What changed in this filing

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Item 1. Financial Statements

2025-05-14 compared with 2025-02-14 · 211 added, 127 removed, 490 unchanged (41% of the section changed)

2 unchanged sentences

Condensed Interim Consolidated Balance Sheets

December 31, 2024

September 30, 2024

March 31, 2025

Current assets:

14 unchanged sentences

Capital shares

Authorized unlimited common and preferred shares without par value

Authorized unlimited common shares without par value

Issued and outstanding:

7,022,678 common shares (September 30, 2024 - 3,247,389 )

Authorized preferred shares issued and outstanding

150 Series A-1 preferred shares (September 30, 2024 - 0 )

834 Series B-1 preferred shares (September 30, 2024 - 0 )

Additional paid-in capital

7 unchanged sentences

Three Months Ended

December 31, 2024

December 31,2023

Six Months Ended

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

Research and development

1 unchanged sentence

Loss from operations

Other income (loss):

Other income:

Reimbursement grant income

Interest income

Misc other income

Foreign exchange (loss)

Loss before income taxes

Income tax expense

Exchange differences on translation

5 unchanged sentences

Condensed Interim Consolidated Statements of Cash Flows

Three Months Ended

December 31, 2024

December 31,2023

Six Months Ended

March 31, 2025

March 31, 2024

Cash flows from operating activities:

2 unchanged sentences

Share-based compensation

Gain on loan forgiveness

Changes in working capital items:

4 unchanged sentences

Cash flows from financing activities:

Proceeds from issuance of common shares

Proceeds from issuance of common shares and warrants

Proceeds from issuance of Series A-1 preferred shares and warrants

Proceeds from issuance of Series B-1 preferred shares

Payments for issuance costs of common shares and warrants

Payment for issuance costs of preferred shares

Payment for issuance costs of warrants

Repayment of debt

Net cash provided by financing activities

8 unchanged sentences

Series A-1 Preferred Shares

Series B-1 Preferred Shares

Additional Paid-in Capital

2 unchanged sentences

Total Shareholders' Equity

Three Months Ended December 31, 2024

Three Months Ended March 31, 2025

Balance - December 31, 2024

Issuance of common shares

Issuance of Series B-1 preferred shares

Issuance of common shares upon exercise of restricted share units

Issuance costs

Preferred return on Class A preferred shares

Share-based compensation

Net loss and comprehensive loss

Balance - March 31, 2025

Three Months Ended March 31, 2024

Balance - December 31, 2023

Issuance of common shares

Issuance costs

Share-based compensation

Net loss and comprehensive loss

Balance - March 31, 2024

Six Months Ended March 31, 2025

Balance - September 30, 2024

1 unchanged sentence

Issuance of Series A-1 preferred shares and warrants

Issuance of Series B-1 preferred shares

Issuance of common shares upon exercise of restricted share units

Issuance costs

2 unchanged sentences

Net loss and comprehensive loss

Balance - December 31, 2024

Three Months Ended December 31, 2023

Balance - March 31, 2025

Six Months Ended March 31, 2024

Balance - September 30, 2023

3 unchanged sentences

Net loss and comprehensive loss

Balance - December 31, 2023

Balance - March 31, 2024

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

9 unchanged sentences

These unaudited condensed consolidated financial statements have been prepared on a going concern basis which presumes the realization of assets and the discharge of liabilities in the normal course of operations for at least the next twelve months.

For the three months ended December 31, 2024, the Company incurred a comprehensive loss of $ 1.6 million resulting in an accumulated deficit of $ 60.2 million.

For the three months ended December 31, 2024, the Company had a net cash outflow from operating activities of $ 1.5 million and ended the quarter with $ 1.6 million in cash and cash equivalents and a working capital of $ 0.2 million.

During the three month period ended December 31, 2024, the Company received proceeds of $ 1.5 million from the sale of preferred shares to an entity controlled by the Company’s CEO, as described below.

Subsequent to the quarter, the Company received gross proceeds of $ 15.0 million from the sale of common shares and preferred shares in a private placement (see Note 11).

For the six months ended March 31, 2025, the Company incurred a comprehensive loss of $ 3.3 million resulting in an accumulated deficit of $ 61.9 million.

For the six months ended March 31, 2025, the Company had a net cash outflow from operating activities of $ 3.9 million and ended the period with $ 13.9 million in cash and cash equivalents and a working capital of $ 13.5 million.

During the six month period ended March 31, 2025, the Company received gross proceeds of $ 15.0 million from the sale of preferred shares and common shares in a private placement and $ 1.5 million from the sale of preferred shares to an entity controlled by the Company’s CEO, as described below.

The Company’s ability to continue as a going concern is dependent on obtaining additional funding through financings, other strategic activities as well as via grants, to fund the development of its drug candidates.

12 unchanged sentences

All adjustments (consisting of normal recurring adjustments and accruals) considered necessary for a fair presentation of the results of operations for the periods presented have been included in the interim periods.

Operating results for the three months ended December 31, 2024 are not necessarily indicative of the results that may be expected for other interim periods or the fiscal year ending September 30, 2025.

Operating results for the three and six months ended March 31, 2025 are not necessarily indicative of the results that may be expected for other interim periods or the fiscal year ending September 30, 2025.

Use of estimates

26 unchanged sentences

Intangible assets, net consisted of the following:

December 31, 2024

March 31, 2025

September 30, 2024

2 unchanged sentences

Total intangible assets, net

Amortization expense amounted to $ 0.03 million for each of the three months ended December 31, 2024 and 2023.

Amortization expense amounted to $ 0.03 million for each of the three months ended March 31, 2025 and March 31, 2024 and $ 0.05 million for each of the six months ended March 31, 2025 and March 31, 2024.

Total estimated future amortization of intangible assets for each fiscal year is as follows:

10 unchanged sentences

Three Months Ended

December 31, 2024

December 31, 2023

Six Months Ended

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

Right-of-use lease cost, included in general and administrative on the Statements of Operations

Lease terms and discount rates were as follows:

December 31, 2024

March 31, 2025

September 30, 2024

2 unchanged sentences

Cash flow information was as follows:

Three Months Ended

December 31, 2024

December 31,2023

Six Months Ended

March 31, 2025

March 31, 2024

Cash paid for amounts included in the measurement of right-of-use lease liabilities, included in accounts payable and accrued liabilities on the Statements of Cash Flow.

