225,000 per option at $ 1.25 per BC Therapeutics share. The first option expires on February 15, 2024 and the second option expires on June 30, 2024 (“BC Therapeutics Options”). In accordance with ASC 321 and ASC 815, the BC Therapeutics Options were valued at $ 76,350 in accordance with the Black Scholes Option Price Model, using the following assumptions: Share price: $ 1.25 , Exercise price: $ 1.25 , Dividend yield: 0 %, Risk free interest rate: $ 4.902 %, Volatility: 100 %. Subsequent to January 31, 2024, the Company exercised the first option on February 1, 2024 and now holds 51 % of BC Therapeutics. BC Therapeutics has a board of four representatives, with two representatives appointed by BriaCell and two representatives appointed by the existing shareholders. All significant decisions related to BC Therapeutics require the approval of at least a majority of the board members. Changes in the Company’s Investment in BC Therapeutics is summarized as follows: SCHEDULE OF CHANGES IN INVESTMENT Balance – August 1, 2023 $ - Funding (including the value of the BC Therapeutics Options) 300,000 Share of losses: Operating expenses ( 18,345 ) Balance – January 1, 2024 $ 281,655 The following amounts represent the Company’s 37.5 % share of the assets and liabilities of BC Therapeutics: SCHEDULE OF ASSETS AND LIABILITIES OF BC THERAPEUTICS As of January 31, 2024 Current assets: Cash $ 4,196 Net assets $ 4,196 NOTE 4: CONTINGENT LIABILITIES AND COMMITMENTS a. BriaPro Warrants As detailed in note 1(f), upon the exercise of BriaCell Warrants, BriaCell shall, as agent for BriaPro, collect and pay to BriaPro an amount of up to $ 241,164 . b. Lease The Company is currently in a 12 -month commitment (ending August 31, 2024 ) for office and lab space in Philadelphia, PA, costing the company approximately $ 36,000 per month. 10 BriaCell Therapeutics Corp Notes to the Condensed Consolidated Financial Statements (Unaudited, expressed in US Dollars, except share and per share data and unless otherwise indicated) NOTE 5: FAIR VALUE MEASUREMENTS The following table presents information about our financial instruments that are measured at fair value on a recurring basis as of January 31, 2024, and July 31, 2023: SCHEDULE OF FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE ON A RECURRING BASIS Fair Value Measurements at January 31, 2024 July 31, 2023 Level 1 Level 2 Total Level 1 Level 2 Total Financial Assets: Cash and cash equivalents 6,244,528 - 6,244,528 21,251,092 - 21,251,092 Total assets measured at fair value $ 6,244,528 $ - $ 6,244,528 $ 21,251,092 $ - $ 21,251,092 Financial liabilities: Warrants liability 6,936,320 9,687,857 16,624,177 9,742,023 19,397,278 29,139,301 Total liabilities measured at fair value $ 6,936,320 $ 9,687,857 $ 16,624,177 $ 9,742,023 $ 19,397,278 $ 29,139,301 The Company classifies its cash and cash equivalents and the liability in respect of publicly traded warrants within Level 1 because we use quoted market prices in active markets. The fair value of the warrant liability for non-public warrants is measured using inputs other than quoted prices included in Level 1 that are observable for the liability either directly or indirectly, and thus are classified as Level 2 financial instruments. NOTE 6: SHAREHOLDERS’ EQUITY a. Authorized share capital The authorized share capital consists of an unlimited number of common shares with no par value. b. Issued share capital No shares were issued during the six-month period ended January 31, 2024. c. Share Purchase Warrants SUMMARY OF CHANGES IN WARRANTS (i) There were no changes in share purchase warrants for the six-month period ended January 31, 2024 as presented below: Number of warrants outstanding Weighted average exercise price Balance, July 31, 2023 and January 31, 2024 8,121,650 $ 5.76 SCHEDULE OF WARRANTS OUTSTANDING (ii) As of January 31, 2024, warrants outstanding were as follows: Number of Warrants Exercise Price(*) Exercisable At January 31, 2024 Expiry Date 51,698 $ 3.91 51,698 November 16, 2025 3,896,809 $ 5.31 3,896,809 February 26, 2026 – April 26, 2026 4,173,143 $ 6.19 4,173,143 December 7, 2026 8,121,650 8,121,650 (*) See note 4(a). 