What changed in this filing

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Item 1. Financial Statements

2023-05-11 compared with 2023-02-10 · 134 added, 68 removed, 312 unchanged (39% of the section changed)

39 unchanged sentences

Three Months Ended

December 31, 2022

December 31, 2021

Six Months Ended

Research and development

3 unchanged sentences

( 4,575,231 )

( 4,788,886 )

( 9,736,954 )

Other income (loss):

1 unchanged sentence

Interest income

Foreign exchange loss

Foreign exchange gain (loss)

Loss before income taxes

( 2,333,549 )

( 4,568,516 )

( 4,668,366 )

( 8,947,193 )

Income tax expense

( 2,334,349 )

( 4,569,316 )

( 4,669,166 )

( 8,947,993 )

Exchange differences on translation

2 unchanged sentences

$ ( 4,556,250 )

$ ( 4,685,590 )

$ ( 8,903,078 )

Weighted average number of common shares

3 unchanged sentences

Condensed Interim Consolidated Statements of Cash Flows

Three Months Ended

December 31, 2022

December 31, 2021

Six Months Ended

Cash flows from operating activities:

16 unchanged sentences

Proceeds from issuance of common shares and warrants

Proceeds from exercise of warrants

Payments for issuance costs of common shares and warrants

2 unchanged sentences

Net change in cash and cash equivalents

( 1,958,510 )

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Supplemental Disclosure of Noncash Financing Activities:

Issuance costs withheld from gross proceeds from issuance of common shares and warrants

Fair value of placement agent warrants

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

1 unchanged sentence

Condensed Interim Consolidated Statements of Changes in Shareholders' Equity

Other Comprehensive

Shareholders'

Three Month Ended December 31, 2022

Balance - September 30, 2022

Common Shares

Additional Paid-in Capital

Accumulated Other Comprehensive Loss

Accumulated Deficit

Three Months Ended March 31, 2023

Balance - December 31, 2022

$ ( 238,669 )

$ ( 46,379,370 )

Issuance of common shares and warrants in equity offering

Issuance of common shares upon exercise of warrants

Issuance costs

3 unchanged sentences

( 2,325,706 )

Balance - March 31, 2023

$ ( 230,026 )

$ ( 48,713,719 )

Three Months Ended March 31, 2022

Balance - December 31, 2021

1 unchanged sentence

$ ( 30,874,306 )

Three Months Ended December 31, 2021

Issuance of common shares and warrants in equity offering

Issuance costs including fair value of placement agent warrants

( 1,252,896 )

Share-based compensation

Net loss and comprehensive loss

( 4,569,316 )

( 4,556,250 )

Balance - March 31, 2022

$ ( 160,347 )

$ ( 35,443,622 )

Six Months Ended March 31, 2023

Balance - September 30, 2022

1 unchanged sentence

$ ( 44,044,553 )

Issuance of common shares in equity offering

Issuance of common shares and warrants in equity offering

Issuance of common shares upon exercise of warrants

Issuance costs

3 unchanged sentences

( 4,685,590 )

Balance - December 31, 2021

Balance - March 31, 2023

$ ( 230,026 )

$ ( 48,713,719 )

Six Months Ended March 31, 2022

Balance - September 30, 2021

$ ( 205,262 )

$ ( 26,495,629 )

Issuance of common shares and warrants in equity offering

Issuance costs including fair value of placement agent warrants

( 1,311,559 )

Share-based compensation

Net loss and comprehensive loss

( 8,947,993 )

( 8,903,078 )

Balance - March 31, 2022

$ ( 160,347 )

$ ( 35,443,622 )

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

16 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, 2022 are not necessarily indicative of the results that may be expected for other interim periods or the fiscal year ending September 30, 2023.

Operating results for the three and six months ended March 31, 2023 are not necessarily indicative of the results that may be expected for other interim periods or the fiscal year ending September 30, 2023.

Use of estimates

27 unchanged sentences

Intangible assets, net consisted of the following:

December 31, 2022

September 30,

2 unchanged sentences

Total intangible assets, net

Amortization expense amounted to $0.03 million for each of the three months ended December 31, 2022 and 2021.

Amortization expense amounted to $ 0.03 million for each of the three months ended March 31, 2023 and 2022 and $ 0.05 million for each of the six months ended March 31, 2023 and 2022 .

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

5 unchanged sentences

Right-of-Use Lease with Related Party

The Company leases facilities used for executive offices from a related company.

The Company leases a facility used for executive offices from a related company.

The original lease expired in December 2022, and the Company executed a two-year extension through December 2024.