1 unchanged sentence

The Company has commitments for contracted research organizations who perform clinical trials for the Company’s ongoing clinical studies and other service providers.

Approximate aggregate future contractual payments at December 31, 2024 are as follows:

Approximate aggregate future contractual payments at March 31, 2025 are as follows:

September 30, 2025

9 unchanged sentences

The Company also has a commitment to pay royalties based on any net sales of products containing the Constructs in the countries where the Company directly commercializes the products containing the Constructs and a percentage of any sublicensing revenue received by the Company and its affiliates in the countries where it does not directly commercialize the products containing the Constructs.

No milestone, royalty or sublicensing payments were made to the third party during the three months ended December 31, 2024 and 2023.

No milestone, royalty or sublicensing payments were made to the third party during the three and six months ended March 31, 2025 and 2024.

In 2016, through its Ontario subsidiary, the Company entered into a license agreement with a third party to obtain exclusive rights to certain know-how, patents and data relating to a pharmaceutical product.

7 unchanged sentences

In addition, if the Company fails to file an investigational new drug application or foreign equivalent (IND) for the product within a certain period of time following the date of the agreement, the Company is required to remit to the inventor a fixed license fee quarterly as long as the requirement to file an IND remains unfulfilled.

For each of the three months ended December 31, 2024, and December 31, 2023, the Company recorded an expense of $ 25,000 as a result of meeting milestones outlined in the 2021 license agreement.

For the three and six months ended March 31, 2025, the Company recorded an expense of $ 25,000 and $ 50,000 as a result of meeting milestones outlined in the 2021 license agreement.

There were no milestones achieved in the three and six months ended March 31, 2025 and no additional expenses were incurred.

In June 2024, the Company’s drug candidate, EB05, was selected by the Biomedical Advanced Research and Development Authority (BARDA), part of the Administration for Strategic Preparedness and Response within the U.S.

7 unchanged sentences

Capital Shares

Series B-1 Preferred Shares Offering

On February 12, 2025, the Company entered into a Securities Purchase Agreement (Series B-1 Purchase Agreement) with certain investors, including members of the Company’s board of directors and executive officers (the Series B-1 Investors), pursuant to which the Company issued and sold to the Series B-1 Investors in a private placement (the Private Placement), an aggregate of (i) 834 shares (the Series B-1 Preferred Shares) of the Company’s newly designated Series B-1 Convertible Preferred Shares, stated value $ 10,000 per share, each of which is initially convertible into approximately 5,208 common shares (the Series B-1 Conversion Shares), without par value, of the Company (the Common Shares) at a conversion price of $ 1.92 per Series B-1 Conversion Share, and (ii) 3,468,746 Common Shares.

The purchase price per Series B-1 Preferred Share was $ 10,000 and the purchase price per Common Share was $ 1.92 .

The gross proceeds to the Company were approximately $ 15.0 million, prior to deducting offering expenses payable by the Company which were allocated between the Series B-1 Preferred Shares and Common Shares based on the market price of the Company’s Common Shares on the issuance date.

A Series B-1 Investor will not have the right to convert any portion of its Series B-1 Preferred Shares if, together with its affiliates, it would beneficially own in excess of 4.99%, 9.99% or 19.99% of the number of Common Shares outstanding immediately after giving effect to such conversion.

The Series B-1 Purchase Agreement contains customary representations and warranties and agreements of the Company and the Series B-1 Investors and customary indemnification rights and obligations of the parties.

The Series B-1 Preferred Shares are presented as permanent shareholders’ equity.

The Series B-1 Preferred Shares did not exist in the comparative period; therefore, no prior-period disclosure is presented.

Issues and Outstanding Series B-1 Preferred Shares

Series B-1 Preferred Shares (#)

Series B-1 Preferred Shares

Six Months Ended March 31, 2025

Balance - September 30, 2024

Issuance of Series B-1 Preferred Shares

Series B-1 Preferred Shares issuance costs

Balance - March 31, 2025

Series A-1 Preferred Shares Offering

1 unchanged sentence

The Series A-1 Preferred Shares and the Warrants are being sold together in a fixed combination of one Series A-1 Preferred Share and a Warrant to purchase a number of Common Shares equal to 75 % of the underlying Series A-1 Conversion Shares at a combined purchase price of $ 10,272.13 per Series A-1 Preferred Share and related Warrants.

Under the Purchase Agreement, the Purchaser has purchased 150 Series A-1 Preferred Shares initially convertible into an aggregate of 435,414 Series A-1 Conversion Shares and Warrants to purchase up to an aggregate of 326,560 Warrant Shares for an aggregate purchase price of $ 1,540,819 .

Under the Series A-1 Purchase Agreement, the Series A-1 Purchaser has purchased 150 Series A-1 Preferred Shares initially convertible into an aggregate of 435,414 Series A-1 Conversion Shares and Warrants to purchase up to an aggregate of 326,560 Warrant Shares for an aggregate purchase price of $ 1,540,819 .

The offering of the Series A-1 Preferred Shares and Warrants was structured as an at-market offering under the rules of The Nasdaq Stock Market.

5 unchanged sentences

The Company has the right to require the Series A-1 Purchaser to purchase additional Series A-1 Preferred Shares and Warrants (up to an aggregate investment of $ 5.0 million); provided however, no more than an aggregate of $ 2.0 million of Series A-1 Preferred Shares and Warrants may be issued and sold pursuant to the Series A-1 Purchase Agreement without shareholder approval in accordance with applicable Canadian securities laws.

The Series A-1 Purchase Agreement contains customary representations and warranties and agreements of the Company and the Purchaser and customary indemnification rights and obligations of the parties.

The Series A-1 Purchase Agreement contains customary representations and warranties and agreements of the Company and the Series A-1 Purchaser and customary indemnification rights and obligations of the parties.