11 BriaCell Therapeutics Corp Notes to the Condensed Consolidated Financial Statements (Unaudited, expressed in US Dollars, except share and per share data and unless otherwise indicated) NOTE 6: SHAREHOLDERS’ EQUITY (Cont.) d. Compensation Warrants (i) There were no changes to compensation warrants for the six-month period ended January 31, 2024. (ii) As of January 31, 2024, compensation warrants outstanding were as follows: SCHEDULE OF WARRANTS OUTSTANDING Number of Warrants Exercise Price(*) Exercisable At January 31, 2024 Expiry Date 4,890 $ 3.91 4,890 November 16, 2025 17,074 $ 5.31 17,074 February 26, 2026 24,688 $ 6.19 24,688 June 7, 2026 46,652 46,652 (*) See note 4(a). e. Warrant liability continuity The following table presents the summary of the changes in the fair value of the warrants: SCHEDULE OF CHANGE IN FAIR VALUE OF WARRANTS Warrants liability Balance as of August 1, 2023 $ 29,139,301 Fair value of BriaPro Warrant Shares at Effective Date $ 199,207 Change in fair value during the period $ ( 12,714,331 ) Balance as of January 31, 2024 $ 16,624,177 The key inputs used in the valuation of the non-public warrants as of January 31, 2024 and at July 31, 2023 were as follows: 12 BriaCell Therapeutics Corp Notes to the Condensed Consolidated Financial Statements (Unaudited, expressed in US Dollars, except share and per share data and unless otherwise indicated) NOTE 6: SHAREHOLDERS’ EQUITY (Cont.) SCHEDULE OF VALUATION OF WARRANTS January 31, 2024 July 31, 2023 Share price $ 4.12 $ 6.69 Exercise price $ 5.31 - 6.19 $ 5.31 - 6.19 Expected life (years) 1.79 - 2.85 2.58 - 3.35 Volatility 100 % 100 % Dividend yield 0 % 0 % Risk free rate 3.99 - 4.21 % 4.51 % The key inputs used in the valuation of the of the BriaPro Warrant Shares as of January 31, 2024 were as follows: SCHEDULE OF VALUATION OF WARRANTS January 31, 2024 August 31, 2023 (Effective Date) Share price $ 0.0365 $ 0.0365 Exercise price $ 0.0206 - 0.0308 $ 0.0206 - 0.0308 Expected life (years) 1.79 - 2.85 2.21 - 3.27 Volatility 100 % 100 % Dividend yield 0 % 0 % Risk free rate 3.99 - 4.00 % 4.40 % NOTE 7: SHARE-BASED COMPENSATION a. On August 2, 2022, the Company approved an omnibus equity incentive plan (“Omnibus Plan), which will permit the Company to grant incentive stock options, preferred share units, RSU, and deferred share units (collectively, the “Awards”) for the benefit of any employee, officer, director, or consultant of the Company or any subsidiary of the Company. The maximum number of shares available for issuance under the Omnibus Plan shall not exceed 15 % of the issued and outstanding Shares, from time to time, less the number of Shares reserved for issuance under all other security-based compensation arrangements of the Company, including the existing Stock Option Plan. On February 9, 2023, the Omnibus Plan was approved by the shareholders. b. The following table summarizes the number of options granted to directors, officers, employees and consultants under the option plan for six-month period ended January 31, 2023 and related information: SUMMARY OF NUMBER OF OPTIONS GRANTED Number of options Weighted average exercise price Weighted average remaining contractual term (in years) Aggregate intrinsic value Balance as of July 31, 2023 2,131,400 $ 6.19 3.55 $ 1,065,700 Balance as of January 31, 2024 2,131,400 6.18 3.05 - Exercisable as of January 31, 2024 1,797,000 $ 6.19 2.83 $ - As of January 31, 2024 there are $ 1,556,676 of total unrecognized costs related to share-based compensation that is expected to be recognized over a period of up to 1.25 years. 13 BriaCell Therapeutics Corp Notes to the Condensed Consolidated Financial Statements (Unaudited, expressed in US Dollars, except share and per share data and unless otherwise indicated) NOTE 7: SHARE-BASED COMPENSATION (Cont.) c. The following table summarizes information about the Company’s outstanding and exercisable options granted to employees as of January 31, 2024. SUMMARY OF OUTSTANDING AND EXERCISABLE OPTIONS Exercise price Options outstanding as of January 31, 2024 Weighted average remaining contractual term (years) Options exercisable as of January 31, 2024 Weighted average remaining contractual term (years) Expiry Date $ 6.03 440,000 4.39 165,000 4.39 June 20, 2028 $ 7.16 21,000 4.08 10,500 4.08 February 27, 2028 $ 6.04 180,100 3.51 135,075 3.51 August 02, 2027 $ 4.71 31,000 3.31 27,125 3.31 May 20, 2027 $ 7.51 150,000 3.04 150,000 3.04 February 16, 2027 $ 8.47 524,700 2.95 524,700 2.95 January 13, 2027 $ 7.15 12,600 2.75 12,600 2.75 November 01, 2026 $ 5.74 100,000 2.59 100,000 2.59 September 01, 2026 $ 4.24 60,000 2.22 60,000 2.22 April 19, 2026 $ 4.24 612,000 2.16 612,000 2.16 March 29, 2026 2,131,400 1,797,000 d. As result of the Arrangement, 2,131,400 BriaPro Options were issued and are outstanding as of January 31, 2024: SCHEDULE OF OPTION ISSUED AND OUTSTANDING Exercise Price Options outstanding as of January 31, 2024 Options exercisable as of January 31, 2024 Expiry Date $ 0.0933 440,000 165,000 June 20, 2028 $ 0.1108 21,000 10,500 February 27, 2028 $ 0.0984 180,100 135,075 August 02, 2027 $ 0.0729 31,000 27,125 May 20, 2027 $ 0.1162 150,000 150,000 February 16, 2027 $ 0.1310 524,700 524,700 January 13, 2027 $ 0.1165 12,600 