What changed in this filing

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Item 1. Financial Statements

2022-08-12 compared with 2022-05-13 · 84 added, 102 removed, 368 unchanged (34% of the section changed)

2 unchanged sentences

Condensed Interim Consolidated Balance Sheets

March 31, 2022

June 30, 2022

September 30, 2021

7 unchanged sentences

Intangible asset, net

Right-of-use assets

Operating lease right-of-use assets

Liabilities and shareholders' equity:

1 unchanged sentence

Accounts payable and accrued liabilities

Lease obligations on right-of-use assets

Short-term operating lease liabilities

Total current liabilities

1 unchanged sentence

Long-term payables

Long-term lease obligations on right-of-use assets

Long-term operating lease liabilities

Total liabilities

16 unchanged sentences

Three Months Ended

Six Months Ended

March 31, 2022

March 31, 2021

March 31, 2022

March 31, 2021

Nine Months Ended

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Research and development

30 unchanged sentences

Condensed Interim Consolidated Statements of Cash Flows

Six Months Ended

March 31, 2022

March 31, 2021

Nine Months Ended

June 30, 2022

June 30, 2021

Cash flows from operating activities:

34 unchanged sentences

Common Shares

Additional Paid-in Capital

Accumulated Other Comprehensive Loss

Accumulated Deficit

Total Shareholders' Equity

Three Months Ended March 31, 2022

Balance - December 31, 2021

$ ( 173,413 )

Comprehensive Loss

Shareholders'

Three Months Ended June 30, 2022

Balance - March 31, 2022

$ ( 160,347 )

Issuance of common shares and warrants in equity offering

Issuance costs including fair value of placement agent warrants

$ ( 35,443,622 )

3 unchanged sentences

( 5,752,461 )

Balance - March 31, 2022

$ ( 160,347 )

$ ( 35,443,622 )

Three Months Ended March 31, 2021

Balance - December 31, 2020

Balance - June 30, 2022

$ ( 125,788 )

$ ( 41,230,642 )

Issuance of common shares and warrants in equity offering

Issuance costs including fair value of underwriter warrants

Three Months Ended June 30, 2021

Balance - March 31, 2021

$ ( 194,257 )

$ ( 18,050,078 )

Issuance of common shares upon exercise of warrants

Issuance of common shares upon exercise of share options

Preferred return on convertible preferred shares

Conversion of convertible preferred shares

Share-based compensation

2 unchanged sentences

( 4,585,382 )

Balance - March 31, 2021

$ ( 194,257 )

Balance - June 30, 2021

$ ( 22,809,588 )

Six Months Ended March 31, 2022

Nine Months Ended June 30, 2022

Balance - September 30, 2021

8 unchanged sentences

( 14,655,539 )

Balance - March 31, 2022

Balance - June 30, 2022

$ ( 125,788 )

$ ( 41,230,642 )

Six Months Ended March 31, 2021

Nine Months Ended June 30, 2021

Balance - September 30, 2020

13 unchanged sentences

( 9,390,034 )

Balance - March 31, 2021

$ ( 194,257 )

Balance - June 30, 2021

$ ( 22,809,588 )

11 unchanged sentences

While the full impact of the COVID-19 pandemic to business and operating results presents additional uncertainty, the Company’s management continues to use reasonably available information to assess impacts to the Company’s business plans and financial condition.

Basis of Preparation

Basis of Presentation

The accompanying unaudited condensed interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S.

6 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 and six months ended March 31, 2022 are not necessarily indicative of the results that may be expected for other interim periods or the fiscal year ending September 30, 2022.

Operating results for the three and nine months ended June 30, 2022 are not necessarily indicative of the results that may be expected for other interim periods or the fiscal year ending September 30, 2022.

Use of estimates

27 unchanged sentences

Intangible assets, net consisted of the following:

March 31, 2022

June 30, 2022

September 30, 2021

2 unchanged sentences

Total intangible assets, net

Amortization expense amounted to $ 0.25 million for each of the three months ended March 31, 2022 and 2021 and $ 0.51 million for each of the six months ended March 31, 2022 and 2021.

Amortization expense amounted to $ 0.25 million for each of the three months ended June 30, 2022 and 2021 and $ 0.76 million for each of the nine months ended June 30, 2022 and 2021.

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

5 unchanged sentences

Lease with Related Party

The Company leases facilities used for executive offices from a company controlled by the Company’s CEO for a six-year term through December 2022, with options to renew for another two-year term.

