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BriaCell Therapeutics Corp. [BCTX]
Date Filed : Mar 18, 2024
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UNITEDSTATES
SECURITIESAND EXCHANGE COMMISSION
Washington,D.C. 20549
FORM
(MarkOne)
Forthe quarterly period ended
Forthe transition period from to
CommissionFile No.
(Exactname of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices, including zip code) |
(Registrant’s telephone number, including area code) |
N/A |
(Former name, former address and former fiscal year, if changed since last report) |
Securitiesregistered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol | Name of each exchange on which registered | ||
Indicateby check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities ExchangeAct of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days.
Indicateby check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrantwas required to submit such files).
Indicateby check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reportingcompany, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☐ Large accelerated filer | ☐Accelerated filer | |
☒ | ||
Ifan emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complyingwith any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicateby check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes
Asof March 18, 2024, there were
BRIACELLTHERAPEUTICS CORP.
Form10-Q
Tableof Contents
2 |
PARTI-FINANCIAL
INFORMATION
Item1. Financial Statements
BRIACELLTHERAPEUTICS CORP.
UNAUDITEDCONDENSED CONSOLIDATED BALANCE SHEETS
January 31, 2024 | July 31, 2023 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Amounts receivable | ||||||||
Prepaid expenses | ||||||||
Total current assets | ||||||||
NON-CURRENT ASSETS: | ||||||||
Investments | ||||||||
Equity investment in BC Therapeutics | - | |||||||
Intangible assets, net | ||||||||
Total non-current assets | ||||||||
Total assets | $ | $ | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Trade payables | $ | $ | ||||||
Accrued expenses and other payables | ||||||||
Total current liabilities | ||||||||
NON-CURRENT LIABILITIES: | ||||||||
Warrant liability | ||||||||
Total non-current liabilities | ||||||||
SHAREHOLDERS’ DEFICIT: | ||||||||
Share Capital of | ||||||||
Share-based payment reserve | ||||||||
Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
Non-controlling Interest | ( | ) | - | |||||
Accumulated deficit | ( | ) | ( | ) | ||||
Total shareholders’ deficit | ( | ) | ( | ) | ||||
Total liabilities and shareholders’ deficit | $ | $ |
Theaccompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3 |
BRIACELLTHERAPEUTICS CORP.
CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE THREE AND SIX MONTHS ENDED JANUARY 31, 2024
(Unaudited)
2024 | 2023 | 2024 | 2023 | |||||||||||||
Three months ended January 31, | Six months ended January 31, | |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
Operating Expenses: | ||||||||||||||||
Research and development expenses | $ | $ | $ | $ | ||||||||||||
General and administrative expenses | ||||||||||||||||
Total operating expenses | ||||||||||||||||
Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Financial expenses, net | ( | ) | ( | ) | ( | ) | ||||||||||
Share of loss on equity investment | ( | ) | - | ( | ) | - | ||||||||||
Net loss for the period | $ | ( | ) | $ | ( | ) | $ | ( | ) | ( | ) | |||||
Net loss attributable to non-controlling interest | ( | ) | - | ( | ) | - | ||||||||||
Net loss and Comprehensive loss for the period attributable to BriaCell | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Net loss per share attributable to BriaCell – basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Weighted average number of shares used in computing net basic earnings per share of common stock | ||||||||||||||||
Weighted average number of shares used in computing net diluted earnings per share of common stock |
Theaccompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4 |
BRIACELLTHERAPEUTICS CORP.
CONDENSEDCONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
FORTHE THREE AND SIX MONTHS ENDED JANUARY 31, 2024
Number | Amount | capital | loss | deficit | interest | (deficit) | ||||||||||||||||||||||
Share capital | Additional paid in | Accumulated other comprehensive | Accumulated | Non- controlling | Total shareholders’ equity | |||||||||||||||||||||||
Number | Amount | capital | loss | deficit | interest | (deficit) | ||||||||||||||||||||||
Balance, October 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
Issuance of options | - | - | - | - | - | |||||||||||||||||||||||
Loss for the period | - | - | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Balance, January 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Share capital | Additional paid in | Accumulated other comprehensive | Accumulated | Non- controlling | Total shareholders’ | |||||||||||||||||||||||
Number | Amount | capital | loss | deficit | interest | deficit | ||||||||||||||||||||||
Balance, July 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | - | $ | ( | ) | ||||||||||||||||
Instruments issued to minority shareholders at the Arrangement Date | - | - | ( | ) | - | - | ( | ) | ( | ) | ||||||||||||||||||
Issuance of options | - | - | - | - | - | |||||||||||||||||||||||
Loss for the period | - | - | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Balance, January 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Number | Amount | capital | loss | deficit | (deficit) | |||||||||||||||||||
Share capital | Additional paid in | Accumulated other comprehensive | Accumulated | Total equity | ||||||||||||||||||||
Number | Amount | capital | loss | deficit | (deficit) | |||||||||||||||||||
Balance, October 31, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
Issuance of options | - | - | - | - | ||||||||||||||||||||
Loss for the period | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
Balance, January 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Share capital | Additional paid in | Accumulated other comprehensive | Accumulated | Total equity | ||||||||||||||||||||
Number | Amount | capital | loss | deficit | (deficit) | |||||||||||||||||||
Balance, July 31, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
Balance | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
Issuance of options | - | - | - | - | ||||||||||||||||||||
Loss for the period | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
Income (loss) for the period | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
Balance, January 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||
Balance | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Theaccompanying notes are an integral part of the condensed consolidated financial statements.
5 |
BRIACELLTHERAPEUTICS CORP.
CONDENSEDCONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JANUARY 31, 2024
(Unaudited)
2024 | 2023 | |||||||
Six months ended January 31, | ||||||||
2024 | 2023 | |||||||
Cash flow from operating activities | ||||||||
Net loss | $ | ( | ) | $ | ( | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | ||||||||
Share-based compensation | ||||||||
Share of loss on equity investment | - | |||||||
Change in fair value of warrants | ( | ) | ||||||
Changes in assets and liabilities: | ||||||||
Increase in amounts receivable | ( | ) | ||||||
Decrease in prepaid expenses | ( | ) | ||||||
Increase in trade payable | ||||||||
Decrease in accrued expenses and other payables | ( | ) | ( | ) | ||||
Total cash flow from operating activities | ( | ) | ( | ) | ||||
Cash flows from investing activities | ||||||||
Equity Investment in BC Therapeutics (*) | - | - | ||||||
Total cash flow from investing activities | - | - | ||||||
Cash flows from financing activities | ||||||||
Share and warrant buyback program | - | ( | ) | |||||
Total cash flow from financing activities | - | ( | ) | |||||
Decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
Cash and cash equivalents at beginning of the period | ||||||||
Cash and cash equivalents at end of the period | $ | $ |
(*) |
Theaccompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6 |
BriaCellTherapeutics Corp
Notesto the Condensed Consolidated Financial Statements
(Unaudited,expressed in US Dollars, except share and per share data and unless otherwise indicated)
NOTE1: GENERAL AND GOING CONCERN
a. | BriaCell Therapeutics Corp. (“BriaCell” or the “Company”) was incorporated under the Business Corporations Act (British Columbia) on July 26, 2006 and is listed on the Toronto Stock Exchange (“TSX”) under the symbol “BCT” and on the Nasdaq Capital Market (“NASDAQ”) under the symbols “BCTX” and “BCTXW”. |
b. | BriaCell Therapeutics Corporation. (the “Company”), is an immuno-oncology biotechnology company. The Company is currently advancing its Bria-IMT targeted immunotherapy program against end-stage breast cancer to Phase 3 study which has been approved by the FDA and is expected to start before end of 2023. BriaCell is also developing a personalized off-the-shelf immunotherapy, Bria-OTS™, and a soluble CD80 protein therapeutic which acts both as a stimulator of the immune system as well as an immune checkpoint inhibitor. |
c. | Basis of presentation of the financial statements: |
Theaccompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generallyaccepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructionsto Form 10-Q and Article 8 of Regulation S-X promulgated by the U.S Securities and Exchange Commission (the “SEC”). Certaininformation or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensedor omitted pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all theinformation and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinionof management, the accompanying unaudited condensed consolidated financial statements include all adjustments consisting of a normalrecurring nature which are necessary for a fair presentation of the financial position, operating results, and cash flows for the periodspresented.
Theaccompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Reportfor the year ended July 31, 2023, filed with the SEC on October 25, 2023. The interim period results do not necessarily indicate theresults that may be expected for any other interim period or for the full fiscal year.
d. | The Company continues to devote substantially all of its efforts toward research and development activities. In the course of such activities, the Company has sustained operating losses and expects such losses to continue in the foreseeable future. The Company’s accumulated deficit as of January 31, 2024 was $ |
7 |
BriaCellTherapeutics Corp
Notesto the Condensed Consolidated Financial Statements
(Unaudited,expressed in US Dollars, except share and per share data and unless otherwise indicated)
NOTE1: GENERAL AND GOING CONCERN (Cont.)
e. | The Company has two wholly-owned U.S. subsidiaries: (i) BriaCell Therapeutics Corp. (“BTC”), which was incorporated in April 3, 2014, under the laws of the state of Delaware. (ii) BTC has a wholly-owned subsidiary, Sapientia Pharmaceuticals, Inc. (“Sapientia”), which was incorporated in September 20, 2012, under the laws of the state of Delaware. The Company also has one Canadian subsidiary: BriaPro Therapeutics Corp, (“BriaPro”) which was incorporated on May 15, 2023, was incorporated under the Business Corporations Act (British Columbia). As of July 31, 2023, BriaPro was a wholly-owned subsidiary. |
f. | OnAugust 31, 2023, the Company closed a plan of arrangement spinout transaction (the “Arrangement”) pursuant to which certainpipeline assets of the Company, including Bria-TILsRx™ and protein kinase C delta (PKCδ) inhibitors for multiple indicationsincluding cancer (the “BriaPro Assets”), were spun-out to BriaPro Therapeutics Corp. (“BriaPro”), resulting ina 2/3rd owned subsidiary of the Company with the remaining 1/3rd held by BriaCell shareholders (“BriaCell Shareholders”). |
Pursuantto the terms of the Arrangement, BriaPro has acquired the entire right and interest in and to the BriaPro Assets in consideration forthe issuance by BriaPro to the Company of BriaPro common shares. Under the terms of the Arrangement, for each BriaCell share held immediatelyprior to closing, BriaCell Shareholders receive one (1) common share of BriaPro, and one (1) new common share of BriaCell (retiring theirold share) having the same terms and characteristics as the existing BriaCell common shares. The Company will remain listed on the NASDAQStock Market and Toronto Stock Exchange, and BriaPro is an unlisted reporting issuer in Canada.
Immediatelyfollowing the closing of the Arrangement, the Company controls 2/3rd of the BriaPro common shares representing approximately
Asa result of the Arrangement, there are
Pursuantto the Arrangement, each BriaCell warrant shall, in accordance with its terms, entitle the holder thereof to receive, upon the exercisethereof, one BriaCell Share and one BriaPro Share for the original exercise price.
Uponthe exercise of BriaCell Warrants, BriaCell shall, as agent for BriaPro, collect and pay to BriaPro an amount for each one (1) BriaProShare so issued that is equal to the exercise price under the BriaCell Warrant multiplied by the fair market value of one (1) BriaProShare at the Effective Date divided by the total fair market value of one (1) BriaCell Share and one (1) BriaPro Share at the EffectiveDate (“BriaPro Warrant Shares”).
Pursuantto the Arrangement, all Briacell option holders received the same amount of BriaPro options (“BriaPro Option”) and underthe BriaPro incentive plan. The exercise price of the BriaCell options was apportioned between the BriaCell options and the BriaPro options,as follows:
Eachone (1) BriaPro Option to acquire one (1) Share shall have an exercise price equal to the product obtained by multiplying the originalexercise price of the BriaCell Option by the quotient obtained by dividing (A) the fair market value of a BriaPro Share at the EffectiveDate by (B) the aggregate fair market value of a BriaCell Share and a BriaPro Share at the Effective Date.
Pursuantto the Arrangement, all BriaCell Restricted Shares Units (“RSU”) holders received the same amount of BriaPro RSU’sunder the BriaPro incentive plan.
TransitionServices Agreement
OnAugust 31, 2023, the Company and BriaPro executed a transition services agreement (the “Agreement”), pursuant to which BriaCellwill provide certain research and development and head office services (the “Services”) to BriaPro for a fixed monthly feeof $
Briacelland BriaPro acknowledged the transitional nature of the Services and accordingly, as promptly as practicable, BriaPro agreed to use commerciallyreasonable efforts to transition each Service to its own internal organization or to obtain alternate third party providers to providethe Services.
Inaccordance with US GAAP’s Accounting Standards Codification 505 “Equity”, the Arrangement was determined to be a spinoffof nonmonetary assets which did not constitute a business. However, since the assets were transferred to an entity under the Company’scontrol, the assets is being recorded on the Company’s basis (carry value) and not at fair market value.