The Company has the option to redeem the Series A-1 Preferred Shares, and upon conversion or liquidation, holders are entitled to receive the stated value plus a 10 % annual return on capital, payable in Common Shares at the conversion price, calculated daily until the three-year anniversary of issuance.

The Series A-1 Preferred Shares are presented as permanent shareholders’ equity.

The total proceeds were allocated between the Series A-1 Preferred Shares and warrants using relatively fair value.

The total proceeds were allocated between the Series A-1 Preferred Shares and warrants using relative fair value.

The fair value of the Series A-1 Preferred Shares was determined as a reference to the fair value of Common Shares on the issuance date and the fair value of the warrants was determined using Black-Scholes option pricing model as detailed below.

1 unchanged sentence

therefore, no prior-period disclosure is presented.

Issued and Outstanding Series A-1 Preferred Shares

Preferred Shares (#)

Preferred Shares

Three Months Ended December 31, 2024

Issued and Outstanding Series A-1 Convertible Preferred Shares

Series A-1 Preferred Shares (#)

Series A-1 Preferred Shares

Six Months Ended March 31, 2025

Balance - September 30, 2024

2 unchanged sentences

Preferred return on Series A-1 Preferred Shares

Balance - December 31, 2024

Balance - March 31, 2025

Equity distribution agreements

2 unchanged sentences

The Company has no obligation to sell any of the Common Shares and may at any time suspend sales or terminate the equity distribution agreement in accordance with its terms.

For the three months ended December 31, 2024, the Company sold a total of 220,269 common shares pursuant to the agreement for net proceeds of $ 0.6 million after deducting sales agent commissions of $ 19,000 .

The Company has not sold any common shares pursuant to the HCW ATM subsequent to December 31, 2024.

On March 27, 2023, the Company entered into an equity distribution agreement with Canaccord Genuity LLC (Canaccord), pursuant to which the Company was able to offer and sell, from time to time, common shares through an at-the-market equity offering program for up to $ 20 million in gross proceeds, subject to certain offering limitations that currently allow the Company to offer and sell common shares having an aggregate gross sales price of up to $ 8.4 million (Canaccord ATM).

During the three months ended December 31, 2024, there were no sales of common shares pursuant to the agreement.

During the three months ended December 31, 2023, the Company sold a total of 89,249 common shares pursuant to the agreement for gross proceeds of approximately $ 0.3 million after deducting sales agent commissions of $ 9,000 .

The Canaccord ATM was terminated on October 3, 2024.

For the six months ended March 31, 2025, the Company sold a total of 304,057 Common Shares pursuant to the agreement for net proceeds of $ 0.8 million after deducting sales agent commissions of $ 25,000 .

The Company has not sold any Common Shares pursuant to the HCW ATM subsequent to March 31, 2025.

Black-Scholes option valuation model

12 unchanged sentences

Weighted Average Exercise Price

Three Months Ended December 31, 2024

Six Months Ended March 31, 2025

Balance - September 30, 2024

Balance - December 31, 2024

Three Months Ended December 31, 2023

Balance - March 31, 2025

Six Months Ended March 31, 2024

Balance - September 30, 2023

Balance - December 31, 2023

The weighted average contractual life remaining on the outstanding warrants at December 31, 2024 is 37 months.

The following table summarizes information about the warrants outstanding at December 31, 2024:

Balance - March 31, 2024

The weighted average contractual life remaining on the outstanding warrants at March 31, 2025 is 34 months.

The following table summarizes information about the warrants outstanding at March 31, 2025:

Number of Warrants (#)

3 unchanged sentences

September 2027

The fair value of warrants granted during the three months ended December 31, 2024 was estimated using the Black-Scholes option valuation model using the following assumptions:

Three Months Ended

December 31, 2024

The fair value of warrants granted during the six months ended March 31, 2025 was estimated using the Black-Scholes option valuation model using the following assumptions:

Six Months Ended March 31, 2025

Class A Pref Share

7 unchanged sentences

The total number of shares available for issuance under the terms of the 2019 Plan is 642,737 .

The remaining number of shares available to grant at December 31, 2024 is 119,574 .

The remaining number of shares available to grant at March 31, 2025 is 85,329 .

The Company’s 2019 Plan allows options to be granted to directors, officers, employees and certain external consultants and advisers.

4 unchanged sentences

Weighted Average Grant Date Fair Value

Three Months Ended December 31, 2024

Six Months Ended March 31, 2025

Balance - September 30, 2024

Balance - December 31, 2024

Three Months Ended December 31, 2023

Balance - March 31, 2025

Six Months Ended March 31, 2024

Balance - September 30, 2023

Balance - December 31, 2023

During the three months ended December 31 2024, there were no employee or director options granted.

During the three months ended December 31, 2023, there were 500 employee options granted and no director options granted.

Balance - March 31, 2024

During the three and six months ended March 31, 2025, there were no employee or director options granted.

During the three and six months ended March 31, 2024, there were 500 employee options granted and no director options granted.

The options have a term of 10 years and an exercise price equal to the Nasdaq closing price on the grant date.

The weighted average contractual life remaining on the outstanding options at December 31, 2024 is 77 months.

The following table summarizes information about the options under the 2019 Plan outstanding and exercisable at December 31, 2024:

The weighted average contractual life remaining on the outstanding options at March 31, 2025 is 74 months.

The following table summarizes information about the options under the 2019 Plan outstanding and exercisable at March 31, 2025:

Number of Options (#)

Exercisable at

December 31, 2024 (#)

March 31, 2025 (#)

Range of Exercise Prices

6 unchanged sentences

March 2025 - Oct 2033

The options exercisable at December 31, 2024 had a weighted average exercise price of $ 27.01 and no intrinsic value and a weighted average remaining life of 74 months.

There were 42,540 options at December 31, 2024 that had not vested with a weighted average exercise price of $ 7.83 and no intrinsic value and a weighted average remaining life of 101 months.

The fair value of options granted during the three months ended December 31 2023 was estimated using the Black-Scholes option valuation model using the following assumptions:

Three Month Ended

December 31,2023

The options exercisable at March 31, 2025 had a weighted average exercise price of $ 24.66 , no intrinsic value and a weighted average remaining life of 72 months.