The Company leases facilities used for executive offices from a company controlled by the Company’s CEO for a six-year term through December 2022, with an option to renew for another two-year term.

The option period is not included in the right-of-use assets and related lease obligation.

1 unchanged sentence

Three Months Ended

Six Months Ended

March 31, 2022

March 31, 2021

March 31, 2022

March 31, 2021

Nine Months Ended

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Operating lease cost, included in general and administrative on the Statements of Operations

Lease terms and discount rates were as follows:

March 31, 2022

June 30, 2022

September 30, 2021

1 unchanged sentence

Estimated incremental borrowing rate:

The approximate future minimum lease payments under operating leases at March 31, 2022 were as follows:

The approximate future minimum lease payments under operating leases at June 30, 2022 were as follows:

September 30, 2022

4 unchanged sentences

Cash flow information was as follows:

Six Months Ended

March 31, 2022

March 31, 2021

Nine Months Ended

June 30, 2022

June 30, 2021

Cash paid for amounts included in the measurement of lease liabilities, included in accounts payable and accrued liabilities on the Statements of Cash Flows

Research and other commitments

The Company has commitments for contracted research organizations that perform clinical trials for the Company’s ongoing clinical studies, other service providers and the drug substance acquired in connection with a license agreement.

Aggregate future contractual payments at March 31, 2022 are as follows:

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

Aggregate future contractual payments at June 30, 2022 are as follows:

September 30, 2022

6 unchanged sentences

See Note 3 for intangible assets.

Under the license agreement, the Company recorded an expense of $ 3.5 million as a result of meeting a milestone during the three and six months ended March 31, 2021 and is committed to remaining payments of up to an aggregate amount of $ 352.5 million contingent upon meeting certain milestones outlined in the license agreement, primarily relating to future potential commercial approval and sales milestones.

No milestone payments were made to the third party during the three and six months ended March 31, 2022.

Under the license agreement, the Company recorded an expense of $ 3.5 million as a result of meeting a milestone during the three and nine months ended June 30, 2021 and is committed to remaining payments of up to an aggregate amount of $ 352.5 million contingent upon meeting certain milestones outlined in the license agreement, primarily relating to future potential commercial approval and sales milestones.

No milestone payments were made to the third party during the three and nine months ended June 30, 2022.

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 royalty or sublicensing payments were made to the third party during the three and six months ended March 31, 2022 and 2021.

No royalty or sublicensing payments were made to the third party during the three and nine months ended June 30, 2022 and 2021.

In connection with this license agreement and pursuant to a purchase agreement entered into in April 2020, the Company acquired drug substance of one of the Constructs for an aggregate purchase price of $5.0 million, payable in two future installments based on the earlier of certain clinical trial progress or fixed dates.

A payment of $2.5 million was made for the drug substance during the three and six months ended March 31, 2021 .

No payments for drug substance were made during the three and six months ended March 31, 2022.

The remaining purchase commitment is included in the table above for the year ending September 30, 2022.

The Company recorded expense of $2.5 million during each of the three and nine months ended June 30, 2022 and 2021 .

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.

2 unchanged sentences

Under the license agreement, the Company is committed to payments of various amounts to the third party upon meeting certain milestones outlined in the license agreement, up to an aggregate amount of $ 18.6 million.

Upon divestiture of substantially all of the assets of the Company, the Company shall pay the third party a percentage of the valuation of the licensed technology sold as determined by an external objective expert.

Upon divestiture of substantially all of the assets of the Company, the Company would pay the third party a percentage of the valuation of the licensed technology sold as determined by an external objective expert.

The Company also has a commitment to pay the third party a royalty based on net sales of the product in countries where the Company, or an affiliate, directly commercializes the product and a percentage of sublicensing revenue received by the Company and its affiliates in the countries where it does not directly commercialize the product.

No milestone, license or royalty payments were made to the third party during the three and six months ended March 31, 2022 and 2021.

No milestone, license or royalty payments were made to the third party during the three and nine months ended June 30, 2022 and 2021.

In March 2021, through its Ontario subsidiary, the Company entered into a license agreement with the inventor of the same pharmaceutical product to acquire global rights for all fields of use beyond those named under the 2016 license agreement.

The Company recorded an expense of $ 0.11 million as a result of meeting milestones outlined in the 2021 license agreement for the three months ended March 31, 2021 and $ 0.03 and $ 0.11 for the six months ended March 31, 2022 and 2021, respectively.