1 unchanged sentence

Three Months Ended

Six Months Ended

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

Lease terms and discount rates were as follows:

March 31, 2023

September 30, 2022

1 unchanged sentence

Estimated incremental borrowing rate:

The future minimum lease payments under right-of-use leases at December 31, 2022 were as follows:

The future minimum lease payments under right-of-use leases at March 31, 2023 were as follows:

September 30, 2023

7 unchanged sentences

Cash flow information was as follows:

Three Months Ended

December 31, 2022

December 31, 2021

Six Months Ended

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, 2022 are as follows:

Approximate aggregate future contractual payments at March 31, 2023 are as follows:

September 30, 2023

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, 2022 and 2021.

No milestone, royalty or sublicensing payments were made to the third party during the three and six months ended March 31, 2023 and 2022.

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 $ 18.4 million after deducting $0.08 million that is included in the commitments table above for the year ending September 30, 2023.

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.

A milestone payment of $ 0.06 million was made to the third party during the three months ended December 31, 2022 and no milestone payments were made during the three months ended December 31, 2021.

No royalty or sublicensing payments were made to the third party during the three months ended December 31, 2022 and 2021.

Milestone payments totaling $ 0.06 million and $ 0.12 million were made to the third party during the three and six months ended March 31, 2023, respectively.

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

No royalty or sublicensing payments were made to the third party during the three and six months ended March 31, 2023 and 2022.

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.

A milestone payment of $ 0.03 million was made during the three months ended December 31, 2021 and no milestone payments were made during the three months ended December 31, 2022.

The Company is committed to remaining payments of up to an aggregate amount of $ 69.1 million, primarily relating to future potential commercial approval and sales milestones.

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 annually as long as the requirement to file an IND remains unfulfilled.

Milestone payments of $ 0.03 million were made under the 2021 agreement during the six months ended March 31, 2022.

No milestones were met during the three and six months ended March 31, 2023 or the three months ended March 31, 2022.

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

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 or prorated license fee annually as long as the requirement to file an IND remains unfulfilled.

Capital Shares

Equity Distribution Agreements

On March 27, 2023, the Company entered into an equity distribution agreement with Canaccord Genuity LLC (Canaccord), as sales agent, pursuant to which the Company may 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 $ 8.37 million.

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.

During the three months ended March 31, 2023, there were no sales under the equity distribution agreement.

From November 22, 2021 until terminated March 21, 2022, the Company had an equity distribution agreement for an at-the-market equity offering program with another sales agent.

During the six months ended March 31, 2022, the Company sold a total of 626,884 common shares pursuant to the agreement for net proceeds of $2.62 million.

Equity offerings

13 unchanged sentences

The placement agent warrants are exercisable on or after March 24, 2022, at an exercise price of $ 4.5625 per share, and will expire on March 21, 2027 with a fair value of $ 0.41 million.

Equity distribution agreements

On November 22, 2021, the Company entered into an equity distribution agreement with RBC Capital Markets, LLC (RBCCM), as sales agent.

Pursuant to the terms of the agreement, as amended March 4, 2022, the Company could offer and sell common shares through an at-the-market equity offering program having an aggregate offering price of up to $ 15.4 million.

During the three months ended December 31, 2021, the Company sold a total of 223,396 common shares pursuant to the agreement for net proceeds of $ 1.23 million.

The distribution agreement was terminated effective March 21, 2022.

Black-Scholes option valuation model

12 unchanged sentences

Weighted Average Exercise Price

Three Months Ended December 31, 2022

Six Months Ended March 31, 2023

Balance - September 30, 2022

Balance -December 31, 2022

Three Months Ended December 31, 2021

Balance - September 30, 2021 and December 31, 2021

The weighted average contractual life remaining on the outstanding warrants at December 31, 2022 is 37 months.

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

Balance - March 31, 2023

Six Months Ended March 31, 2022

Balance - September 30, 2021

Balance - March 31, 2022

The weighted average contractual life remaining on the outstanding warrants at March 31, 2023 is 37 months.

The following table summarizes information about the warrants outstanding at March 31, 2023:

Number of Warrants (#)

1 unchanged sentence

December 2023

February 2025

December 2025

February 2026

September 2027

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

Three Months Ended

December 31, 2022

The fair value of warrants granted during the six months ended March 31, 2023 was estimated using the Black-Scholes option valuation model using the following assumptions:

Six Months Ended March 31, 2023

Six Months Ended March 31, 2022

Class A Warrants

Class B Warrants

Class A Warrants

Class B Warrants

Risk free interest rate

2 unchanged sentences

Expected dividend yield

Pre-funded Warrants

A summary of the Company’s pre-funded warrants 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, 2023.

Share Options

1 unchanged sentence

Options, restricted shares and restricted share units are eligible for grant under the 2019 Plan.

At December 31, 2022, the total number of shares available for issuance is 2,625,951 including shares available for the exercise of outstanding options under the 2019 Plan.

The remaining number of options available for grant at December 31, 2022 is 418,990.

At March 31, 2023, the total number of shares available for issuance is 2,625,951 including shares available for the exercise of outstanding options under the 2019 Plan.

The remaining number of options available for grant at March 31, 2023 is 89,540 .

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

7 unchanged sentences

Weighted Average Grant Date Fair Value

Three Months Ended December 31, 2022

Six Months Ended March 31, 2023

Balance - September 30, 2022

Balance - December 31, 2022

Three Months Ended December 31, 2021

Balance - March 31, 2023

Six Months Ended March 31, 2022

Balance - September 30, 2021

Balance - December 31, 2021

During the three months ended December 31, 2022, the independent members of the Board of Directors granted 3,500 employee options pursuant to the 2019 Plan.

Balance - March 31, 2022

During the six months ended March 31, 2023, the independent members of the Board of Directors granted 332,950 employee and new employee options pursuant to the 2019 Plan.

During the six months ended March 31, 2022, the independent members of the Board of Directors granted 415,083 employee options and 85,000 director options.

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, 2022 is 93 months.

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

The weighted average contractual life remaining on the outstanding options at March 31, 2023 is 94 months.

The following table summarizes information about the options under the 2019 Plan outstanding and exercisable at March 31, 2023:

Number of Options (#)

Exercisable at December 31, 2022 (#)

Exercisable at

March 31, 2023 (#)

Range of Exercise Prices

2 unchanged sentences

Aug 2027 - Dec 2028

$ 7.44 - 8.07

Sep 2030 - Oct 2030

$ 5.25 - 5.65

Jan 2031 - Sep 2031

$ 2.94 - 3.71

Feb 2032 - Mar 2032

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

Three Months Ended

December 31, 2022

$ 0.96 - 1.43

Dec 2032 - Feb 2033

The fair value of options granted during the six months ended March 31, 2023 and 2022 was estimated using the Black-Scholes option valuation model using the following assumptions:

Six Months Ended

March 31, 2023

March 31, 2022

Risk free interest rate

3.62 % - 4.18

1.71 % - 2.54

Expected life

Expected share price volatility

95.3 % - 97.34

85.91 % - 86.59

Expected dividend yield

The Company recorded $ 0.33 million and $ 0.61 million of share-based compensation expenses for the three months ended December 31, 2022 and 2021, respectively.

As of December 31, 2022, the Company had $ 0.71 million of unrecognized share-based compensation expense, which is expected to be recognized over a period of 35 months.

The Company recorded $ 0.29 million and $ 0.63 million of share-based compensation expenses for the three months ended March 31, 2023 and 2022, respectively and $ 0.62 million and $ 1.24 million for the six months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023, the Company had $ 0.77 million of unrecognized share-based compensation expense, which is expected to be recognized over a period of 35 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 December 31, 2022, all grant reimbursements have been received.

At March 31, 2023, the grant program is complete and all grant reimbursements have been received.

Financial Instruments

1 unchanged sentence

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.

Fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Company follows the fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

17 unchanged sentences

The Company assesses the collectability of accounts receivable through a review of the current aging and terms, as well as an analysis of historical collection rates, general economic conditions and credit status of government agencies.

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.

Credit risk for the HST refunds receivable are not considered significant since amounts are due from the Canada Revenue Agency.

5 unchanged sentences

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

At December 31, 2022, the Company and its Canadian subsidiary had assets denominated in Canadian dollars of approximately C$ 6.78 million and the U.S.

At March 31, 2023, the Company and its Canadian subsidiary had assets denominated in Canadian dollars of approximately C$5.2 million and the U.S.

dollar exchange rate at this date was equal to 1.3532 Canadian dollars.

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

Based on the exposure at March 31, 2023, 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

During each of three months ended December 31, 2022 and 2021, the Company paid cash of $ 0.02 million for right of use lease from a company controlled by the Company’s CEO.

During each of three and six months ended March 31, 2023 and 2022, the Company paid cash of $ 0.02 million and $ 0.04 million, respectively, for a right of use 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.

1 unchanged sentence

Subsequent Events

Subsequent to December 31, 2022 and through the date of this filing, 705,314 shares have been issued upon the exercise of Class A and Class B warrants with proceeds to the Company of $ 0.77 million.

Subsequent to March 31, 2023, equity sales under the Company’s “at the market” offering program have resulted in the issuance of 562,052 common shares and receipt of net cash proceeds of $ 0.60 million after deducting sales agent commissions.

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