There were 33,354 options at March 31, 2025 that had not vested with a weighted average exercise price of $ 7.12 , no intrinsic value and a weighted average remaining life of 98 months.

The fair value of options granted during the six months ended March 31, 2025 and 2024 was estimated using the Black-Scholes option valuation model using the following assumptions:

Six Months Ended March 31, 2024

Risk free interest rate

2 unchanged sentences

Expected dividend yield

The Company recorded $ 0.1 million and $ 0.2 million of share-based compensation expenses for the three months ended December 31, 2024 and 2023, respectively.

As of December 31, 2024, the Company had approximately $ 0.1 million of unrecognized share-based compensation expense, which is expected to be recognized over a period of 21 months.

The Company recorded $ 0.1 million and $ 0.1 million of share-based compensation expenses for the three months ended March 31, 2025 and 2024, respectively and $ 0.1 million and $ 0.3 million for the six months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025, the Company had approximately $ 0.1 million of unrecognized share-based compensation expense, which is expected to be recognized over a period of 18 months.

Restricted share units (RSU)

2 unchanged sentences

The fair value is based on the 5-day VWAP of the Company’s Common Shares up to the date of grant.

The following is a summary of changes in the status of RSUs from October 1, 2024 through December 31, 2024:

The following is a summary of changes in the status of RSUs from October 1, 2024 through March 31, 2025:

Number of RSU (#)

Weighted Average Grant Date Fair Value

Three Months Ended December 31, 2024

Six Months Ended March 31, 2025

Balance - September 30, 2024

Balance - December 31, 2024

Three Months Ended December 31, 2023

Balance - March 31, 2025

Six Months Ended March 31, 2024

Balance - September 30, 2023

Balance - December 31, 2023

The following table summarizes information about the RSUs under the 2019 Plan outstanding and exercisable at December 31, 2024:

Balance - March 31, 2024

The following table summarizes information about the RSUs under the 2019 Plan outstanding and exercisable at March 31, 2025:

Number of RSU (#)

Fully-vested RSUs

August 2033 - December 2034

August 2033 - March 2035

All RSUs that were granted vested immediately upon the grant date.

15 unchanged sentences

The Agreement will expire on the later of December 31, 2042 or the date of the last repayment, unless earlier terminated, subject to certain provisions that extend three ( 3 ) years beyond the term or early termination of the 2023 SIF Agreement.

Under the October 2023 SIF Agreement the Company recorded grant income of $ 0.3 million and $ 0.1 million for the quarters ended December 31, 2024 and December 31, 2023, respectively, bringing the total recorded under the agreement to $ 1.0 million.

Under the October 2023 SIF Agreement the Company recorded grant income of $ 0.1 million and $ 0.3 million for the three months ended March 31, 2025 and March 31, 2024, respectively, and $ 0.4 million for each of the six months ended March 31, 2025 and March 31, 2024 bringing the total recorded under the agreement to $ 1.1 million.

Financial Instruments

27 unchanged sentences

The Company has not entered into any agreements or purchased any instruments to hedge possible currency risks.

At December 31, 2024, the Company and its Canadian subsidiary had assets denominated in Canadian dollars of approximately C$ 1.1 million and the U.S.

At March 31, 2025, the Company and its Canadian subsidiary had assets denominated in Canadian dollars of approximately C$ 5.7 million and the U.S.

dollar exchange rate at this date was equal to 1.4355 Canadian dollars.

Based on the exposure at December 31, 2024, a 10% annual change in the Canadian/U.S.

Based on the exposure at March 31, 2025, a 10% annual change in the Canadian/U.S.

exchange rate would impact the Company’s loss and other comprehensive loss by approximately $ 0.4 million.

5 unchanged sentences

Related Party Transactions

On February 12, 2025 (the “Closing Date”), the Company entered into the Series B-1 Purchase Agreement with the Series B-1 Investors.

Pursuant to the Series B-1 Purchase Agreement, the Company sold to the Series B-1 Investors in a private placement, an aggregate of (i) 834 Series B-1 Preferred Shares, each of which is initially convertible into approximately 5,208 Series B-1 Conversion Shares at a conversion price of $ 1.92 per Series B-1 Conversion Share, and (ii) 3,468,746 Common Shares.

The purchase price per Series B-1 Preferred Share was $ 10,000 and the purchase price per common share was $ 1.92 .

The Company’s Chief Executive Officer, Secretary, and a member of the board of directors purchased 100 Series B-1 Preferred Shares for an aggregate purchase price of $ 1.0 million.

A director purchased 41,666 Common Shares for an aggregate purchase price of approximately $ 80,000 .

Another director purchased 10,416 Common Shares for an aggregate purchase price of approximately $ 20,000 .

Entities affiliated with significant beneficial owners purchased, in aggregate, 2,687,500 Common Shares and 734 Series B-1 Preferred Shares for aggregate gross proceeds of approximately $ 12.5 million.

A holder of Series B-1 Preferred Shares will not have the right to convert any portion of its Series B-1 Preferred Shares, if, together with its affiliates, it would beneficially own in excess of 4.99 % (or, at the option of the holder, 9.99 %) of the number of Common Shares outstanding immediately after giving effect to such conversion, provided, however, that a holder may increase or decrease the beneficial ownership limitation by giving 61 days’ notice to the Company, but not to any percentage in excess of 19.99 %.

In connection with the Series B-1 Purchase Agreement, on February 12, 2025, the Company also entered into an Investor Rights Agreement (IRA) with the Series B-1 Investors, whereby the Company agreed to provide the Series B-1 Investors with certain registration and other rights.

The IRA provides that the board of directors, following the Company’s annual meeting to be held on May 28, 2025, shall consist of seven members, one of whom shall be a director nominated by the lead investor (the “Lead Investor Nominee”), who shall serve on the board effective as of the Closing Date, until the earlier of such time as (i) the lead investor no longer holds at least 51% of the Common Shares (calculated on an as-converted-to-Common Shares basis), subject to appropriate adjustment in the event of any stock dividend, stock split, combination, or other similar recapitalization with respect to the Common Shares issued in the private placement, or (ii) the lead investor beneficially owns less than 5% of the outstanding Common Shares as a result of a disposition of shares (such period, the “Lead Investor Rights Period”).