No milestones were met during the three months ended March 31, 2022.

The Company recorded an expense of $ 0.11 million as a result of meeting milestones outlined in the 2021 license agreement for the three months ended June 30, 2021 and $ 0.03 million and $ 0.11 million for the nine months ended June 30, 2022 and 2021, respectively.

No milestones were met during the three months ended June 30, 2022.

The Company is committed to remaining payments of up to an aggregate amount of $ 68.9 million, primarily relating to future potential commercial approval and sales milestones.

24 unchanged sentences

Pursuant to the terms of the agreement, as amended March 4, 2022, the Company could offer and sell common shares having an aggregate offering price of up to $ 15.4 million from time to time through RBCCM.

For the six months ended March 21, 2022, the Company sold a total of 626,884 common shares pursuant to the agreement for gross proceeds of $ 2.94 million.

From November 22, 2021 to March 21, 2022, the Company sold a total of 626,884 common shares pursuant to the agreement for gross proceeds of $ 2.94 million.

The commissions and direct costs of the offering program totaled approximately $ 0.32 million and were recorded as an offset against gross proceeds.

11 unchanged sentences

Changes in the subjective input assumptions can materially affect the fair value estimates, and therefore the existing models do not necessarily provide a reliable single measure of the fair value of the Company’s warrants and share options.

A summary of the Company’s warrant activity is as follows:

A summary of the Company’s warrants activity is as follows:

Number of Warrant Shares (#)

Weighted Average Exercise Price

Six Months Ended March 31, 2022

Nine Months Ended June 30, 2022

Balance - September 30, 2021

Balance – March 31, 2022

Six Months Ended March 31, 2021

Balance - June 30, 2022

Nine Months Ended June 30, 2021

Balance - September 30, 2020

Balance – March 31, 2021

The weighted average contractual life remaining on the outstanding warrants at March 31, 2022 is 56 months.

The following table summarizes information about the warrants outstanding at March 31, 2022:

Balance - June 30, 2021

The weighted average contractual life remaining on the outstanding warrants at June 30, 2022 is 53 months.

The following table summarizes information about the warrants outstanding at June 30, 2022:

Number of Warrants (#)

2 unchanged sentences

September 2027

The fair value of warrants granted during the three and six months ended March 31, 2022 and 2021 was estimated using the Black-Scholes option valuation model using the following assumptions:

Six Months Ended March 31, 2022

Six Months Ended March 31, 2021

The fair value of warrants granted during the three and nine months ended June 30, 2022 and 2021 was estimated using the Black-Scholes option valuation model using the following assumptions:

Nine Months Ended June 30, 2022

Nine Months Ended June 30, 2021

Common Warrants

6 unchanged sentences

Pre-funded Warrants

A summary of the Company’s pre-funded warrants activity is as follows:

A summary of the Company’s pre-funded warrant activity is as follows:

Number of Pre-funded Warrant Shares (#)

Six Months Ended March 31, 2022

Balance - September 30, 2021

Balance – March 31, 2022

There were no pre-funded warrants during the six months ended March 31, 2021.

Balance - June 30, 2022

Share Options

9 unchanged sentences

Weighted Average Grant Date Fair Value

Six Months Ended March 31, 2022

Nine Months Ended June 30, 2022

Balance - September 30, 2021

Balance – March 31, 2022

Six Months Ended March 31, 2021

Balance - June 30, 2022

Nine Months Ended June 30, 2021

Balance - September 30, 2020

Balance – March 31, 2021

During the quarter ended March 31, 2022, the independent members of the Board of Directors granted a total of 415,083 options to employees of the Company pursuant to the 2019 Plan.

Balance - June 30, 2021

During the nine months ended June 30, 2022, the independent members of the Board of Directors granted a total of 415,083 options to employees of the Company pursuant to the 2019 Plan.

The options have a term of 10 years with vesting in equal proportions over 36 months beginning on the monthly anniversary of the grant date (following 90 days of employment for new employees), and an exercise price equal to the Nasdaq closing price on the grant dates.

During the quarter ended March 31, 2022, the independent directors of the Board of Directors granted a total of 85,000 options, respectively, to directors of the Company pursuant to the 2019 Plan.

During the nine months ended June 30, 2022, the independent directors of the Board of Directors granted a total of 85,000 options, respectively, to directors of the Company pursuant to the 2019 Plan.