8 |
BriaCellTherapeutics Corp
Notesto the Condensed Consolidated Financial Statements
(Unaudited,expressed in US Dollars, except share and per share data and unless otherwise indicated)
NOTE2: SIGNIFICANT ACCOUNTING POLICIES
a.Use of estimates:
Thepreparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions thataffect the amounts reported in the consolidated financial statements and accompanying notes. The Company’s management believesthat the estimates, judgment and assumptions used are reasonable based upon information available at the time they are made. These estimates,judgments and assumptions can affect the reported amounts of assets and liabilities at the dates of the consolidated financial statements,and the reported amount of expenses during the reporting periods. Actual results could differ from those estimates.
b.Equity method investments:
Investmentsin entities over which the Company does not have a controlling financial interest but has significant influence, are accounted for usingthe equity method, with the Company’s share of losses reported in loss from equity method investments on the statements of lossand comprehensive loss. Equity method investments are recorded at cost, plus the Company’s share of undistributed earnings or losses,and impairment, if any, within interest in equity investees on the statements of financial position.
c.Recently issued and adopted accounting standards:
Asan “emerging growth company,” the Jumpstart Our Business Startups Act (“JOBS Act”) allows the Company to delayadoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable toprivate companies. The Company has elected to use this extended transition period under the JOBS Act. The adoption dates discussed belowreflects this election. The pronouncements below relate to standards that impact the Company.
1. | In March 2022, the FASB issued ASU 2022-02 - FinancialInstruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. This standard eliminates theaccounting guidance on TDRs for creditors in ASC 310-40 and amends the guidance on “vintage disclosures” to require disclosureof current period gross write-offs by year of origination. The ASU also updates the requirements related to accounting for credit lossesunder ASC 326 and adds enhanced disclosures for creditors with respect to loan refinancings and restructurings for borrowers experiencingfinancial difficulty. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interimperiods within those fiscal years, for any entities that have adopted ASU 2016-13 - Financial Instruments - Credit Losses (Topic326): Measurement of Credit Losses on Financial Instruments. The adoption of this standard did not result in amended disclosuresin the Company’s Condensed Consolidated Financial Statements, nor did this standard have a material impact the Company’s results of operations. |
9 |
BriaCellTherapeutics Corp
Notesto the Condensed Consolidated Financial Statements
(Unaudited,expressed in US Dollars, except share and per share data and unless otherwise indicated)
NOTE2: SIGNIFICANT ACCOUNTING POLICIES (Cont.)
2. | In July 2023, the FASBissued 2023-03 — Presentation of Financial Statements (Topic 205), Income Statement — Reporting Comprehensive Income(Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation — Stock Compensation (Topic718): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022, EITFMeeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280 — General Revision of Regulation S-X: Income orLoss Applicable to Common Stock (SEC Update). The adoption of this standard did not result in amended disclosuresin the Company’s Condensed Consolidated Financial Statements, nor did this standard have a material impact the Company’s results of operations. |
NOTE3: INVESTMENT IN BC THERAPEUTICS INC.
OnDecember 21, 2021, the Company and BC Therapeutics, Inc. (“BC Therapeutics” or “the Investee”) entered ashare purchase agreement (“SPA”), pursuant to which the Company invested $
Subsequentto January 31, 2024, the Company exercised the first option on February 1, 2024 and now holds
BCTherapeutics has a board of four representatives, with two representatives appointed by BriaCell and two representatives appointed bythe existing shareholders. All significant decisions related to BC Therapeutics require the approval of at least a majority of the boardmembers.
Changesin the Company’s Investment in BC Therapeutics is summarized as follows:
SCHEDULEOF CHANGES IN INVESTMENT
Balance – August 1, 2023 | $ | - | ||
Funding (including the value of the BC Therapeutics Options) | ||||
Share of losses: | ||||
Operating expenses | ( | ) | ||
Balance – January 1, 2024 | $ |
Thefollowing amounts represent the Company’s
SCHEDULEOF ASSETS AND LIABILITIES OF BC THERAPEUTICS
As of January 31, 2024 | ||||
Current assets: Cash | $ | |||
Net assets | $ |
NOTE4: CONTINGENT LIABILITIES AND COMMITMENTS
a. | BriaPro Warrants |
Asdetailed in note 1(f), upon the exercise of BriaCell Warrants, BriaCell shall, as agent for BriaPro, collect and pay to BriaPro an amountof up to $
b. | Lease |
TheCompany is currently in a
10 |
BriaCellTherapeutics Corp
Notesto the Condensed Consolidated Financial Statements
(Unaudited,expressed in US Dollars, except share and per share data and unless otherwise indicated)
NOTE5: FAIR VALUE MEASUREMENTS
Thefollowing table presents information about our financial instruments that are measured at fair value on a recurring basis as of January31, 2024, and July 31, 2023:
SCHEDULEOF FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE ON A RECURRING BASIS
Fair Value Measurements at | ||||||||||||||||||||||||
January 31, 2024 | July 31, 2023 | |||||||||||||||||||||||
Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | |||||||||||||||||||
Financial Assets: | ||||||||||||||||||||||||
Cash and cash equivalents | - | - | ||||||||||||||||||||||
Total assets measured at fair value | $ | $ | - | $ | $ | $ | - | $ | ||||||||||||||||
Financial liabilities: | ||||||||||||||||||||||||
Warrants liability | ||||||||||||||||||||||||
Total liabilities measured at fair value | $ | $ | $ | $ | $ | $ |
TheCompany classifies its cash and cash equivalents and the liability in respect of publicly traded warrants within Level 1 because weuse quoted market prices in active markets.
Thefair value of the warrant liability for non-public warrants is measured using inputs other than quoted prices included in Level 1 thatare observable for the liability either directly or indirectly, and thus are classified as Level 2 financial instruments.