The Company also agreed to use its reasonable best efforts to solicit shareholder approval of the Lead Investor Nominee at each general or special meeting of shareholders of the Company at which an election of directors is held during the Lead Investor Rights Period.

Additionally, the IRA includes certain protective provisions that restrict the Company’s ability to, among other things, (i) amend, modify, alter or repeal any provision of the Company’s governing documents in a manner adverse to the holders of Series B-1 Preferred Shares, (ii) alter or change the special rights and restrictions of the Series B-1 Preferred Shares and (iii) increase or decrease the authorized number of Series B-1 Preferred Shares, in each case, without the written consent of the lead investor.

Pursuant to the IRA, during the Lead Investor Rights Period, the lead investor is entitled to designate one (1) non-voting observer to the Board to attend all meetings of the Board and committees and subcommittees thereof, subject to the terms of the IRA.

On October 30, 2024, the Company entered into the Series A-1 Purchase Agreement with the Series A-1 Purchaser, an entity controlled by the Company’s Chief Executive Officer, Secretary and member of the board of directors of the Company, pursuant to which the Company agreed to issue and sell to the Series A-1 Purchaser in a private placement, up to $ 5,000,000 of the Series A-1 Preferred Shares, each of which is initially convertible into the Series A-1 Conversion Shares, at a conversion price of $ 3.445 per Series A-1 Conversion Share, and Warrants to purchase Common Shares at an exercise price of $ 3.445 .

1 unchanged sentence

The offering of the Series A-1 Preferred Shares and Warrants was structured as an at-market offering under the rules of The Nasdaq Stock Market.

The Purchaser will not have the right to convert any portion of its Series A-1 Preferred Shares, or exercise any portion of the Warrants, if, together with its affiliates, it would beneficially own in excess of 19.99 % of the number of common shares outstanding immediately after giving effect to such conversion or exercise.

The Series A-1 Purchaser will not have the right to convert any portion of its Series A-1 Preferred Shares, or exercise any portion of the Warrants, if, together with its affiliates, it would beneficially own in excess of 19.99 % of the number of Common Shares outstanding immediately after giving effect to such conversion or exercise.

See Note 6 – Series A-1 Convertible Preferred Shares offering.

During the three months ended December 31, 2024 and 2023, the Company paid cash of $ 18,000 and $ 20,000 , respectively, for a ROU lease from a company controlled by the Company’s CEO.

During the three and six months ended March 31, 2025 and 2024, the Company paid cash of $ 0 and $ 18,000 in 2025, and $ 20,000 and $ 40,000 in 2024, respectively, for a ROU lease from a company controlled by the Company’s CEO.

These transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by both parties.

On December 31, 2022, the Company executed a two -year lease extension through December 31, 2024 in accordance with the terms of the original lease agreement.

Rent of approximately $ 7,000 and $ 15,000 were payable at December 31, 2024 and 2023, respectively.

The Company extended the lease beyond its December 31, 2024 expiration to November 30, 2025 and upon expiry will be month to month and either party will have the right to terminate on 30 days’ notice.

In October 2023, the Company entered into $ 10.0 million revolving credit agreement with an entity controlled by the Company’s Chief Executive Officer and Secretary and member of the Company’s board of directors (Credit Agreement), providing an unsecured revolving credit facility, with a credit limit of $ 3.5 million (Credit Limit) which was available immediately.

2 unchanged sentences

At no time shall the aggregate principal amount of all advances outstanding exceed the lesser of (i) the Credit Limit and (ii) an amount equal to 85 % of the Borrowing Base.

During the three months ended December 31, 2024 and 2023, the Company incurred a standby charges of $ 4,000 and $ 12,000 , respectively.

During the three and six months ended March 31, 2025 and 2024, the Company incurred standby charges of $ 0 and $ 13,000 in 2025 and $ 4,000 and $ 25,000 in 2024, respectively.

The Credit Agreement was terminated in October 2024.

1 unchanged sentence

The Company incurred no termination penalties in connection with the termination of the Credit Agreement.

Subsequent Events

Series B-1 Preferred Shares Offering

On February 12, 2025, the Com pany entered into a Securities Purchase Agreement (the Series B-1 Purchase Agreement) with a lead investor and several additional investors signatory thereto (the Investors), pursuant to which the Company sold to the Investors in a private placement, an aggregate of (i) 834 shares (the “Series B-1 Preferred Shares”) of the Company’s newly designated Series B-1 Convertible Preferred Shares, stated value $ 10,000 per share, each of which is initially convertible into approximately 5,208 common shares (the “Series B-1 Conversion Shares”) at a conversion price of $ 1.92 per Series B-1 Conversion Share, and (ii) 3,468,746 common shares.

The purchase price per Series B-1 Preferred Share was $ 10,000 and the purchase price per common share was $ 1.92 .

The g ross proceeds to the Company were approximately $ 15.0 million, prior to deducting offering expenses payable by the Company.

As a result of the foregoing transaction and as of the date of this filing, the Company believes it has shareholders’ equity of at least $2.5 million and therefore satisfies the minimum Nasdaq listing requirement set forth in Nasdaq Listing Rule 5550(b)(1).

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations.

The following management ’ s discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed interim consolidated financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q as of December 31, 2024 and our audited consolidated financial statements for the year ended September 30, 2024 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission, or the SEC, on December 13, 2024, as amended .

The following management ’ s discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed interim consolidated financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q as of March 31, 2025 and our audited consolidated financial statements for the year ended September 30, 2024 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission, or the SEC, on December 13, 2024, as amended.

This Quarterly Report on Form 10-Q contains forward-looking statements.

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You should not place undue reliance on these forward-looking statements.

Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including the risks described in our Annual Report on Form 10-K for the year ended September 30, 2024 and other reports we file with the Securities and Exchange Commission.

Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including the risks described in our Annual Report on Form 10-K for the year ended September 30, 2024, as amended, and other reports we file with the Securities and Exchange Commission.

Although we believe the expectations reflected in the forward-looking statements are reasonable, they relate only to events as of the date on which the statements are made.

We do not intend to update any of the forward-looking statements after the date of this report to conform these statements to actual results or to changes in our expectations, except as required by law.

The discussion and analysis of our financial condition and results of operations are based on our unaudited condensed interim consolidated financial statements as of December 31, 2024 and September 30, 2024, as amended and for the three months ended December 31, 2024 and 2023 included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which we have prepared in accordance with U.S.

The discussion and analysis of our financial condition and results of operations are based on our unaudited condensed interim consolidated financial statements as of March 31, 2025 and September 30, 2024 and for the three and six months ended March 31, 2025 and 2024 included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which we have prepared in accordance with U.S.

generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q.

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Food and Drug Administration (FDA) for the same study.

Preparation for the manufacturing campaign is underway, with data anticipated to be submitted to the FDA during the middle of 2025.

Preparation for the manufacturing campaign began in our fiscal second quarter, and we have evaluated multiple development and manufacturing pathways to produce our drug.

We anticipate data to be submitted to the FDA during the second half of calendar 2025, from previous guidance of middle of the 2025 calendar year, based on the current availability of manufacturing slots at third party service providers.

Our medical dermatology assets also include EB01 (1.0% daniluromer cream), a Phase 3-ready asset developed for use as a potential therapy for moderate-to-severe chronic Allergic Contact Dermatitis (ACD), a common occupational skin condition.

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We have no obligation to sell any of the common shares and may at any time suspend sales or terminate the equity distribution agreement in accordance with its terms.

For the three months ended December 31, 2024, we sold a total of 220,269 common shares pursuant to the agreement for net proceeds of $0.6 million after deducting sales agent commissions of $19,000.

We have not sold any common shares pursuant to the HCW ATM subsequent to December 31, 2024.

For the six months ended March 31, 2025, we sold a total of 304,057 common shares pursuant to the agreement for net proceeds of $0.8 million after deducting sales agent commissions of $25,000.

We have not sold any common shares pursuant to the HCW ATM subsequent to March 31, 2025.

Amended Articles

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Series B-1 Preferred Shares Offering

On February 12, 2025, we entered into a Securities Purchase Agreement (Series B-1 Purchase Agreement) with a lead investor and several additional investors signatory thereto (the Investors), pursuant to which we sold to the Investors in a private placement, an aggregate of (i) 834 Series B-1 Preferred Shares, each of which is initially convertible into approximately 5,208 common shares (Series B-1 Conversion Shares) at a conversion price of $1.92 per Series B-1 Conversion Share, and (ii) 3,468,746 common shares.

On February 12, 2025, we entered into a Securities Purchase Agreement (Series B-1 Purchase Agreement) with a lead investor and several additional investors signatory thereto (the Series B-1 Investors), pursuant to which we sold to the Series B-1 Investors in a private placement, an aggregate of (i) 834 shares (Series B-1 Preferred Shares) of the Company’s newly designated Series B-1 Convertible Preferred Shares, stated value $10,000 per share, each of which is initially convertible into approximately 5,208 common shares (Series B-1 Conversion Shares) at a conversion price of $1.92 per Series B-1 Conversion Share, and (ii) 3,468,746 common shares.

The purchase price per Series B-1 Preferred Share was $10,000 and the purchase price per common share was $1.92.

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Results of Operations

Comparison of the Three Months Ended December 31, 2024 and 2023

Total operating expenses were unchanged at $1.9 million for each of the three months ended December 31, 2024 and December 31, 2023:

Research and development (R&D) expenses increased by $0.3 million to $1.0 million for the three months ended December 31, 2024 compared to $0.7 million for the same period last year primarily due to increased external research expenses related to manufacturing paridiprubart.

Our R&D expenses consist primarily of employee-related expenses, including salaries, benefits, taxes, travel, and share-based compensation expense for personnel in R&D functions;

expenses related to process development and production of product candidates paid to contract manufacturing organizations, including the cost of acquiring, developing, and manufacturing research material;

costs associated with clinical activities, including expenses for contract research organizations;

and clinical trials and activities related to regulatory filings for our product candidates, including regulatory consultants.

General and administrative (G&A) expenses decreased by $0.3 million to $0.9 million for the three months ended December 31, 2024 compared to $1.2 million for the same period last year primarily due to a decrease in salaries and related costs, noncash share-based compensation and professional service fees.

Comparison of the Three Months Ended March 31, 2025 and 2024

Total operating expenses decreased to $1.6 million for the three months ended March 31, 2025 compared to $2.2 million for the three months ended March 31, 2024.

The following table summarizes our R&D expenses incurred during the three months ended March 31, 2025 and 2024, together with the dollar increase or decrease in those items:

Three Months Ended March 31, 2025

Program-specific external costs:

Other development and discovery programs

Total program-specific costs

Unallocated internal costs

Non-program specific external costs

Unallocated internal costs

Total unallocated internal costs

Total research and development costs

Research and development (R&D) expenses decreased by $0.7 million to $0.5 million for the three months ended March 31, 2025 compared to $1.2 million for the same period last year primarily due to decreased external research expenses related to EB05 (paridiprubart) in the comparative period, offset partially by an increase in EB06 related expense as we prepare for the Phase 2 clinical study.

Our R&D expenses consist primarily of employee-related expenses, including salaries, benefits, taxes, travel, and share-based compensation expense for personnel in R&D functions; expenses related to process development and production of product candidates paid to contract manufacturing organizations, including the cost of acquiring, developing, and manufacturing research material; costs associated with clinical activities, including expenses for contract research organizations; and clinical trials and activities related to regulatory filings for our product candidates, including regulatory consultants.

General and administrative (G&A) expenses increased by $0.2 million to $1.2 million for the three months ended March 31, 2025 compared to $1.0 million for the same period last year primarily due to an increase in salaries and related costs, partially offset by a decrease in noncash share-based compensation and professional service fees.