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

Options for directors have monthly vesting in equal proportions over 12 months beginning on the grant date.

The weighted average contractual life remaining on the outstanding options at March 31, 2022 is 102 months.

The following table summarizes information about the options under the 2019 Plan outstanding and exercisable at March 31, 2022:

The weighted average contractual life remaining on the outstanding options at June 30, 2022 is 99 months.

The following table summarizes information about the options under the 2019 Plan outstanding and exercisable at June 30, 2022:

Number of Options (#)

Exercisable at

March 31, 2022 (#)

June 30, 2022 (#)

Range of Exercise Prices

5 unchanged sentences

Feb 2032 - Mar 2032

The fair value of options granted during the three and six months ended March 31, 2022 and 2021 was estimated using the Black-Scholes option valuation model using the following assumptions:

Six Months Ended March 31, 2022

Six Months Ended March 31, 2021

The fair value of options granted during the nine months ended June 30, 2022 and 2021 was estimated using the Black-Scholes option valuation model using the following assumptions:

Nine Months Ended

June 30, 2022

June 30, 2021

Risk free interest rate

6 unchanged sentences

Expected dividend yield

The Company recorded $ 0.63 million and $ 0.47 million of share-based compensation expenses for the three months ended March 31, 2022 and 2021, respectively and $ 1.24 million and $ 1.19 million for the six months ended March 31, 2022 and 2021.

As of March 31, 2022, the Company had approximately $ 2.16 million of unrecognized share-based compensation expense, which is expected to be recognized over a period of 34 months.

The Company recorded $ 0.57 million and $ 1.10 million of share-based compensation expenses for the three months ended June 30, 2022 and 2021, respectively and $ 1.80 million and $ 2.29 million for the nine months ended June 30, 2022 and 2021, respectively.

As of June 30, 2022, the Company had approximately $ 1.49 million of unrecognized share-based compensation expense, which is expected to be recognized over a period of 31 months.

Reimbursement Grant Income and Receivable

Reimbursement grant income for the Company’s federal grant with the Canadian government’s Strategic Innovation Fund (SIF) is recorded based on the claim period of eligible costs.

At March 31, 2022, grant reimbursements receivable of $ 1.1 million were included in accounts and other receivable.

At June 30, 2022, grant reimbursements receivable of $ 1.1 million were included in accounts and other receivable.

Financial Instruments

(a) Fair values

The Company uses the fair value measurement framework for valuing financial assets and liabilities measured on a recurring basis in situations where other accounting pronouncements either permit or require fair value measurements.

10 unchanged sentences

The fair value of lease obligations on right-of-use assets approximates carrying value due to a fixed lease rate, which represents market rate.

(b) Interest rate and credit risk

Interest rate and credit risk

Interest rate risk is the risk that the value of a financial instrument might be adversely affected by a change in interest rates.

7 unchanged sentences

Credit risk for reimbursement grant and HST refunds receivable are not considered significant since amounts are due from the Canadian government’s Strategic Innovation Fund (SIF) and the Canada Revenue Agency.

Foreign exchange risk

The Company and its subsidiary have balances in Canadian dollars that give rise to exposure to foreign exchange (FX) risk relating to the impact of translating certain non-U.S.

4 unchanged sentences

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

At March 31, 2022, the Company and its Canadian subsidiary had assets denominated in Canadian dollars of approximately C$ 5.3 million and the U.S.

At June 30, 2022, the Company and its Canadian subsidiary had assets denominated in Canadian dollars of approximately C$ 7 million and the U.S.

dollar exchange rate as at this date was equal to 1.2893 Canadian dollars.

Based on the exposure at March 31, 2022, a 10% annual change in the Canadian/U.S.

Based on the exposure at June 30, 2022, a 10% annual change in the Canadian/U.S.

exchange rate would impact the Company’s loss and other comprehensive loss by approximately $541,000 .

(d) Liquidity risk

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty raising liquid funds to meet commitments as they fall due.

3 unchanged sentences

Related Party Transactions

The Company incurred rent expense of $ 0.20 million during each of the three months ended March 31, 2022 and 2021 and $ 0.41 million and $ 0.40 million for the six months ended March 31, 2022 and 2021, respectively from a company controlled by the Company’s CEO.

The Company incurred rent expense of $ 0.20 million and $ 0.21 million for the three months ended June 30, 2022 and 2021, respectively, and $ 0.61 million for each of the nine months ended June 30, 2022 and 2021, 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.

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