NOTE6: SHAREHOLDERS’ EQUITY
a.Authorized share capital
Theauthorized share capital consists of an unlimited number of common shares with
b.Issued share capital
c.Share Purchase Warrants
SUMMARY OF CHANGES IN WARRANTS
(i) | There were no changes in share purchase warrants for the six-month period ended January 31, 2024 as presented below: |
Number of warrants outstanding | Weighted average exercise price | |||||||
Balance, July 31, 2023 and January 31, 2024 | $ |
SCHEDULEOF WARRANTS OUTSTANDING
(ii) | As of January 31, 2024, warrants outstanding were as follows: |
Number of Warrants | Exercise Price(*) | Exercisable At January 31, 2024 | Expiry Date | |||||||||
$ | ||||||||||||
$ | ||||||||||||
$ | ||||||||||||
(*) |
11 |
BriaCellTherapeutics Corp
Notesto the Condensed Consolidated Financial Statements
(Unaudited,expressed in US Dollars, except share and per share data and unless otherwise indicated)
NOTE6: SHAREHOLDERS’ EQUITY (Cont.)
d.Compensation Warrants
(i) | There were no changes to compensation warrants for the six-month period ended January 31, 2024. |
(ii) | As of January 31, 2024, compensation warrants outstanding were as follows: |
SCHEDULE OF WARRANTS OUTSTANDING
Number of Warrants | Exercise Price(*) | Exercisable At January 31, 2024 | Expiry Date | |||||||||
$ | ||||||||||||
$ | ||||||||||||
$ | ||||||||||||
(*) |
e.Warrant liability continuity
Thefollowing table presents the summary of the changes in the fair value of the warrants:
SCHEDULEOF CHANGE IN FAIR VALUE OF WARRANTS
Warrants liability | ||||
Balance as of August 1, 2023 | $ | |||
Fair value of BriaPro Warrant Shares at Effective Date | $ | |||
Change in fair value during the period | $ | ( | ) | |
Balance as of January 31, 2024 | $ |
Thekey inputs used in the valuation of the non-public warrants as of January 31, 2024 and at July 31, 2023 were as follows:
12 |
BriaCellTherapeutics Corp
Notesto the Condensed Consolidated Financial Statements
(Unaudited,expressed in US Dollars, except share and per share data and unless otherwise indicated)
NOTE6: SHAREHOLDERS’ EQUITY (Cont.)
SCHEDULEOF VALUATION OF WARRANTS
January 31, 2024 | July 31, 2023 | |||||||
Share price | $ | $ | ||||||
Exercise price | $ | | $ | |||||
Expected life (years) | ||||||||
Volatility | % | % | ||||||
Dividend yield | % | % | ||||||
Risk free rate | % | % |
Thekey inputs used in the valuation of the of the BriaPro Warrant Shares as of January 31, 2024 were as follows:
SCHEDULEOF VALUATION OF WARRANTS
January 31, 2024 | August 31, 2023 (Effective Date) | |||||||
Share price | $ | $ | ||||||
Exercise price | $ | $ | | |||||
Expected life (years) | ||||||||
Volatility | % | % | ||||||
Dividend yield | % | % | ||||||
Risk free rate | % | % |
NOTE7: SHARE-BASED COMPENSATION
a. | On August 2, 2022, the Company approved an omnibus equity incentive plan (“Omnibus Plan), which will permit the Company to grant incentive stock options, preferred share units, RSU, and deferred share units (collectively, the “Awards”) for the benefit of any employee, officer, director, or consultant of the Company or any subsidiary of the Company. The maximum number of shares available for issuance under the Omnibus Plan shall not exceed
| |
b. | The following table summarizes the number of options granted to directors, officers, employees and consultants under the option plan for six-month period ended January 31, 2023 and related information: |
SUMMARYOF NUMBER OF OPTIONS GRANTED
Number of options | Weighted average exercise price | Weighted average remaining contractual term (in years) | Aggregate intrinsic value | |||||||||||||
Balance as of July 31, 2023 | $ | $ | ||||||||||||||
Balance as of January 31, 2024 | - | |||||||||||||||
Exercisable as of January 31, 2024 | $ | $ | - |
Asof January 31, 2024 there are $
13 |
BriaCellTherapeutics Corp
Notesto the Condensed Consolidated Financial Statements
(Unaudited,expressed in US Dollars, except share and per share data and unless otherwise indicated)
NOTE7: SHARE-BASED COMPENSATION (Cont.)
c. | The following table summarizes information about the Company’s outstanding and exercisable options granted to employees as of January 31, 2024. |
SUMMARYOF OUTSTANDING AND EXERCISABLE OPTIONS
Exercise price | Options outstanding as of January 31, 2024 | Weighted average remaining contractual term (years) | Options exercisable as of January 31, 2024 | Weighted average remaining contractual term (years) | Expiry Date | |||||||||||||||
$ | ||||||||||||||||||||
$ | ||||||||||||||||||||
$ | ||||||||||||||||||||
$ | ||||||||||||||||||||
$ | ||||||||||||||||||||
$ | ||||||||||||||||||||
$ | ||||||||||||||||||||
$ | ||||||||||||||||||||
$ | ||||||||||||||||||||
$ | ||||||||||||||||||||
d. | As result of the Arrangement, |
SCHEDULEOF OPTION ISSUED AND OUTSTANDING
Exercise Price | Options outstanding as of January 31, 2024 | Options exercisable as of January 31, 2024 | Expiry Date | |||||||||
$ | ||||||||||||
$ | ||||||||||||
$ | ||||||||||||
$ | ||||||||||||
$ | ||||||||||||
$ | ||||||||||||
$ | ||||||||||||
$ | ||||||||||||
$ | ||||||||||||
$ | ||||||||||||
e. | Restricted Share Unit Plan |
Thefollowing table summarizes the number of RSU’s granted to directors under the Omnibus plan as of January 31, 2024:
SUMMARYOF RESTRICTED STOCK UNITS GRANTED
Number of RSU’s outstanding | Aggregate intrinsic value | |||||||
Balance, July 31, 2023 | $ | |||||||
Balance, January 31, 2024 | $ |
14 |
BriaCellTherapeutics Corp
Notesto the Condensed Consolidated Financial Statements
(Unaudited,expressed in US Dollars, except share and per share data and unless otherwise indicated)
NOTE7: SHARE-BASED COMPENSATION (Cont.)