Our G&A expenses consist primarily of salaries and related costs for our employees in administrative, executive and finance functions.

G&A expenses also include professional fees for legal, accounting, audit, tax and consulting services, insurance, office, and travel expenses.

Total other income increased by $102,000 to $281,000 for the three months ended December 31, 2024 compared to $179,000 for the same period last year and was composed of the following:

Grant income increased by $0.2 million to $0.3 million for the three months ended December 31, 2024 compared to $0.1 million for the three months ended December 31, 2023.

The increase is related to the grant income associated with the activities under the 2023 SIF Agreement.

Interest income decreased by $59,000 to $2,000 for the three months ended December 31, 2024 compared to $61,000 for the same period last year primarily due to lower cash balances.

Foreign exchange gain was $21,000 for the three months ended December 31, 2024 compared to a gain of $2,800 for the three months ended December 31, 2023.

For the three months ended December 31, 2024, our net loss was $1.6 million, or $0.48 per common share, compared to a net loss of $1.7 million, or $0.54 per common share for the three months ended December 31, 2023.

Total other income decreased by $311,000 to $49,000 for the three months ended March 31, 2025 compared to $360,000 for the same period last year and was composed of the following:

Grant income decreased by $0.2 million to $0.1 million for the three months ended March 31, 2025 compared to $0.3 million for the three months ended March 31, 2024.

The decrease is related to the grant income associated with the activities under the 2023 SIF Agreement.

Interest income decreased by $42,000 to $265 for the three months ended March 31, 2025 compared to $43,000 for the same period last year primarily due to lower cash balances.

Foreign exchange loss was $3,000 for the three months ended March 31, 2025 compared to a loss of $2,000 for the three months ended March 31, 2024.

For the three months ended March 31, 2025, our net loss was $1.6 million, or $0.30 per common share, compared to a net loss of $1.9 million, or $0.58 per common share for the three months ended March 31, 2024.

Comparison of the Six Months Ended March 31, 2025 and 2024

Total operating expenses decreased to $3.5 million for the six months ended March 31, 2025 compared to $4.1 million for the six months ended March 31, 2024.

The following table summarizes our R&D expenses incurred during the six months ended March 31, 2025 and 2024, together with the dollar increase or decrease in those items:

Six Months Ended March 31, 2025

Program-specific external costs:

Other development and discovery programs

Total program-specific costs

Unallocated internal costs

Non-program specific external costs

Unallocated internal costs

Total unallocated internal costs

Total research and development costs

R&D expenses decreased by $0.4 million to $1.5 million for the six months ended March 31, 2025 compared to $1.9 million for the same period last year primarily due to a decrease in external research expenses related to EB05 (paridiprubart), partially offset by an increase in costs related to EB06 as we prepare for the Phase 2 clinical study.

General and administrative (G&A) expenses decreased by $0.2 million to $2.0 million for the six months ended March 31, 2025 compared to $2.2 million for the same period last year primarily due to a decrease in noncash share-based compensation and professional service fees, which were partially offset by an increase in salaries and related costs.

Our G&A expenses consist primarily of salaries and related costs for our employees in administrative, executive and finance functions.

G&A expenses also include professional fees for legal, accounting, audit, tax and consulting services, insurance, office, and travel expenses.

Total other income decreased by $208,000 to $331,000 for the six months ended March 31, 2025 compared to $539,000 for the same period last year and was composed of the following:

Grant income remained unchanged at $0.4 million for the six months ended March 31, 2025 and the six months ended March 31, 2024, respectively.

Grant income is related to activities under the 2023 SIF Agreement.

Interest income decreased by $102,000 to $2,000 for the six months ended March 31, 2025 compared to $104,000 for the same period last year primarily due to lower cash balances.

Foreign exchange loss was $25,000 for the six months ended March 31, 2025 compared to a loss of $4,800 for the six months ended March 31, 2024.

For the six months ended March 31, 2025, our net loss was $3.2 million, or $0.74 per common share, compared to a net loss of $3.5 million, or $1.12 per common share for the six months ended March 31, 2024.

Capital Expenditures

Our capital expenditures primarily consist of computer and office equipment.

There were no significant capital expenditures for the three months ended December 31, 2024 and 2023.

There were no significant capital expenditures for the three and six months ended March 31, 2025 and 2024.

Liquidity and Capital Resources

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Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in accounts payable and accrued expenses.

Net cash used in operating activities was $1.5 million and $1.4 million for the three months ended December 31, 2024 and 2023, respectively.

Net cash used in operating activities was $3.9 million and $3.1 million for the six months ended March 31, 2025 and 2024, respectively.

We incurred net losses of $3.2 million and $3.5 million, respectively, for those same periods.

On February 12, 2025, we entered into the Series B-1 Purchase Agreement the Investors, pursuant to which we sold to the Investors in a private placement, an aggregate of (i) 834 Series B-1 Preferred Shares, each of which is initially convertible into approximately 5,208 common shares (Series B-1 Conversion Shares) at a conversion price of $1.92 per Series B-1 Conversion Share, and (ii) 3,468,746 common shares.

On February 12, 2025, we entered into the Series B-1 Purchase Agreement with the Series B-1 Investors, pursuant to which we sold to the Series B-1 Investors in a private placement, an aggregate of (i) 834 Series B-1 Preferred Shares, each of which is initially convertible into approximately 5,208 Series B-1 Conversion Shares at a conversion price of $1.92 per Series B-1 Conversion Share, and (ii) 3,468,746 common shares.

The purchase price per Series B-1 Preferred Share was $10,000 and the purchase price per common share was $1.92.

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In October 2024, we entered into the HCW ATM pursuant to which we may offer and sell, from time to time, common shares through an at-the-market equity offering program for up to $3.87 million in gross proceeds.

For the three months ended December 31, 2024, we sold a total of 220,269 common shares pursuant to the agreement for net proceeds of $0.6 million after deducting sales agent commissions of $19,000.

We have not sold any common shares pursuant to the HCW ATM subsequent to December 31, 2024.

For the three months ended March 31, 2025, we sold a total of 83,788 common shares pursuant to the agreement for net proceeds of $$0.2 million after deducting sales agent commissions of $6,000.