12,600 November 01, 2026 $ 0.0888 100,000 100,000 September 01, 2026 $ 0.0656 60,000 60,000 April 19, 2026 $ 0.0656 612,000 612,000 March 29, 2026 2,131,400 1,797,000 e. Restricted Share Unit Plan The following table summarizes the number of RSU’s granted to directors under the Omnibus plan as of January 31, 2024: SUMMARY OF RESTRICTED STOCK UNITS GRANTED Number of RSU’s outstanding Aggregate intrinsic value Balance, July 31, 2023 19,200 $ 123,072 Balance, January 31, 2024 19,200 $ 79,104 14 BriaCell Therapeutics Corp Notes to the Condensed Consolidated Financial Statements (Unaudited, expressed in US Dollars, except share and per share data and unless otherwise indicated) NOTE 7: SHARE-BASED COMPENSATION (Cont.) f. The total share-based compensation expense related to all of the Company’s equity-based awards, recognized for the three and six-month period ended January 31, 2024 and 2023 is comprised as follows: SCHEDULE OF SHARE-BASED COMPENSATION EXPENSES 2024 2023 2024 2023 Three months ended January 31, Six months ended January 31, 2024 2023 2024 2023 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Research and development expenses $ 234,253 225,091 $ 492,062 575,347 General and administrative expenses 265,902 41,753 541,909 803,438 Total share-based compensation $ 500,155 266,844 $ 1,033,971 1,378,785 NOTE 8: FINANCIAL INCOME (EXPENSES), NET SCHEDULE OF FINANCIAL INCOME (EXPENSES), NET 2024 2023 2024 2023 Three months ended January 31, Six months ended January 31, 2024 2023 2024 2023 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Interest income $ 81,595 240,595 $ 272,410 428,948 Change in fair value of warrant liability ( 1,567,747 ) ( 7,629,502 ) 12,714,331 ( 3,511,712 ) Foreign exchange gain (loss) 33 ( 6,532 ) ( 10,960 ) ( 16,065 ) Financial income (expenses), net $ ( 1,486,119 ) $ ( 7,395,439 ) $ 12,975,781 $ ( 3,098,829 ) NOTE 9: SUBSEQUENT EVENT The Company evaluated the possibility of subsequent events existing in the Company’s unaudited condensed consolidated financial statements through March 18, 2024, the date that the condensed consolidated financial statements were available for issuance. The Company is not aware of any subsequent events which would require recognition or disclosure in the consolidated financial statements, except as follows: a. As disclosed in note 3, subsequent to January 31, 2024, on February 1, 2024 the Company exercised an option to acquire an additional interest in BC Therapeutics and now owns 51 %. 15 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, 2023 (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 first half and second quarter of fiscal 2024 in comparison to the first half and second quarter of fiscal 2023. ● 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 Therapeutics Corp. (the “Company”), is a clinical-stage biotechnology company that is developing novel immunotherapies to transform cancer care. Immunotherapies have come to the forefront in the fight against cancer as they harness the body’s own immune system to recognize and destroy cancer cells. The Company is currently advancing its Bria-IMT™ targeted immunotherapy in combination with an immune check point inhibitor (Retifanlimab) in a pivotal 1 Phase 3 study in advanced metastatic breast cancer. Bria-IMT™ is currently under Fast Track Designation by the U.S. FDA intended to accelerate the review process of novel treatments that address unmet medical needs. Positive completion of the pivotal study, following review by FDA, could lead to full approval of the Bria-IMT™ immune checkpoint inhibitor combination in advanced metastatic breast cancer. BriaCell reported benchmark-beating patient survival and clinical benefit in advanced metastatic breast cancer with median overall survival of 13.4 months in BriaCell’s advanced metastatic breast cancer patients vs. 6.7-9.8 months for similar patients reported in the literature in its Phase 2 study of Bria-IMT™ combination study with retifanlimab at the 2023 San Antonio Breast Cancer Symposium. A completed Bria-IMT™ Phase 1 combination study with retifanlimab (an anti-PD1 antibody manufactured by Incyte) confirmed tolerability and early-stage efficacy. BriaCell is also developing a personalized off-the-shelf immunotherapy, Bria-OTS™, which provides a platform technology to develop personalized off-the-shelf immunotherapies for numerous types of cancer, and a soluble CD80 protein therapeutic which acts both as a stimulator of the immune system as well as an immune checkpoint inhibitor. 1 “Pivotal” is an industry term referring to a Phase 3 clinical study intended to show and confirm the safety and efficacy of a treatment. 16 Recent Developments On August 31, 2023, the Company closed the previously announced plan of arrangement spinout transaction (the “Arrangement”) pursuant to which certain pipeline assets of the Company, including Bria-TILsRx™ and protein kinase C delta (PKCδ) inhibitors for multiple indications including cancer (the “BriaPro Assets”), were spun-out to BriaPro Therapeutics Corp. (“BriaPro”), resulting in a 2/3rd owned subsidiary of the Company with the remaining 1/3rd held by BriaCell shareholders (“BriaCell Shareholders”). Pursuant to the terms of the Arrangement, BriaPro has acquired the entire right and interest in and to the BriaPro Assets in consideration for the issuance by BriaPro to the Company of BriaPro common shares. Under the terms of the Arrangement, for each BriaCell share held immediately prior to closing, BriaCell Shareholders receive one (1) common share of BriaPro, and one (1) new common share of BriaCell (retiring their old share) having the same terms and characteristics as the existing BriaCell common shares. The Company will remain listed on the NASDAQ Stock Market and Toronto Stock Exchange, and BriaPro is an unlisted reporting issuer in Canada. As noted above, immediately following the closing of the Arrangement, the Company controlled 2/3rd of the BriaPro common shares representing approximately 66.6% of the issued and outstanding common shares of BriaPro As a result of the Arrangement, there were approximately 47,945,178 BriaPro common shares issued and outstanding immediately following consummation of the Arrangement. The Corporation now beneficially owns or controls approximately 31,963,452 BriaPro common shares, representing 2/3rd of the issued and outstanding BriaPro common shares. On October 3, 2023, BriaCell initiated its pivotal Phase 3 Study of Bria-IMT™ in advanced metastatic breast Cancer. The study will evaluate the efficacy and safety of the Bria-IMT™ combination regimen with an immune check point inhibitor (Retifanlimab) in patients who have failed at least two approved therapies for the disease. Bria-IMT™ is currently under Fast Track Designation by the U.S. FDA intended to accelerate the review process of novel treatments that address unmet medical needs. Positive completion of the pivotal study, following review by FDA, could lead to full approval of the Bria-IMT™ immune checkpoint inhibitor combination in advanced metastatic breast cancer. FDA has agreed that improvement in overall survival in the Bria-IMT™ combination arm as compared to the physician’s choice of treatment arm will be the primary endpoint of the study. The study will enroll 177 patients in the Bria-IMT™ combination therapy arm and 177 patients in the treatment of physician’s choice arm. To gather additional information on the Bria-IMT™ regimen alone, 50 patients will be enrolled in this regimen and will be eligible for combination therapy following their initial post treatment evaluation. BriaCell expects frequent and responsive FDA communication under its Fast Track status during the pivotal Phase 3 study. The successful completion of the pivotal Phase 3 study would allow BriaCell to subsequently submit a Biologics License Application and accelerate the path to commercialization. 17 Results of Operations for the Three Months Ended January 31, 2024 and 2023 Three months ended January 31, 2024 2023 (Unaudited) (Unaudited) Operating Expenses: Research and development expenses $ 8,257,455 $ 3,053,357 General and administrative expenses 1,571,991 1,432,966 Total operating expenses 9,829,446 4,486,323 Operating loss (9,829,446 ) (4,486,323 ) Financial expenses, net (1,486,119 ) (7,395,439 ) Share of loss on equity investments (18,345 ) - Net loss for the period $ (11,333,910 ) $ (11,881,762 ) Net loss attributable to non-controlling interest (39,307 ) - Net loss for the period attributable to BriaCell (11,294,603 ) (11,881,762 ) Net loss per share attributable to BriaCell – basic and diluted $ (0.71 ) $ (0.77 ) 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, 2024 2023 Clinical trials $ 4,359,850 $ 1,438,231 Pre-clinical projects 2,992,990 745,236 Chemical, Manufacturing and Control Costs (“CMC Costs”) 420,112 331,590 Other 484,503 538,300 $ 8,257,455 $ 3,053,357 Our clinical trial expenses include the extra costs for our immunotherapy program, Bria-IMT™, Phase I/IIa clinical trial. Clinical trial expenses increased in 2024 as patients stayed in the trial for a longer period of time (i.e. a longer than expected overall survival). Additionally, our costs increased significantly compared with the same period in 2023 for much higher set up costs for the pivotal Phase 3 study of Bria-IMT™ combination regimen with Retifanlimab in advanced breast cancer, and additional expenses in preparation for the upcoming clinical studies of Bria-OTS™. 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 2024 as we hired more staff to accelerate our existing pre-clinical program and added an additional pre-clinical program (sCD80). 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 2024 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, 2024 2023 Clinical trial sites and investigational drug costs $ 6,200,980 $ 1,288,577 Wages and salaries 1,401,679 1,282,441 Laboratory Rent 108,000 48,000 Supplies 312,543 207,061 Professional fees - 2,187 Share-based compensation 234,253 225,091 $ 8,257,455 $ 3,053,357 18 For the three-month period ended January 31, 2024, total research costs amounted to $8,257,455 as compared to $3,053,357 for the three-month period ended January 31, 2023. 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 $1,288,577 in 2023 to $6,200,980 in 2024. Laboratory costs increase during 2024 as well, including the hiring of additional lab employees which increased from $1,282,441 in 2023 to $1,401,679 in 2024 and increased supplies from $207,061 in 2023 to $312,543 in 2024. Finally, the increase in share-based compensation (non-cash) expenses, from $225,091 in 2023 to $234,253 in 2024 also contributed to the increase in research and development expenses. General and Administrative Expenses For the three-month period ended January 31, 2024, general and administrative expenses amounted to $1,571,991 as compared to $1,432,966 for the three-month period ended January 31, 2023. The increase relates primarily to shareholder communication expenses and in share-based compensation (non-cash) expense, offset by a decrease in insurance expenses and professional fees. Financial income (expenses), net For the three-month period ended January 31, 2024, financial expense, net, amounted to $1,486,119 as compared to $7,395,439 for the three-month period ended January 31, 2023. The large difference is due to the change in value of the Company’s warrant liability which amounted to a loss of $1,567,746 in the three-month period ending January 31, 2024, and a loss of $7,629,502 in the three-month period ending January 31, 2023. Loss for the period The Company reported a loss for the three-month period ended January 31, 2024, of $11,294,603, as compared to a loss of $11,881,762 for the three-month period ended January 31, 2023. The loss in 2024 is due to a significant increase in operational spending. The loss in the prior period is primarily due to the large increase in fair value of the warrant liability. Results of Operations for the Six Months Ended January 31, 2024 and 2023 Six months ended January 31, 2024 2023 (Unaudited) (Unaudited) Operating Expenses: Research and development expenses $ 15,114,712 $ 6,308,572 General and administrative expenses 3,217,762 3,580,902 Total operating expenses 18,332,474 9,889,474 Operating loss (18,332,474 ) (9,889,474 ) Financial expenses, net 12,975,781 (3,098,829 ) Share of loss on equity investments (18,345 ) - Net loss for the period $ (5,375,038 ) (12,988,303 ) Net loss attributable to non-controlling interest (81,978 ) - Net loss for the period attributable to BriaCell (5,293,060 ) (12,988,303 ) Net loss per share attributable to BriaCell – basic and diluted $ (0.33 ) $ (0.84 ) Weighted average number of shares used in computing net basic earnings per share of common stock 15,981,726 15,518,018 Weighted average number of shares used in computing net diluted earnings per share of common stock 15,981,726 15,518,018 19 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, 2024 2023 Clinical trials $ 7,987,140 $ 3,041,327 Pre-clinical projects 5,061,969 1,608,402 CMC Costs 967,309 741,608 Other 1,098,294 917,235 $ 15,114,712 $ 6,308,572 Our clinical trial expenses include the extra costs for our immunotherapy program, Bria-IMT™, Phase I/IIa clinical trial. Clinical trial expenses increased in 2024 as patients stayed in the trial for a longer period of time (i.e. longer than expected overall survival). Additionally, our costs increased significantly compared with those in the same period in 2023 for much higher set up costs for the pivotal Phase 3 study of Bria-IMT™ combination regimen with Retifanlimab in advanced breast cancer, and additional expenses in preparation for the upcoming clinical studies of Bria-OTS™. 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 2024 to support the pivotal Phase 3 study, and the upcoming clinical studies of Bria-OTS™. 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 2024 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, 2024 2023 Clinical trial sites and Investigational drug costs $ 11,598,418 $ 3,330,516 Wages and salaries 2,422,404 1,998,985 Laboratory Rent 196,480 96,000 Supplies 401,566 300,425 Professional fees 3,782 7,299 Share-based compensation 492,062 575,347 $ 15,114,712 $ 6,308,572 For the six-month period ending January 31, 2024, research costs amounted to $15,114,712, a significant increase from the $6,308,572 incurred during the same period in 2023. This upturn was primarily fuelled by the expansion of the Company’s Phase 2 trial, and initiation of the Phase 3 trial of the Bria-IMT™ regimen, and heightened costs associated with clinical trials and investigational drugs, surging from $3,330,516 in 2023 to $11,598,418 in 2024. Concurrently, laboratory costs increased due to the recruitment of additional employees, growing from $96,000 to $196,480. Notably, non-cash share-based compensation expenses decreased from $575,347 in 2023 to $492,062 in 2024, mitigating some of the overall increase in research and development expenses. General and Administrative Expenses For the six-month period ended January 31, 2024, general and administrative expenses amounted to $3,217,762 as compared to $3,580,902 for the six-month period ended January 31, 2023. This reduction is mainly attributed to a decrease in non-cash share-based compensation expenses, which declined from $803,438 in 2023 to $541,909 in 2024 and insurance expenses which declined from $847,241 in 2023 to $583,997 in 2024. Financial income (expenses), net For the six-month period ending January 31, 2024, net financial income amounted to $12,975,781, a significant increase from the loss of $3,098,829 recorded in the same period of 2023. This substantial difference is primarily attributed to the change in the value of the Company’s warrant liability, which is directly affected by the shortened life of the warrants and decrease in share price, resulting in a gain of $12,714,331 for the six-month period ended January 31, 2024, compared to a loss of $3,511,712 in the six-month period ended January 31, 2023. 20 Loss for the period The Company reported a loss for the period ended January 31, 2024, of $5,375,038, as compared to $12,988,303 for the period ended January 31, 2023. The reduced loss in 2024 was primarily due to a significant increase in operational spending, offset by a large gain resulting from the decrease in the fair value of the warrant liability. In contrast, the larger loss in the prior period was primarily due to higher operational spending and an increase in the value of the Company’s 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, 2024, the Company has total assets of $12,231,047 (July 31, 2023 - $27,163,577) and a positive working capital balance of $7,817,634 (July 31, 2023 -$25,147,050). The Company had negative cash flows from operating activities during the six-month period ended January 31, 2024 of $15,006,564. 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 uncertainty of the Company’s ability to raise such financial capital casts significant doubt on the Company’s ability to continue as a going concern. Liquidity and Capital Resources As of January 31, 2024, the Company has working capital of $7,817,634 (July 31, 2023 - $25,147,050) and an accumulated deficit of $85,945,291 (July 31, 2023 - $80,652,231). As of January 31, 2024, 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, 2024, the Company’s overall position of cash and cash equivalents decreased by $15,006,563 from the six-month period ended January 31, 2023 (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, 2024, was $15,006,564, as compared to $7,494,122 for the six-month period ended January 31, 2023. Cash used in financing activities for the six-month period ended January 31, 2024, was nil, as compared to $47,294 for the six-month period ended January 31, 2023. 21 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, 2024. Item 3. Quantitative and Qualitative Disclosures About Market Risk. The Company’s financial instruments consist of cash and cash equivalents, investments, trade payable , and accrued expenses and other payables. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments. The fair value of these financial instruments approximates their carrying values, unless otherwise noted. Management understands that the Company is exposed to financial risk arising from fluctuations in foreign exchange rates and the degree of volatility of these rates as a portion of the Company’s transactions occur in Canadian Dollars (mainly costs relating to being a public company in Canada), and the Company’s functional and presentation currency is the US dollar. The Company does not use derivative instruments to reduce its exposure to foreign currency risk. The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management process. The overall objectives of the Board are to set policies that seek to reduce risk as far as possible without unduly affecting the Company’s competitiveness and flexibility. The type of risk exposure and the way in which such exposure is managed is as follows: Credit Risk The Company has no significant concentration of credit risk arising from operations. Management believes that the credit risk concentration with respect to financial instruments is remote. Liquidity Risk The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities as they come due. As of January 31, 2024, the Company has total assets of $12,231,047 (July 31, 2023 - $27,163,577 ) and a positive working capital balance of $7,817,634 (July 31, 2023 –$25,147,050). Market Risk Interest rate risk Interest Rate risk is the risk that the fair value of a financial instrument will fluctuate because of changes in market interest rates. The Company does not believe it is exposed to material interest rate risk as it has no interest-bearing debt. Price risk As the Company has no revenues, price risk is remote. 22 Exchange risk The Company is exposed to foreign exchange risk as a portion of the Company’s transactions occur in Canadian Dollars (mainly costs relating to being a public company in Canada) and, therefore, the Company is exposed to foreign currency risk at the end of the reporting period through its Canadian denominated trade payable and cash. As of January 31, 2024, a 5% depreciation or appreciation of the Canadian dollar against the US dollar would not have a material effect on the in total loss and comprehensive loss. Fair Values The carrying values of cash and cash equivalents, trade payable, and accrued expenses and other payables approximate their fair values due to their short terms to maturity. Cash and cash equivalents are valued using quoted market prices in active markets. The fair value of the warrant liability is determined based on the nature of the warrant. For publicly traded warrants we use the quoted market price and for all other warrants we use the Black-Scholes pricing model. Item 4. Controls and Procedures. Disclosure Controls and Procedures We maintain “disclosure controls and procedures,” as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Our management, with the participation of our principal executive officer and principal accounting and financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 under the Securities Exchange Act of 1934, as amended, or the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on such evaluation, our principal executive officer and principal accounting and financial officer have concluded that as of January 31, 2024, our disclosure controls and procedures were effective at the reasonable assurance level. Changes in Internal Control over Financial Reporting There have not been material changes in our internal control over financial reporting during the quarter ended January 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 23 PART II - OTHER INFORMATION Item 1. Legal Proceedings. None. Item 1A. Risk Factors. As of the date of this Quarterly Report on Form 10-Q, there have been no material changes from the risk factors previously disclosed in our Annual Report for the year ended July 31, 2023. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. There were no unregistered sales of equity securities during the three months ended January 31, 2024 Item 3. Defaults Upon Senior Securities. None. Item 4. Mine Safety Disclosures. Not Applicable. Item 5. Other Information. None. Item 6. Exhibits The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q. EXHIBIT INDEX Exhibit Description 31.1 Certification of Principal Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 * 31.2 Certification of Principal Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 * 32.1 Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 * 32.2 Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 * 101.INS Inline XBRL Instance Document* 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document* 101.SCH Inline XBRL Taxonomy Extension Schema Document* 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document* 101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document* 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document* 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) * Filed herewith. 24 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BRIACELL THERAPEUTICS CORP. March 18, 2024 By: /s/ William V. Williams Name: William V. Williams Title: Chief Executive Officer (Principal Executive Officer) March 18, 2024 By: /s/ Gadi Levin Name: Gadi Levin Title: Chief Financial Officer (Principal Financial and Accounting Officer) 25