f.The total share-based compensation expense related to all of the Company’s equity-based awards, recognized for the three and six-monthperiod ended January 31, 2024 and 2023 is comprised as follows:
SCHEDULEOF SHARE-BASED COMPENSATION EXPENSES
2024 | 2023 | 2024 | 2023 | |||||||||||||
Three months ended January 31, | Six months ended January 31, | |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
Research and development expenses | $ | $ | ||||||||||||||
General and administrative expenses | ||||||||||||||||
Total share-based compensation | $ | $ |
NOTE8: FINANCIAL INCOME (EXPENSES), NET
SCHEDULEOF FINANCIAL INCOME (EXPENSES), NET
2024 | 2023 | 2024 | 2023 | |||||||||||||
Three months ended January 31, | Six months ended January 31, | |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
Interest income | $ | $ | ||||||||||||||
Change in fair value of warrant liability | ( | ) | ( | ) | ( | ) | ||||||||||
Foreign exchange gain (loss) | ( | ) | ( | ) | ( | ) | ||||||||||
Financial income (expenses), net | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) |
NOTE9: SUBSEQUENT EVENT
TheCompany evaluated the possibility of subsequent events existing in the Company’s unaudited condensed consolidated financial statementsthrough March 18, 2024, the date that the condensed consolidated financial statements were available for issuance. The Company is notaware of any subsequent events which would require recognition or disclosure in the consolidated financial statements, except as follows:
a. | As disclosed in note 3, subsequent to January 31, 2024, on February 1, 2024 the Company exercised an optionto acquire an additional interest in BC Therapeutics and now owns |
15 |
Item2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Referencesto the “Company,” “our,” “us” or “we” refer to BriaCell Therapeutics Corp. The followingdiscussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unauditedcondensed consolidated financial statements and the notes thereto contained elsewhere in this report. Certain information contained inthe discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Introduction
ThisManagement’s Discussion and Analysis (“MD&A”) should be read together with other information, including our unauditedcondensed interim consolidated financial statements and the related notes to those statements included in Part I, Item 1 of this QuarterlyReport (the “Condensed Consolidated Financial Statements”), our consolidated financial statements appearing in our AnnualReport on Form 10-K for the year ended July 31, 2023 (the “Annual Report”) and Part I, Item 1A, Risk Factors, of the AnnualReport. This MD&A provides additional information on our business, recent developments, financial condition, cash flows and resultsof operations, and is organized as follows:
● | Part 1 - Business Overview. This section provides a general description of our business, which we believe is important in understanding the results of our operations, financial condition, and potential future trends. | |
● | Part 2 - Results of Operations. This section provides an analysis of our results of operations for the first half and second quarter of fiscal 2024 in comparison to the first half and second quarter of fiscal 2023. | |
● | Part 3 - Financial Liquidity and Capital Resources. This section provides an analysis of our cash flows and outstanding debt and commitments. Included in this analysis is a discussion of the amount of financial capacity available to fund our ongoing operations and future commitments. |
Weprepare and report our unaudited Condensed Consolidated Financial Statements in accordance with U.S. GAAP. Our unaudited Condensed ConsolidatedFinancial Statements, and the financial information contained herein, are reported in U.S Dollars.
CautionaryNote Regarding Forward-Looking Statements
ThisQuarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, asamended, and Section 21E of the Exchange Act. We have based these forward-looking statements on our current expectations and projectionsabout future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about usthat may cause our actual results, levels of activity, performance or achievements to be materially different from any future results,levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identifyforward-looking statements by terminology such as “may,” “should,” “could,” “would,”“expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,”or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, butare not limited to, those described in our other SEC filings.
Overview
BriaCellTherapeutics Corp. (the “Company”), is a clinical-stage biotechnology company that is developing novel immunotherapiesto transform cancer care. Immunotherapies have come to the forefront in the fight against cancer as they harness the body’sown immune system to recognize and destroy cancer cells. The Company is currently advancing its Bria-IMT™ targetedimmunotherapy in combination with an immune check point inhibitor (Retifanlimab) in a pivotal1 Phase 3 study inadvanced metastatic breast cancer. Bria-IMT™ is currently under Fast Track Designation by the U.S. FDA intended to acceleratethe review process of novel treatments that address unmet medical needs. Positive completion of the pivotal study, following reviewby FDA, could lead to full approval of the Bria-IMT™ immune checkpoint inhibitor combination in advanced metastatic breastcancer. BriaCell reported benchmark-beating patient survival and clinical benefit in advanced metastatic breast cancer with medianoverall survival of 13.4 months in BriaCell’s advanced metastatic breast cancer patients vs. 6.7-9.8 months for similarpatients reported in the literature in its Phase 2 study of Bria-IMT™ combination study with retifanlimab at the 2023 SanAntonio Breast Cancer Symposium. A completed Bria-IMT™ Phase 1 combination study with retifanlimab (an anti-PD1 antibodymanufactured by Incyte) confirmed tolerability and early-stage efficacy. BriaCell is also developing a personalized off-the-shelfimmunotherapy, Bria-OTS™, which provides a platform technology to develop personalized off-the-shelf immunotherapies fornumerous types of cancer, and a soluble CD80 protein therapeutic which acts both as a stimulator of the immune system as well as animmune checkpoint inhibitor.
1“Pivotal”is an industry term referring to a Phase 3 clinical study intended to show and confirm the safety and efficacy of a treatment.
16 |
RecentDevelopments
OnAugust 31, 2023, the Company closed the previously announced plan of arrangement spinout transaction (the “Arrangement”)pursuant to which certain pipeline assets of the Company, including Bria-TILsRx™ and protein kinase C delta (PKCδ) inhibitorsfor multiple indications including cancer (the “BriaPro Assets”), were spun-out to BriaPro Therapeutics Corp. (“BriaPro”),resulting in a 2/3rd owned subsidiary of the Company with the remaining 1/3rd held by BriaCell shareholders (“BriaCell Shareholders”).
Pursuantto the terms of the Arrangement, BriaPro has acquired the entire right and interest in and to the BriaPro Assets in consideration forthe issuance by BriaPro to the Company of BriaPro common shares. Under the terms of the Arrangement, for each BriaCell share held immediatelyprior to closing, BriaCell Shareholders receive one (1) common share of BriaPro, and one (1) new common share of BriaCell (retiring theirold share) having the same terms and characteristics as the existing BriaCell common shares. The Company will remain listed on the NASDAQStock Market and Toronto Stock Exchange, and BriaPro is an unlisted reporting issuer in Canada.
Asnoted above, immediately following the closing of the Arrangement, the Company controlled 2/3rd of the BriaPro common sharesrepresenting approximately 66.6% of the issued and outstanding common shares of BriaPro As a result of the Arrangement, there wereapproximately 47,945,178 BriaPro common shares issued and outstanding immediately following consummation of the Arrangement. The Corporation now beneficially owns or controlsapproximately 31,963,452 BriaPro common shares, representing 2/3rd of the issued and outstanding BriaPro common shares.
OnOctober 3, 2023, BriaCell initiated its pivotal Phase 3 Study of Bria-IMT™ in advanced metastatic breast Cancer. The study willevaluate the efficacy and safety of the Bria-IMT™ combination regimen with an immune check point inhibitor (Retifanlimab) in patientswho have failed at least two approved therapies for the disease. Bria-IMT™ is currently under Fast Track Designation by the U.S.FDA intended to accelerate the review process of novel treatments that address unmet medical needs. Positive completion of the pivotalstudy, following review by FDA, could lead to full approval of the Bria-IMT™ immune checkpoint inhibitor combination in advancedmetastatic breast cancer. FDA has agreed that improvement in overall survival in the Bria-IMT™ combination arm as compared to thephysician’s choice of treatment arm will be the primary endpoint of the study. The study will enroll 177 patients in the Bria-IMT™combination therapy arm and 177 patients in the treatment of physician’s choice arm. To gather additional information on the Bria-IMT™regimen alone, 50 patients will be enrolled in this regimen and will be eligible for combination therapy following their initial posttreatment evaluation. BriaCell expects frequent and responsive FDA communication under its Fast Track status during the pivotal Phase3 study. The successful completion of the pivotal Phase 3 study would allow BriaCell to subsequently submit a Biologics License Applicationand accelerate the path to commercialization.
17 |
Resultsof Operations for the Three Months Ended January 31, 2024 and 2023
Three months ended January 31, | ||||||||
2024 | 2023 | |||||||
(Unaudited) | (Unaudited) | |||||||
Operating Expenses: | ||||||||
Research and development expenses | $ | 8,257,455 | $ | 3,053,357 | ||||
General and administrative expenses | 1,571,991 | 1,432,966 | ||||||
Total operating expenses | 9,829,446 | 4,486,323 | ||||||
Operating loss | (9,829,446 | ) | (4,486,323 | ) | ||||
Financial expenses, net | (1,486,119 | ) | (7,395,439 | ) | ||||
Share of loss on equity investments | (18,345 | ) | - | |||||
Net loss for the period | $ | (11,333,910 | ) | $ | (11,881,762 | ) | ||
Net loss attributable to non-controlling interest | (39,307 | ) | - | |||||
Net loss for the period attributable to BriaCell | (11,294,603 | ) | (11,881,762 | ) | ||||
Net loss per share attributable to BriaCell – basic and diluted | $ | (0.71 | ) | $ | (0.77 | ) |
Researchand Development Costs
Researchcosts are comprised primarily of (i) salaries and wages to Company employees at our laboratory; and (ii) clinical trials and investigationaldrug costs, which include the testing and manufacture of our investigational drugs and costs of our clinical trials.
Thefollowing is a breakdown of our research and development costs by project:
Three months ended January 31, | ||||||||
2024 | 2023 | |||||||
Clinical trials | $ | 4,359,850 | $ | 1,438,231 | ||||
Pre-clinical projects | 2,992,990 | 745,236 | ||||||
Chemical, Manufacturing and Control Costs (“CMC Costs”) | 420,112 | 331,590 | ||||||
Other | 484,503 | 538,300 | ||||||
$ | 8,257,455 | $ | 3,053,357 |
Ourclinical trial expenses include the extra costs for our immunotherapy program, Bria-IMT™, Phase I/IIa clinicaltrial. Clinical trial expenses increased in 2024 as patients stayed in the trial for a longer period of time (i.e. a longer than expected overall survival). Additionally,our costs increased significantly compared with the same period in 2023 for much higher set upcosts for the pivotal Phase 3 study of Bria-IMT™ combination regimen with Retifanlimab in advanced breast cancer, and additional expenses in preparationfor the upcoming clinical studies of Bria-OTS™.
Pre-clinicalprojects include expenses incurred in our off-the-shelf personalized immunotherapies, including Bria-OTS+™, and Bria-PROS™.Our pre-clinical costs have increased in 2024 as we hired more staff to accelerate our existing pre-clinical program and added an additionalpre-clinical program (sCD80).
Othercosts are ancillary expenses we incur such as costs to maintain our patents, investigation of early-stage projects, scientific advisoryboard expenses, contracts with vendors for pre-clinical work, and administration costs associated with all our research and developmentexpenditure. Other costs increased in 2024 as we investigated additional potential pre-clinical projects.
Thefollowing is a breakdown of our research and development costs by nature of expenses:
Three months ended January 31, | ||||||||
2024 | 2023 | |||||||
Clinical trial sites and investigational drug costs | $ | 6,200,980 | $ | 1,288,577 | ||||
Wages and salaries | 1,401,679 | 1,282,441 | ||||||
Laboratory Rent | 108,000 | 48,000 | ||||||
Supplies | 312,543 | 207,061 | ||||||
Professional fees | - | 2,187 | ||||||
Share-based compensation | 234,253 | 225,091 | ||||||
$ | 8,257,455 | $ | 3,053,357 |
18 |
Forthe three-month period ended January 31, 2024, total research costs amounted to $8,257,455 as compared to $3,053,357 for the three-monthperiod ended January 31, 2023. The rise in these costs is primarily attributed to the continued expansion of the Company’s clinicaltrials, specifically our Bria-IMT™ trial. Clinical trials and investigational drug costs increased from $1,288,577 in 2023 to $6,200,980in 2024. Laboratory costs increase during 2024 as well, including the hiring of additional lab employees which increased from $1,282,441in 2023 to $1,401,679 in 2024 and increased supplies from $207,061 in 2023 to $312,543 in 2024. Finally, the increase in share-basedcompensation (non-cash) expenses, from $225,091 in 2023 to $234,253 in 2024 also contributed to the increase in research and developmentexpenses.
Generaland Administrative Expenses
Forthe three-month period ended January 31, 2024, general and administrative expenses amounted to $1,571,991 as compared to $1,432,966 forthe three-month period ended January 31, 2023. The increase relates primarily to shareholder communication expenses and in share-based compensation (non-cash) expense, offset by a decrease in insurance expenses and professional fees.
Financialincome (expenses), net
Forthe three-month period ended January 31, 2024, financial expense, net, amounted to $1,486,119 as compared to $7,395,439 for the three-monthperiod ended January 31, 2023. The large difference is due to the change in value of the Company’s warrant liability which amountedto a loss of $1,567,746 in the three-month period ending January 31, 2024, and a loss of $7,629,502 in the three-month period endingJanuary 31, 2023.
Lossfor the period
TheCompany reported a loss for the three-month period ended January 31, 2024, of $11,294,603, as compared to a loss of $11,881,762 for thethree-month period ended January 31, 2023. The loss in 2024 is due to a significant increase in operational spending. The loss in theprior period is primarily due to the large increase in fair value of the warrant liability.
Resultsof Operations for the Six Months Ended January 31, 2024 and 2023
Six months ended January 31, | ||||||||
2024 | 2023 | |||||||
(Unaudited) | (Unaudited) | |||||||
Operating Expenses: | ||||||||
Research and development expenses | $ | 15,114,712 | $ | 6,308,572 | ||||
General and administrative expenses | 3,217,762 | 3,580,902 | ||||||
Total operating expenses | 18,332,474 | 9,889,474 | ||||||
Operating loss | (18,332,474 | ) | (9,889,474 | ) | ||||
Financial expenses, net | 12,975,781 | (3,098,829 | ) | |||||
Share of loss on equity investments | (18,345 | ) | - | |||||
Net loss for the period | $ | (5,375,038 | ) | (12,988,303 | ) | |||
Net loss attributable to non-controlling interest | (81,978 | ) | - | |||||
Net loss for the period attributable to BriaCell | (5,293,060 | ) | (12,988,303 | ) | ||||
Net loss per share attributable to BriaCell – basic and diluted | $ | (0.33 | ) | $ | (0.84 | ) | ||
Weighted average number of shares used in computing net basic earnings per share of common stock | 15,981,726 | 15,518,018 | ||||||
Weighted average number of shares used in computing net diluted earnings per share of common stock | 15,981,726 | 15,518,018 |
19 |
Researchand Development Costs
Researchcosts are comprised primarily of (i) salaries and wages to Company employees at our laboratory; and (ii) Clinical trials and investigationaldrug costs, which include the testing and manufacture of our investigational drugs and costs of our clinical trials.
Thefollowing is a breakdown of our research and development costs by project:
Six months ended January 31, | ||||||||
2024 | 2023 | |||||||
Clinical trials | $ | 7,987,140 | $ | 3,041,327 | ||||
Pre-clinical projects | 5,061,969 | 1,608,402 | ||||||
CMC Costs | 967,309 | 741,608 | ||||||
Other | 1,098,294 | 917,235 | ||||||
$ | 15,114,712 | $ | 6,308,572 |
Ourclinical trial expenses include the extra costs for our immunotherapy program, Bria-IMT™, Phase I/IIa clinical trial. Clinicaltrial expenses increased in 2024 as patients stayed in the trial for a longer period of time (i.e. longer than expected overall survival).Additionally, our costs increased significantly compared with those in the same period in 2023 for much higher set up costs for the pivotalPhase 3 study of Bria-IMT™ combination regimen with Retifanlimab in advanced breast cancer, and additional expenses in preparationfor the upcoming clinical studies of Bria-OTS™.
Pre-clinicalprojects include expenses incurred in our off-the-shelf personalized immunotherapies, including Bria-OTS+™, and Bria-PROS™.Our pre-clinical costs have increased in 2023 as we hired more staff to accelerate our existing pre-clinical program and added an additionalpre-clinical program (sCD80).
CMCCosts include the manufacturing of Bria-IMT™ and Bria-OTS™. CMC Costs increased in 2024 to support the pivotal Phase 3 study,and the upcoming clinical studies of Bria-OTS™.
Othercosts are ancillary expenses we incur such as costs to maintain our patents, investigation of early-stage projects, scientific advisoryboard expenses, contracts with vendors for pre-clinical work, and administration costs associated with all our research and developmentexpenditure. Other costs increased in 2024 as we investigated additional potential pre-clinical projects.
Thefollowing is a breakdown of our research and development costs by nature of expenses:
Six months ended January 31, | ||||||||
2024 | 2023 | |||||||
Clinical trial sites and Investigational drug costs | $ | 11,598,418 | $ | 3,330,516 | ||||
Wages and salaries | 2,422,404 | 1,998,985 | ||||||
Laboratory Rent | 196,480 | 96,000 | ||||||
Supplies | 401,566 | 300,425 | ||||||
Professional fees | 3,782 | 7,299 | ||||||
Share-based compensation | 492,062 | 575,347 | ||||||
$ | 15,114,712 | $ | 6,308,572 |
Forthe six-month period ending January 31, 2024, research costs amounted to $15,114,712, a significant increase from the $6,308,572incurred during the same period in 2023. This upturn was primarily fuelled by the expansion of the Company’s Phase 2 trial,and initiation of the Phase 3 trial of the Bria-IMT™ regimen, and heightened costs associated with clinical trials andinvestigational drugs, surging from $3,330,516 in 2023 to $11,598,418 in 2024. Concurrently, laboratory costs increased due to therecruitment of additional employees, growing from $96,000 to $196,480. Notably, non-cash share-based compensation expenses decreasedfrom $575,347 in 2023 to $492,062 in 2024, mitigating some of the overall increase in research and development expenses.
Generaland Administrative Expenses
Forthe six-month period ended January 31, 2024, general and administrative expenses amounted to $3,217,762 as compared to $3,580,902 forthe six-month period ended January 31, 2023. This reduction is mainly attributed to a decrease in non-cash share-based compensation expenses,which declined from $803,438 in 2023 to $541,909 in 2024 and insurance expenses which declined from $847,241 in 2023 to $583,997 in 2024.
Financialincome (expenses), net
Forthe six-month period ending January 31, 2024, net financial income amounted to $12,975,781, a significant increase from the loss of $3,098,829recorded in the same period of 2023. This substantial difference is primarily attributed to the change in the value of the Company’swarrant liability, which is directly affected by the shortened life of the warrants and decrease in share price, resulting in a gainof $12,714,331 for the six-month period ended January 31, 2024, compared to a loss of $3,511,712 in the six-month period ended January31, 2023.
20 |
Lossfor the period
TheCompany reported a loss for the period ended January 31, 2024, of $5,375,038, as compared to $12,988,303 for the period ended January31, 2023. The reduced loss in 2024 was primarily due to a significant increase in operational spending, offset by a large gain resultingfrom the decrease in the fair value of the warrant liability. In contrast, the larger loss in the prior period was primarily due to higheroperational spending and an increase in the value of the Company’s warrant liability.
GoingConcern Uncertainty
Thefinancial statements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets anddischarge its liabilities in the normal course of business for the foreseeable future. The continuing operations of the Company are dependentupon its ability to continue to raise adequate financing and to commence profitable operations in the future.
Asof January 31, 2024, the Company has total assets of $12,231,047 (July 31, 2023 - $27,163,577) and a positive working capital balanceof $7,817,634 (July 31, 2023 -$25,147,050). The Company had negative cash flows from operating activities during thesix-month period ended January 31, 2024 of $15,006,564.
TheCompany is planning to finance its research and developmental activities from its existing and future working capital resources and willcontinue to evaluate additional sources of capital and financing. The uncertainty of the Company’s ability to raise such financialcapital casts significant doubt on the Company’s ability to continue as a going concern.
Liquidityand Capital Resources
Asof January 31, 2024, the Company has working capital of $7,817,634 (July 31, 2023 - $25,147,050) and an accumulated deficit of $85,945,291(July 31, 2023 - $80,652,231).
Asof January 31, 2024, the Company’s capital resources consist primarily of cash and cash equivalents, comprising mostly of cashon deposit with banks, investments in money market funds, investments in U.S. government securities, U.S. government agency securities,and investment grade corporate debt securities. Our investment policy and strategy are focused on preservation of capital and supportingour liquidity requirements.
Historically,the Company has financed its operation through private and public placement of equity securities, as well as debt financing. The Company’sability to fund its longer-term cash requirements is subject to multiple risks, many of which are beyond its control. The Company intendsto raise additional capital, either through debt or equity financings in order to achieve its business plan objectives. Management believesthat it can be successful in obtaining additional capital; however, there can be no assurance that the Company will be able to do so.There is no assurance that any funds raised will be sufficient to enable the Company to attain profitable operations or continue as agoing concern. To the extent that the Company is unsuccessful, the Company may need to curtail or cease its operations and implementa plan to extend payables or reduce overhead until sufficient additional capital is raised to support further operations. There can beno assurance that such a plan will be successful.
Duringthe six-month period ended January 31, 2024, the Company’s overall position of cash and cash equivalents decreased by $15,006,563from the six-month period ended January 31, 2023 (including effects of foreign exchange). This decrease in cash can be attributed tothe following:
TheCompany’s net cash used in operating activities during the six-month period ended January 31, 2024, was $15,006,564, as comparedto $7,494,122 for the six-month period ended January 31, 2023.
Cashused in financing activities for the six-month period ended January 31, 2024, was nil, as compared to $47,294 for the six-month periodended January 31, 2023.
21 |
Off-BalanceSheet Arrangements
None.
TabularDisclosure of Contractual Obligations
None.
CriticalAccounting Policies and Estimates
Therehave been no material changes to our critical accounting policies and estimates from the information provided in the MD&A sectionin our Annual Report.
NewAccounting Policies Adopted
TheCompany did not adopt any new accounting policies during the six-month period ended January 31, 2024.
Item3. Quantitative and Qualitative Disclosures About Market Risk.
TheCompany’s financial instruments consist of cash and cash equivalents, investments, trade payable , and accruedexpenses and other payables. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significantinterest or credit risks arising from these financial instruments. The fair value of these financial instruments approximates their carryingvalues, unless otherwise noted.
Managementunderstands that the Company is exposed to financial risk arising from fluctuations in foreign exchange rates and the degree of volatilityof these rates as a portion of the Company’s transactions occur in Canadian Dollars (mainly costs relating to being a public companyin Canada), and the Company’s functional and presentation currency is the US dollar. The Company does not use derivative instrumentsto reduce its exposure to foreign currency risk.
TheCompany is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitorsthe risk management process. The overall objectives of the Board are to set policies that seek to reduce risk as far as possible withoutunduly affecting the Company’s competitiveness and flexibility.
Thetype of risk exposure and the way in which such exposure is managed is as follows:
CreditRisk
TheCompany has no significant concentration of credit risk arising from operations. Management believes that the credit risk concentrationwith respect to financial instruments is remote.
LiquidityRisk
TheCompany’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities as they comedue. As of January 31, 2024, the Company has total assets of $12,231,047 (July 31, 2023 - $27,163,577 ) and a positive working capitalbalance of $7,817,634 (July 31, 2023 –$25,147,050).
MarketRisk
Interestrate risk
InterestRate risk is the risk that the fair value of a financial instrument will fluctuate because of changes in market interest rates. The Companydoes not believe it is exposed to material interest rate risk as it has no interest-bearing debt.
Pricerisk
Asthe Company has no revenues, price risk is remote.
22 |
Exchangerisk
TheCompany is exposed to foreign exchange risk as a portion of the Company’s transactions occur in Canadian Dollars (mainly costsrelating to being a public company in Canada) and, therefore, the Company is exposed to foreign currency risk at the end of the reportingperiod through its Canadian denominated trade payable and cash. As of January 31, 2024, a 5% depreciation or appreciation of the Canadiandollar against the US dollar would not have a material effect on the in total loss and comprehensive loss.
FairValues
Thecarrying values of cash and cash equivalents, trade payable, and accrued expenses and other payables approximatetheir fair values due to their short terms to maturity.
Cashand cash equivalents are valued using quoted market prices in active markets. The fair value of the warrant liability is determined basedon the nature of the warrant. For publicly traded warrants we use the quoted market price and for all other warrants we use the Black-Scholespricing model.
Item4. Controls and Procedures.
Disclosure Controls and Procedures
Wemaintain “disclosure controls and procedures,” as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act thatare designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the ExchangeAct is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosurecontrols and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosedby a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, includingour principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
Ourmanagement, with the participation of our principal executive officer and principal accounting and financial officer, has evaluated theeffectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Actof 1934 under the Securities Exchange Act of 1934, as amended, or the Exchange Act), as of the end of the period covered by this QuarterlyReport on Form 10-Q. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provideonly reasonable assurance of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefitrelationship of possible controls and procedures. Based on such evaluation, our principal executive officer and principal accountingand financial officer have concluded that as of January 31, 2024, our disclosure controls and procedures were effective at the reasonableassurance level.
Changesin Internal Control over Financial Reporting
Therehave not been material changes in our internal control over financial reporting during the quarter ended January 31, 2024, that havematerially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
23 |
PARTII - OTHER INFORMATION
Item1. Legal Proceedings.
None.
Item1A. Risk Factors.
Asof the date of this Quarterly Report on Form 10-Q, there have been no material changes from the risk factors previously disclosed inour Annual Report for the year ended July 31, 2023.
Item2. Unregistered Sales of Equity Securities and Use of Proceeds.
Therewere no unregistered sales of equity securities during the three months ended January 31, 2024
Item3. Defaults Upon Senior Securities.
None.
Item4. Mine Safety Disclosures.
NotApplicable.
Item5. Other Information.
None.
Item6. Exhibits
Thefollowing exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
EXHIBITINDEX
* | Filed herewith. |
24 |
SIGNATURES
Inaccordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned,thereunto duly authorized.
BRIACELL THERAPEUTICS CORP. | ||
March 18, 2024 | By: | /s/ William V. Williams |
Name: | William V. Williams | |
Title: | Chief Executive Officer | |
(Principal Executive Officer) | ||
March 18, 2024 | By: | /s/ Gadi Levin |
Name: | Gadi Levin | |
Title: | Chief Financial Officer | |
(Principal Financial and Accounting Officer) |
25 |