For the six months ended March 31, 2025, we sold a total of 304,057 common shares pursuant to the agreement for net proceeds of $0.8 million after deducting sales agent commissions of $25,000.

We have not sold any common shares pursuant to the HCW ATM subsequent to March 31, 2025.

In October 2024, we entered into the Series A-1 Purchase Agreement with the Series A-1 Purchaser, an entity controlled by our Chief Executive Officer, Secretary and member of our board of directors, pursuant to which we agreed to issue and sell to the Series A-1 Purchaser in a private placement, up to $5 million of Series A-1 Preferred Shares, each of which is initially convertible into approximately 2,903 Series A-1 Conversion Shares, at a conversion price of $3.445 per Series A-1 Conversion Share, and Warrants to purchase the Warrant Shares at an exercise price of $3.445 per Warrant Share.

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The remaining C$17.2 million is conditionally repayable starting in 2029 only if and when we earn gross revenue.

For the three months ended December 31, 2024 and 2023, we recorded grant income of $0.3 million and $0.1 million, respectively, related to the 2023 SIF Agreement.

For the three months ended March 31, 2025and 2024, we recorded grant income of $0.1 million and $$0.3 million, respectively, related to the 2023 SIF Agreement.

For the six months ended March 31, 2025 and 2024, we recorded grant income of $0.4 million and $0.4 million, respectively, related to the 2023 SIF Agreement.

In October 2023, we entered into $10.0 million revolving credit agreement with an entity controlled by the Company’s Chief Executive Officer and Secretary and member of our board of directors (Credit Agreement), providing an unsecured revolving credit facility, with a credit limit of $3.5 million (Credit Limit) which was available immediately.

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The Canaccord ATM was terminated in October 2024.

At December 31, 2024, we had an accumulated deficit of $60.2 million and working capital of $0.2 million, including $1.6 million in cash and cash equivalents.

In the three months ended, December 31, 2024, we received proceeds of $1.5 million from the initial sale of Series A-1 Preferred Shares to the Series A-1 Purchaser.

Subsequent to the quarter, we received gross proceeds of $15.0 million from the sale of common shares and Series B-1 Preferred Shares in a private placement.

We expect that our cash and cash equivalents at December 31, 2024, including the net proceeds from the Series A-1 Purchase Agreement, the $15.0 million in gross proceeds from the sale of common shares and Series B-1 Preferred Shares, HCW ATM and reimbursements of eligible R&D expenses under the 2023 SIF Agreement, will be used to fund our operating expenses including the advancement of the Vitiligo program through the end of fiscal 2026.

At March 31, 2025, we had an accumulated deficit of $61.9 million and working capital of $13.5 million, including $13.9 million in cash and cash equivalents.

In the six months ended, March 31, 2025, we received proceeds of $1.5 million from the initial sale of Series A-1 Preferred Shares to the Series A-1 Purchaser and gross proceeds of $15.0 million from the sale of common shares and Series B-1 Preferred Shares in a private placement.

We expect that our cash and cash equivalents at March 31, 2025, including the net proceeds from the Series A-1 Purchase Agreement, the $15.0 million in gross proceeds from the sale of common shares and Series B-1 Preferred Shares, HCW ATM and reimbursements of eligible R&D expenses under the 2023 SIF Agreement will be used to fund our operating expenses including the advancement of the Vitiligo program through the end of fiscal 2026.

Management has flexibility to adjust this timeline by making changes to planned expenditures related to, among other factors, the size and timing of clinical trial expenditures and manufacturing campaigns, staffing levels, and the acquisition or in-licensing of new product candidates.

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Net cash used in operating activities

Net cash used in operating activities was $1.5 million for the three months ended December 31, 2024 compared to $1.4 million for the three months ended December 31, 2023 primarily due to a slight increase in operating expenses and an investment in working capital of $24,000, compared to a recovery of working capital $42,000 in the comparable period.

Net cash used in operating activities was $3.9 million for the six months ended March 31, 2025 compared to $3.1 million for the six months ended March 31, 2024, primarily due to an improvement in net loss offset by an investment in working capital of $0.9 million, compared to a recovery of working capital $63,000 in the comparable period.

Net cash used in investing activities

There was no cash used in investing activities for the three months ended December 31, 2024 and 2023, respectively.

There was no cash used in investing activities for the six months ended March 31, 2025 and 2024, respectively.

Net cash provided by financing activities

Net cash provided by financing activities was $2.1 million for the three months ended December 31, 2024, as compared to $0.3 million for the three months ended December 31, 2023.

In the current period, we received $1.5 million in proceeds from the sale of the Series A-1 Preferred Shares, in addition to proceeds of $0.6 million from the HCW ATM, partially offset by issuance costs of $96,000.

Net cash provided by financing activities was $16.8 million for the six months ended March 31, 2025, as compared to $0.5 million for the six months ended March 31, 2024.

In the current period, we received $15.0 million in proceeds from the sale of common shares and the sale of Series B-1 Preferred Shares, $1.5 million in proceeds from the sale of the Series A-1 Preferred Shares and proceeds of $0.8 million from the HCW ATM, partially offset by issuance costs of $0.5 million.

In the comparative period, we received $0.6 million in net proceeds from the Canaccord ATM.

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R&D expenses, which have historically varied based on the level of activity in our clinical programs, are significantly influenced by study initiation expenses and patient recruitment rates, and as a result are expected to continue to fluctuate, sometimes substantially.

Our R&D expenses were $1.0 million for the three months ended December 31, 2024, compared to $0.7 million for the three months ended December 31, 2023.

The increase was due primarily to manufacturing expenses related to paridiprubart.

Our R&D expenses were $0.5 million and $1.5 million for the three and six months ended March 31, 2025, compared to $1.2 million and $1.9 million for the three and six months ended March 31, 2024.

The decrease was primarily related to lower clinical expenses related to EB05 (paridiprubart), partially offset by an increase in costs related to EB06 as we prepare for the Phase 2 clinical study.

Off-Balance Sheet Arrangements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements