UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 20232024
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 001-40101
BRIACELL THERAPEUTICS CORP.
(Exact name of registrant as specified in its charter)
British Columbia, Canada | 47-1099599 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
235 15th Street, Suite 300, West Vancouver, BC, V7T 2X1 |
(Address of Principal Executive Offices, including zip code) |
604-921-1810 |
(Registrant’s telephone number, including area code) |
N/A |
(Former name, former address and former fiscal year, if changed since last report) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☐ Large accelerated filer | ☐Accelerated filer | |
☒ Non-accelerated filer | ☒ Smaller reporting company | |
☒ Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes Yes☒ ☒ No ☐
As of March 15, 2023,18, 2024, there were common shares, no par value per share, of the Company issued and outstanding.
BRIACELL THERAPEUTICS CORP.
Form 10-Q
Table of Contents
2 |
PART I-FINANCIAL
INFORMATION
Item 1. Financial Statements
BRIACELL THERAPEUTICS CORP.
INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSBALANCE SHEETS
January 31, 2024 | July 31, 2023 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 6,244,528 | $ | 21,251,092 | ||||
Amounts receivable | 30,145 | 18,873 | ||||||
Prepaid expenses | 5,467,286 | 5,678,542 | ||||||
Total current assets | 11,741,959 | 26,948,507 | ||||||
NON-CURRENT ASSETS: | ||||||||
Investments | 2 | 2 | ||||||
Equity investment in BC Therapeutics | 281,655 | - | ||||||
Intangible assets, net | 207,431 | 215,068 | ||||||
Total non-current assets | 489,088 | 215,070 | ||||||
Total assets | $ | 12,231,047 | $ | 27,163,577 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Trade payables | $ | 3,711,455 | $ | 1,123,739 | ||||
Accrued expenses and other payables | 212,870 | 677,718 | ||||||
Total current liabilities | 3,924,325 | 1,801,457 | ||||||
NON-CURRENT LIABILITIES: | ||||||||
Warrant liability | 16,624,177 | 29,139,301 | ||||||
Total non-current liabilities | 16,624,177 | 29,139,301 | ||||||
SHAREHOLDERS’ DEFICIT: | ||||||||
Share Capital of | par value - Authorized: at January 31, 2024 and July 31, 2023, Issued and outstanding: shares January 31, 2024 and July 31, 2023, respectively69,591,784 | 69,591,784 | ||||||
Share-based payment reserve | 8,419,154 | 7,421,950 | ||||||
Accumulated other comprehensive loss | (138,684 | ) | (138,684 | ) | ||||
Non-controlling Interest | (244,418 | ) | - | |||||
Accumulated deficit | (85,945,291 | ) | (80,652,231 | ) | ||||
Total shareholders’ deficit | (8,317,455 | ) | (3,777,181 | ) | ||||
Total liabilities and shareholders’ deficit | $ | 12,231,047 | $ | 27,163,577 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3 |
BRIACELL THERAPEUTICS CORP.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETSSTATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE THREE AND SIX MONTHS ENDED JANUARY 31, 2024
(Unaudited)
January 31, 2023 | July 31, 2022 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 33,500,236 | $ | 41,041,652 | ||||
Amounts receivable | 8,928 | 24,103 | ||||||
Prepaid expenses | 429,397 | 1,280,945 | ||||||
Total current assets | 33,938,561 | 42,346,700 | ||||||
NON-CURRENT ASSETS: | ||||||||
Investments | 2 | 2 | ||||||
Intangible assets, net | 222,704 | 230,339 | ||||||
Total non-current assets | 222,706 | 230,341 | ||||||
Total assets | $ | 34,161,267 | $ | 42,577,041 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Trade payables | $ | 582,451 | $ | 463,280 | ||||
Accrued expenses and other payables | 87,962 | 477,807 | ||||||
Total current liabilities | 670,413 | 941,087 | ||||||
NON-CURRENT LIABILITIES: | ||||||||
Warrant liability | 34,771,440 | 31,307,022 | ||||||
Total non-current liabilities | 34,771,440 | 31,307,022 | ||||||
SHAREHOLDERS’ EQUITY: | ||||||||
Share Capital of | par value - Authorized: at January 31, 2023 and July 31, 2022, Issued and outstanding: shares January 31, 2023 and July 31, 2022, respectively65,589,293 | 65,589,293 | ||||||
Additional paid in capital | 6,606,945 | 5,228,160 | ||||||
Accumulated other comprehensive loss | (138,684 | ) | (138,684 | ) | ||||
Accumulated deficit | (73,338,140 | ) | (60,349,837 | ) | ||||
Total shareholders’ (deficit) equity | (1,280,586 | ) | 10,328,932 | |||||
Total liabilities and shareholders’ equity | $ | 34,161,267 | $ | 42,577,041 |
2024 | 2023 | 2024 | 2023 | |||||||||||||
Three months ended January 31, | Six months ended January 31, | |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
Operating Expenses: | ||||||||||||||||
Research and development expenses | $ | 8,257,455 | $ | 3,053,357 | $ | 15,114,712 | $ | 6,308,572 | ||||||||
General and administrative expenses | 1,571,991 | 1,432,966 | 3,217,762 | 3,580,902 | ||||||||||||
Total operating expenses | 9,829,446 | 4,486,323 | 18,332,474 | 9,889,474 | ||||||||||||
Operating loss | (9,829,446 | ) | (4,486,323 | ) | (18,332,474 | ) | (9,889,474 | ) | ||||||||
Financial expenses, net | (1,486,119 | ) | (7,395,439 | ) | 12,975,781 | (3,098,829 | ) | |||||||||
Share of loss on equity investment | (18,345 | ) | - | (18,345 | ) | - | ||||||||||
Net loss for the period | $ | (11,333,910 | ) | $ | (11,881,762 | ) | $ | (5,375,038 | ) | (12,988,303 | ) | |||||
Net loss attributable to non-controlling interest | (39,307 | ) | - | (81,978 | ) | - | ||||||||||
Net loss and Comprehensive loss for the period attributable to BriaCell | (11,294,603 | ) | (11,881,762 | ) | (5,293,060 | ) | (12,988,303 | ) | ||||||||
Net loss per share attributable to BriaCell – basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
Weighted average number of shares used in computing net basic earnings per share of common stock | 15,981,726 | 15,518,018 | 15,981,726 | 15,518,018 | ||||||||||||
Weighted average number of shares used in computing net diluted earnings per share of common stock | 15,981,726 | 15,518,018 | 15,981,726 | 15,518,018 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4 |
BRIACELL THERAPEUTICS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
FOR THE THREE AND SIX MONTHS ENDED JANUARY 21, 202331, 2024
Number | Amount | capital | loss | deficit | interest | (deficit) | ||||||||||||||||||||||
Share capital | Additional paid in | Accumulated other comprehensive | Accumulated | Non- controlling | Total shareholders’ equity | |||||||||||||||||||||||
Number | Amount | capital | loss | deficit | interest | (deficit) | ||||||||||||||||||||||
Balance, October 31, 2023 | 15,981,726 | $ | 69,591,784 | $ | 7,918,999 | $ | (138,684 | ) | $ | (74,650,688 | ) | $ | (205,111 | ) | $ | 2,516,300 | ||||||||||||
Issuance of options | - | - | 500,155 | - | - | - | 500,155 | |||||||||||||||||||||
Loss for the period | - | - | - | - | (11,294,603 | ) | (39,307 | ) | (11,333,910 | ) | ||||||||||||||||||
Balance, January 31, 2024 | 15,981,726 | $ | 69,591,784 | $ | 8,419,154 | $ | (138,684 | ) | $ | (85,945,291 | ) | $ | (244,418 | ) | $ | (8,317,455 | ) |
Share capital | Additional paid in | Accumulated other comprehensive | Accumulated | Non- controlling | Total shareholders’ | |||||||||||||||||||||||
Number | Amount | capital | loss | deficit | interest | deficit | ||||||||||||||||||||||
Balance, July 31, 2023 | 15,981,726 | $ | 69,591,784 | $ | 7,421,950 | $ | (138,684 | ) | $ | (80,652,231 | ) | - | $ | (3,777,181 | ) | |||||||||||||
Instruments issued to minority shareholders at the Arrangement Date | - | - | (36,767 | ) | - | - | (162,440 | ) | (199,207 | ) | ||||||||||||||||||
Issuance of options | - | - | 1,033,971 | - | - | - | 1,033,971 | |||||||||||||||||||||
Loss for the period | - | - | - | - | (5,293,060 | ) | (81,978 | ) | (5,375,038 | ) | ||||||||||||||||||
Balance, January 31, 2024 | 15,981,726 | $ | 69,591,784 | $ | 8,419,154 | $ | (138,684 | ) | $ | (85,945,291 | ) | $ | (244,418 | ) | $ | (8,317,455 | ) |
Number | Amount | capital | loss | deficit | (deficit) | |||||||||||||||||||
Share capital | Additional paid in | Accumulated other comprehensive | Accumulated | Total equity | ||||||||||||||||||||
Number | Amount | capital | loss | deficit | (deficit) | |||||||||||||||||||
Balance, October 31, 2022 | 15,518,018 | $ | 65,589,293 | $ | 6,340,101 | $ | (138,684 | ) | $ | (61,456,378 | ) | $ | 10,334,332 | |||||||||||
Issuance of options | - | - | 266,844 | - | - | 266,844 | ||||||||||||||||||
Loss for the period | - | - | - | - | (11,881,762 | ) | (11,881,762 | ) | ||||||||||||||||
Balance, January 31, 2023 | 15,518,018 | $ | 65,589,293 | $ | 6,606,945 | $ | (138,684 | ) | $ | (73,338,140 | ) | $ | (1,280,586 | ) |
Share capital | Additional paid in | Accumulated other comprehensive | Accumulated | Total equity | ||||||||||||||||||||
Number | Amount | capital | loss | deficit | (deficit) | |||||||||||||||||||
Balance, July 31, 2022 | 15,518,018 | $ | 65,589,293 | $ | 5,228,160 | $ | (138,684 | ) | $ | (60,349,837 | ) | $ | 10,328,932 | |||||||||||
Balance | 15,518,018 | $ | 65,589,293 | $ | 5,228,160 | $ | (138,684 | ) | $ | (60,349,837 | ) | $ | 10,328,932 | |||||||||||
Issuance of options | - | - | 1,378,785 | - | - | 1,378,785 | ||||||||||||||||||
Loss for the period | - | - | - | - | (12,988,303 | ) | (12,988,303 | ) | ||||||||||||||||
Income (loss) for the period | - | - | - | - | (12,988,303 | ) | (12,988,303 | ) | ||||||||||||||||
Balance, January 31, 2023 | 15,518,018 | $ | 65,589,293 | $ | 6,606,945 | $ | (138,684 | ) | $ | (73,338,140 | ) | $ | (1,280,586 | ) | ||||||||||
Balance | 15,518,018 | $ | 65,589,293 | $ | 6,606,945 | $ | (138,684 | ) | $ | (73,338,140 | ) | $ | (1,280,586 | ) |
The accompanying notes are an integral part of the condensed consolidated financial statements.
5 |
BRIACELL THERAPEUTICS CORP.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JANUARY 31, 2024
(Unaudited)
2023 | 2022 | 2023 | 2022 | |||||||||||||
Three months ended January 31, | Six months ended January 31, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
Operating Expenses: | ||||||||||||||||
Research and development expenses | $ | 3,053,357 | $ | 1,708,179 | $ | 6,308,572 | $ | 2,583,815 | ||||||||
General and administrative expenses | 1,432,966 | 1,938,630 | 3,580,902 | 3,347,803 | ||||||||||||
Total operating expenses | 4,486,323 | 3,646,809 | 9,889,474 | 5,931,618 | ||||||||||||
Operating loss | (4,486,323 | ) | (3,646,809 | ) | (9,889,474 | ) | (5,931,618 | ) | ||||||||
Financial income (expenses), net | (7,395,439 | ) | 14,807,316 | (3,098,829 | ) | (10,441,360 | ) | |||||||||
Income (loss) and Comprehensive income (loss) for the period | $ | (11,881,762 | ) | $ | 11,160,507 | $ | (12,988,303 | ) | (16,372,978 | ) | ||||||
Net loss per share – basic | $ | (0.77 | ) | $ | 0.71 | $ | (0.84 | ) | $ | (1.05 | ) | |||||
Net income (loss) per share – diluted | $ | (0.77 | ) | $ | 0.04 | $ | (0.84 | ) | $ | (1.05 | ) | |||||
Weighted average number of shares used in computing net basic earnings per share of common stock | 15,518,018 | 15,788,827 | 15,518,018 | 15,547,497 | ||||||||||||
Weighted average number of shares used in computing net diluted earnings per share of common stock | 15,518,018 | 18,405,614 | 15,518,018 | 15,547,497 |
2024 | 2023 | |||||||
Six months ended January 31, | ||||||||
2024 | 2023 | |||||||
Cash flow from operating activities | ||||||||
Net loss | $ | (5,375,038 | ) | $ | (12,988,303 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 7,637 | 7,635 | ||||||
Share-based compensation | 1,033,971 | 1,378,785 | ||||||
Share of loss on equity investment | 18,345 | - | ||||||
Change in fair value of warrants | (12,714,331 | ) | 3,511,712 | |||||
Changes in assets and liabilities: | ||||||||
Increase in amounts receivable | (11,272 | ) | 15,175 | |||||
Decrease in prepaid expenses | (88,744 | ) | 851,548 | |||||
Increase in trade payable | 2,587,716 | 119,171 | ||||||
Decrease in accrued expenses and other payables | (464,848 | ) | (389,845 | ) | ||||
Total cash flow from operating activities | (15,006,564 | ) | (7,494,122 | ) | ||||
Cash flows from investing activities | ||||||||
Equity Investment in BC Therapeutics (*) | - | - | ||||||
Total cash flow from investing activities | - | - | ||||||
Cash flows from financing activities | ||||||||
Share and warrant buyback program | - | (47,294 | ) | |||||
Total cash flow from financing activities | - | (47,294 | ) | |||||
Decrease in cash and cash equivalents | (15,006,564 | ) | (7,541,416 | ) | ||||
Cash and cash equivalents at beginning of the period | 21,251,092 | 41,041,652 | ||||||
Cash and cash equivalents at end of the period | $ | 6,244,528 | $ | 33,500,236 |
(*) | $125,000 of this amount was loaned to BC Therapeutics during the year ended July 31, 2023 and an additional $175,000 was loaned to BC Therapeutics between August 1, 2023 and December 20, 2023. The total amount ($300,000) was converted into an investment). |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BRIACELL THERAPEUTICS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
FOR THE THREE AND SIX MONTHS ENDED JANUARY 31, 2023
Share capital | Additional paid in | Accumulated other comprehensive | Accumulated | Total equity | ||||||||||||||||||||
Number | Amount | capital | loss | deficit | (deficit) | |||||||||||||||||||
Balance, October 31, 2022 | 15,518,018 | $ | 65,589,293 | $ | 6,340,101 | $ | (138,684 | ) | $ | (61,456,378 | ) | $ | 10,334,332 | |||||||||||
Issuance of options | - | - | 266,844 | - | - | 266,844 | ||||||||||||||||||
Loss for the period | - | - | - | - | (11,881,762 | ) | (11,881,762 | ) | ||||||||||||||||
Balance, January 31, 2023 | 15,518,018 | $ | 65,589,293 | $ | 6,606,945 | $ | (138,684 | ) | $ | (73,338,140 | ) | $ | (1,280,586 | ) |
Share capital | Additional paid in | Accumulated other comprehensive | Accumulated | Total equity | ||||||||||||||||||||
Number | Amount | capital | loss | deficit | (deficit) | |||||||||||||||||||
Balance, July 31, 2022 | 15,518,018 | $ | 65,589,293 | $ | 5,228,160 | $ | (138,684 | ) | $ | (60,349,837 | ) | $ | 10,328,932 | |||||||||||
Issuance of options | - | - | 1,378,785 | - | - | 1,378,785 | ||||||||||||||||||
Loss for the period | - | - | - | - | (12,988,303 | ) | (12,988,303 | ) | ||||||||||||||||
Balance, January 31, 2023 | 15,518,018 | $ | 65,589,293 | $ | 6,606,945 | $ | (138,684 | ) | $ | (73,338,140 | ) | $ | (1,280,586 | ) |
Share capital | Additional paid in | Accumulated other comprehensive | Accumulated | Total shareholders’ | ||||||||||||||||||||
Number | Amount | capital | loss | deficit | equity | |||||||||||||||||||
Balance, October 31, 2021 | 15,370,412 | $ | 55,701,579 | $ | 2,696,264 | $ | (138,684 | ) | $ | (56,675,382 | ) | $ | 1,583,777 | |||||||||||
Exercise of representation warrants | 107,471 | 376,832 | - | - | - | 376,832 | ||||||||||||||||||
Exercise of private placement warrants | 800,000 | 9,910,089 | - | - | - | 9,910,089 | ||||||||||||||||||
Exercise of public offering warrants | 33,065 | 1,677,631 | - | - | - | 1,677,631 | ||||||||||||||||||
Issuance of options | - | - | 814,876 | - | - | 814,876 | ||||||||||||||||||
Shares repurchased and cancelled | (364,306 | ) | (4,704,423 | ) | - | - | (4,393,591 | ) | (9,098,014 | ) | ||||||||||||||
Income for the period | - | - | - | - | 11,160,507 | 11,160,507 | ||||||||||||||||||
Balance, January 31, 2022 | 15,946,642 | $ | 62,961,708 | $ | 3,511,140 | $ | (138,684 | ) | $ | (49,908,466 | ) | $ | 16,425,698 |
Share capital | Additional paid in | Accumulated other comprehensive | Accumulated | Total shareholders’ equity | ||||||||||||||||||||
Number | Amount | capital | loss | deficit | (deficit) | |||||||||||||||||||
Balance, July 31, 2021 | 15,269,583 | $ | 54,774,172 | $ | 2,178,130 | $ | (138,684 | ) | $ | (29,141,897 | ) | $ | (27,671,721 | ) | ||||||||||
Balance | 15,269,583 | $ | 54,774,172 | $ | 2,178,130 | $ | (138,684 | ) | $ | (29,141,897 | ) | $ | (27,671,721 | ) | ||||||||||
Exercise of representation warrants | 208,300 | 1,304,239 | - | - | - | 1,304,239 | ||||||||||||||||||
Exercise of private placement warrants | 800,000 | 9,910,089 | - | - | - | 9,910,089 | ||||||||||||||||||
Exercise of public offering warrants | 33,065 | 1,677,631 | - | - | - | 1,677,631 | ||||||||||||||||||
Issuance of options | - | - | 1,333,010 | - | - | 1,333,010 | ||||||||||||||||||
Shares repurchased and canceled | (364,306 | ) | (4,704,423 | ) | - | - | (4,393,591 | ) | (9,098,014 | ) | ||||||||||||||
Loss for the period | - | - | - | - | (16,372,978 | ) | (16,372,978 | ) | ||||||||||||||||
Income (loss) for the period | - | - | - | - | (16,372,978 | ) | (16,372,978 | ) | ||||||||||||||||
Balance, January 31, 2022 | 15,946,642 | $ | 62,961,708 | $ | 3,511,140 | $ | (138,684 | ) | $ | (49,908,466 | ) | $ | 16,425,698 | |||||||||||
Balance | 15,946,642 | $ | 62,961,708 | $ | 3,511,140 | $ | (138,684 | ) | $ | (49,908,466 | ) | $ | 16,425,698 |
The accompanying notes are an integral part of the condensed consolidated financial statements.
6 |
BriaCell Therapeutics Corp
BRIACELL THERAPEUTICS CORP.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JANUARY 31, 2023
(Unaudited)
Six months ended January 31, | ||||||||
2023 | 2022 | |||||||
Cash flow from operating activities | ||||||||
Net loss | $ | (12,988,303 | ) | $ | (16,372,978 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 7,635 | 7,636 | ||||||
Share-based compensation | 1,378,785 | 1,333,010 | ||||||
Interest expense | - | 979 | ||||||
Gain from government grant | - | (3,388 | ) | |||||
Change in fair value of warrants | 3,511,712 | 10,456,148 | ||||||
Changes in assets and liabilities: | ||||||||
Increase in amounts receivable | 15,175 | (14,592 | ) | |||||
Decrease in prepaid expenses | 851,548 | 210,022 | ||||||
Increase in trade payable | 119,171 | 314,143 | ||||||
Decrease in accrued expenses and other payables | (389,845 | ) | (265,788 | ) | ||||
Total cash flow from operating activities | (7,494,122 | ) | (4,334,808 | ) | ||||
Cash flows from financing activities | ||||||||
Share and warrant buyback program | (47,294 | ) | (10,056,273 | ) | ||||
Repayment government grant | - | (23,577 | ) | |||||
Proceeds from exercise of warrants | - | 5,127,658 | ||||||
Total cash flow from financing activities | (47,294 | ) | (4,952,192 | ) | ||||
Decrease in cash and cash equivalents | (7,541,416 | ) | (9,287,000 | ) | ||||
Cash and cash equivalents at beginning of the period | 41,041,652 | 57,268,685 | ||||||
Cash and cash equivalents at end of the period | $ | 33,500,236 | $ | 47,981,685 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BRIACELL THERAPEUTICS CORP.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)(Unaudited, expressed in US Dollars, except share and per share data and unless otherwise indicated)
NOTE 1: GENERAL AND GOING CONCERN
a. | BriaCell Therapeutics Corp. (“BriaCell” or the “Company”) was incorporated under the Business Corporations Act (British Columbia) on July 26, 2006 and is listed on the Toronto Stock Exchange (“TSX”) under the symbol “BCT” and on the Nasdaq Capital Market (“NASDAQ”) under the symbols “BCTX” and “BCTXW”. |
b. | BriaCell Therapeutics Corporation. (the “Company”), is an immuno-oncology biotechnology company. |
c. | Basis of presentation of the financial statements: |
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 108 of Regulation S-X promulgated by the U.S Securities and Exchange Commission (the “SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments consisting of a normal recurring nature which are necessary for a fair presentation of the financial position, operating results, and cash flows for the periods presented.
The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report for the year ended July 31, 20222023, filed with the SEC on October 28 , 2022.25, 2023. The interim period results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year.
Prior to 2021, the Company prepared its financial statements, including its condensed financial statements, in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB), as permitted in the United States based on the Company’s qualification as a “foreign private issuer” under the rules and regulations of the SEC. In connection with the loss of the Company’s status as a foreign private issuer effective on August 1, 2022, the Company, as a domestic filer, prepares its consolidated financial statements in accordance with U.S. GAAP, and restated its condensed consolidated financial statements as of January 31, 2022 to be prepared in accordance with U.S. GAAP.
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, |
BriaCell Therapeutics Corp
Notes to the Condensed Consolidated Financial Statements
(Unaudited, expressed in US Dollars, except share and per share data and unless otherwise indicated)
NOTE 1: GENERAL AND GOING CONCERN (Cont.)
e. | The Company has | |
f. |
| |
Pursuant to the terms of the Arrangement, BriaPro has acquired the entire right and interest in and to the BriaPro Assets in consideration for the issuance by BriaPro to the Company of BriaPro common shares. Under the terms of the Arrangement, for each BriaCell share held immediately prior to closing, BriaCell Shareholders receive one (1) common share of BriaPro, and one (1) new common share of BriaCell (retiring their old share) having the same terms and characteristics as the existing BriaCell common shares. The Company will remain listed on the NASDAQ Stock Market and Toronto Stock Exchange, and BriaPro is an unlisted reporting issuer in Canada.
Immediately following the closing of the Arrangement, the Company controls 2/3rd of the BriaPro common shares representing approximately 66.6% of the issued and outstanding common shares of BriaPro.
As a result of the Arrangement, there are BriaPro common shares issued and outstanding. The Company now beneficially owns or controls approximately BriaPro common shares, representing 2/3rd of the issued and outstanding BriaPro common shares.
Pursuant to the Arrangement, each BriaCell warrant shall, in accordance with its terms, entitle the holder thereof to receive, upon the exercise thereof, one BriaCell Share and one BriaPro Share for the original exercise price.
Upon the exercise of BriaCell Warrants, BriaCell shall, as agent for BriaPro, collect and pay to BriaPro an amount for each one (1) BriaPro Share so issued that is equal to the exercise price under the BriaCell Warrant multiplied by the fair market value of one (1) BriaPro Share at the Effective Date divided by the total fair market value of one (1) BriaCell Share and one (1) BriaPro Share at the Effective Date (“BriaPro Warrant Shares”).
Pursuant to the Arrangement, all Briacell option holders received the same amount of BriaPro options (“BriaPro Option”) and under the BriaPro incentive plan. The exercise price of the BriaCell options was apportioned between the BriaCell options and the BriaPro options, as follows:
Each one (1) BriaPro Option to acquire one (1) Share shall have an exercise price equal to the product obtained by multiplying the original exercise price of the BriaCell Option by the quotient obtained by dividing (A) the fair market value of a BriaPro Share at the Effective Date by (B) the aggregate fair market value of a BriaCell Share and a BriaPro Share at the Effective Date.
Pursuant to the Arrangement, all BriaCell Restricted Shares Units (“RSU”) holders received the same amount of BriaPro RSU’s under the BriaPro incentive plan.
Transition Services Agreement
On August 31, 2023, the Company and BriaPro executed a transition services agreement (the “Agreement”), pursuant to which BriaCell will provide certain research and development and head office services (the “Services”) to BriaPro for a fixed monthly fee of $20,000.
Briacell and BriaPro acknowledged the transitional nature of the Services and accordingly, as promptly as practicable, BriaPro agreed to use commercially reasonable efforts to transition each Service to its own internal organization or to obtain alternate third party providers to provide the Services.
In accordance with US GAAP’s Accounting Standards Codification 505 “Equity”, the Arrangement was determined to be a spinoff of nonmonetary assets which did not constitute a business. However, since the assets were transferred to an entity under the Company’s control, the assets is being recorded on the Company’s basis (carry value) and not at fair market value.
8 |
BriaCell Therapeutics Corp
Notes to the Condensed Consolidated Financial Statements
(Unaudited, expressed in US Dollars, except share and per share data and unless otherwise indicated)
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES
a.Use of estimates:
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company’s management believes that the estimates, judgment and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities at the dates of the consolidated financial statements, and the reported amount of expenses during the reporting periods. Actual results could differ from those estimates.
b.Equity method investments:
Investments in entities over which the Company does not have a controlling financial interest but has significant influence, are accounted for using the equity method, with the Company’s share of losses reported in loss from equity method investments on the statements of loss and comprehensive loss. Equity method investments are recorded at cost, plus the Company’s share of undistributed earnings or losses, and impairment, if any, within interest in equity investees on the statements of financial position.
c. Recently issued and adopted accounting standards:
As an “emerging growth company,” the Jumpstart Our Business Startups Act (“JOBS Act”) allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. The Company has elected to use this extended transition period under the JOBS Act. The adoption dates discussed below reflects this election. The pronouncements below relate to standards that impact the Company.
1. | In |
9 |
BriaCell Therapeutics Corp
Notes to the Condensed Consolidated Financial Statements
(Unaudited, expressed in US Dollars, except share and per share data and unless otherwise indicated)
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (Cont.)
2. | In |
NOTE 3: INVESTMENT IN BC THERAPEUTICS INC.
On December 21, 2021, the Company and BC Therapeutics, Inc. (“BC Therapeutics” or “the Investee”) entered a share purchase agreement (“SPA”), pursuant to which the Company invested $ at $ per BC Therapeutics share for a % interest in the Investee. Pursuant to the SPA, Briacell also received two options to invest an additional $ per option at $ per BC Therapeutics share. The first option expires on February 15, 2024 and the second option expires on June 30, 2024 (“BC Therapeutics Options”). In accordance with ASC 321 and ASC 815, the BC Therapeutics Options were valued at $ in accordance with the Black Scholes Option Price Model, using the following assumptions: Share price: $ , Exercise price: $ , Dividend yield: %, Risk free interest rate: $ %, Volatility: %.
Subsequent to January 31, 2024, the Company exercised the first option on February 1, 2024 and now holds % of BC Therapeutics.
BC Therapeutics has a board of four representatives, with two representatives appointed by BriaCell and two representatives appointed by the existing shareholders. All significant decisions related to BC Therapeutics require the approval of at least a majority of the board members.
Changes in the Company’s Investment in BC Therapeutics is summarized as follows:
SCHEDULE OF CHANGES IN INVESTMENT
Balance – August 1, 2023 | $ | - | ||
Funding (including the value of the BC Therapeutics Options) | 300,000 | |||
Share of losses: | ||||
Operating expenses | (18,345 | ) | ||
Balance – January 1, 2024 | $ | 281,655 |
The following amounts represent the Company’s % share of the assets and liabilities of BC Therapeutics:
SCHEDULE OF ASSETS AND LIABILITIES OF BC THERAPEUTICS
As of January 31, 2024 | ||||
Current assets: Cash | $ | 4,196 | ||
Net assets | $ | 4,196 |
NOTE 3:4: CONTINGENT LIABILITIES AND COMMITMENTS
a. |
On May 19, 2021, Alpha Capital Anstalt (“Alpha”) filed a lawsuitAs detailed in note 1(f), upon the New York State Supreme Court, Commercial Division, New York County againstexercise of BriaCell Therapeutics Corp. (“BriaCell”), alleging thatWarrants, BriaCell breached a loan contract when it refusedshall, as agent for BriaPro, collect and pay to reprice and extend the termBriaPro an amount of warrants purported held by Alpha in spring 2021, seeking monetary and injunctive relief for delivery of those amended warrants. Counterclaiming and defending against Alpha’s complaint, BriaCell alleges that Alpha’s loanup to BriaCell is unenforceable both because the loan is criminally usurious under New York law and because Alpha acted as an unregistered securities dealer in violation of American securities law. BriaCell also has alleged that Canadian securities law, regulation, and rules prohibited it from amending the warrants to comply with Alpha’s spring 2021 demands. On May 11, 2022, Alpha moved to dismiss BriaCell’s operative Amended Counterclaim. At oral argument on January 19, 2023, Justice Cohen granted in part and denied in part Alpha’s partial motion to dismiss BriaCell’s Amended Counterclaim and Affirmative Defenses. In relevant part, Justice Cohen refused to dismiss any of BriaCell’s substantive counterclaims, allowing BriaCell to continue to prosecute its Unjust Enrichment, Money Had and Received, Recovery of Excess, and Implied Covenant of Good Faith and Fair Dealing claims against Alpha. At this time, the parties cannot estimate the value of their respective claims and damages.$241,164.
b. | Lease |
The Company is currently onin a month-to-month lease arrangement12-month commitment (ending August 31, 2024) for office and lab space in Philadelphia, PA, incosting the amount ofcompany approximately $16,00036,000 per month.
10 |
BriaCell Therapeutics Corp
Notes to the Condensed Consolidated Financial Statements
(Unaudited, expressed in US Dollars, except share and per share data and unless otherwise indicated)
NOTE 4:5: FAIR VALUE MEASUREMENTS
The following table presents information about our financial instruments that are measured at fair value on a recurring basis as of January 31, 2023,2024, and July 31, 2022:2023:
SCHEDULE OF FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE ON A RECURRING BASIS
Fair Value Measurements at | Fair Value Measurements at | |||||||||||||||||||||||||||||||||||||||||||||||
January 31, 2023 | July 31, 2022 | January 31, 2024 | July 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||
Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | |||||||||||||||||||||||||||||||||||||
Financial Assets: | ||||||||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | 33,500,236 | - | 33,500,236 | 41,041,652 | - | 41,041,652 | 6,244,528 | - | 6,244,528 | 21,251,092 | - | 21,251,092 | ||||||||||||||||||||||||||||||||||||
Total assets measured at fair value | $ | 33,500,236 | - | 33,500,236 | $ | 41,041,652 | $ | - | $ | 41,041,652 | $ | 6,244,528 | $ | - | $ | 6,244,528 | $ | 21,251,092 | $ | - | $ | 21,251,092 | ||||||||||||||||||||||||||
Financial liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||
Warrants liability | 11,652,356 | 23,119,084 | 34,771,440 | 11,151,608 | 20,155,414 | 31,307,022 | 6,936,320 | 9,687,857 | 16,624,177 | 9,742,023 | 19,397,278 | 29,139,301 | ||||||||||||||||||||||||||||||||||||
Total liabilities measured at fair value | $ | 11,652,356 | 23,119,084 | 34,771,440 | $ | 11,151,608 | $ | 20,155,414 | $ | 31,307,022 | $ | 6,936,320 | $ | 9,687,857 | $ | 16,624,177 | $ | 9,742,023 | $ | 19,397,278 | $ | 29,139,301 |
We classify our
The Company classifies its cash and cash equivalents and the liability in respect of publicly traded warrants within Level 1 because we use quoted market prices in active markets.
The fair value of the warrant liability for non-public warrants is measured using inputs other than quoted prices included in Level 1 that are observable for the liability either directly or indirectly, and thus are classified as Level 2 financial instruments.
NOTE 5:6: SHAREHOLDERS’ EQUITY
a.Authorized share capital
The authorized share capital consists of an number of common shares with par value.
b. Issued share capital
2023.2024. shares were issued during the six-month period ended January 31,
c. Share buyback programPurchase 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 | $ |
(ii) | As of January 31, 2024, warrants outstanding were as follows: |
Number of Warrants | Exercise Price(*) | Exercisable At January 31, 2024 | Expiry Date | |||||||||
51,698 | $ | 3.91 | 51,698 | |||||||||
3,896,809 | $ | 5.31 | 3,896,809 | – | ||||||||
4,173,143 | $ | 6.19 | 4,173,143 | |||||||||
8,121,650 | 8,121,650 |
(*) | See note 4(a). |
11 |
BriaCell Therapeutics Corp
Notes to the Condensed Consolidated Financial Statements
(Unaudited, expressed in US Dollars, except share and per share data and unless otherwise indicated)
NOTE 5:6: SHAREHOLDERS’ EQUITY (Cont.)
d. Share Purchase Warrants
A summary of changes in share purchase warrants for the six-month period ended January 31, 2023 is presented below:
SUMMARY OF CHANGES IN WARRANTS
Number of warrants outstanding | Weighted average exercise price | |||||||
Balance, July 31, 2022 | 8,137,686 | $ | 5.76 | |||||
Repurchased and cancelled | (15,736 | ) | (5.31 | ) | ||||
Balance, January 31, 2023 | 8,121,950 | 5.76 |
d. Share Purchase Warrants (continued)
SCHEDULE OF WARRANTS OUTSTANDING
Number of Warrants | Exercise Price | Exercisable At January 31, 2023 | Expiry Date | |||||||||
51,698 | $ | 4.06 | 51,698 | |||||||||
3,897,109 | $ | 5.31 | 3,897,109 | – | ||||||||
4,173,143 | $ | 6.19 | 4,173,143 | |||||||||
8,121,950 | 8,121,950 |
e. Compensation Warrants
(i) | There were no changes to compensation warrants for the six-month period ended January 31, |
(ii) | As |
SCHEDULE OF WARRANTS OUTSTANDING
Number of Warrants | Exercise Price(*) | Exercisable At January 31, 2024 | Expiry Date | |||||||||
4,890 | $ | 3.91 | 4,890 | November 16, 2025 | ||||||||
17,074 | $ | 5.31 | 17,074 | February 26, 2026 | ||||||||
24,688 | $ | 6.19 | 24,688 | June 7, 2026 | ||||||||
46,652 | 46,652 |
Number of Warrants | Exercise Price | Exercisable At January 31, 2023 | Expiry Date | |||||||||
4,890 | $ | 4.06 | 4,890 | November 16, 2025 | ||||||||
17,074 | $ | 5.31 | 17,074 | February 26, 2026 | ||||||||
24,688 | $ | 6.19 | 24,688 | June 7, 2026 | ||||||||
46,652 | 46,652 |
(*) | See note 4(a). |
f.e. Warrant liability continuity
The following table presents the summary of the changes in the fair value of the warrants:
SCHEDULE OF CHANGE IN FAIR VALUE OF WARRANTS
Warrants liability | ||||
Balance as of August 1, 2022 | $ | 31,307,022 | ||
Warrant buyback program | $ | (47,294 | ) | |
Change in fair value during the period | $ | 3,511,712 | ||
Balance as of January 31, 2023 | $ | 34,771,440 |
Warrants liability | ||||
Balance as of August 1, 2023 | $ | 29,139,301 | ||
Fair value of BriaPro Warrant Shares at Effective Date | $ | 199,207 | ||
Change in fair value during the period | $ | (12,714,331 | ) | |
Balance as of January 31, 2024 | $ | 16,624,177 |
The key inputs used in the valuation of the non-public warrants as of January 31, 20232024 and at July 31, 20222023 were as follows:
12 |
BriaCell Therapeutics Corp
Notes to the Condensed Consolidated Financial Statements
(Unaudited, expressed in US Dollars, except share and per share data and unless otherwise indicated)
NOTE 5:6: SHAREHOLDERS’ EQUITY (Cont.)
SCHEDULE OF VALUATION OF NON PUBLIC WARRANTS
January 31, 2024 | July 31, 2023 | |||||||
Share price | $ | $ | ||||||
Exercise price | $ | - | $ | - | ||||
Expected life (years) | - | - | ||||||
Volatility | % | % | ||||||
Dividend yield | % | % | ||||||
Risk free rate | - | % | % |
January 31, 2023 | July 31, 2022 | |||||||
Share price | $ | $ | ||||||
Exercise price | $ | - | $ | - | ||||
Expected life (years) | - | - | ||||||
Volatility | % | % | ||||||
Dividend yield | % | % | ||||||
Risk free rate | % | % |
The key inputs used in the valuation of the of the BriaPro Warrant Shares as of January 31, 2024 were as follows:
SCHEDULE OF VALUATION OF WARRANTS
January 31, 2024 | August 31, 2023 (Effective Date) | |||||||
Share price | $ | $ | ||||||
Exercise price | $ | - | $ | - | ||||
Expected life (years) | - | - | ||||||
Volatility | % | % | ||||||
Dividend yield | % | % | ||||||
Risk free rate | - | % | % |
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, | |
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: |
Number of options | Weighted average exercise price | Weighted (in years) | Aggregate intrinsic value | |||||||||||||
Balance as of July 31, 2022 | 1,490,300 | $ | 6.20 | $ | 447,090 | |||||||||||
Granted (i) | 180,100 | 6.28 | - | |||||||||||||
Balance as of January 31, 2023 | 1,670,400 | 6.21 | $ | 2,121,408 | ||||||||||||
Exercisable as of January 31, 2023 | 1,424,010 | $ | 6.13 | $ | 1,922,414 |
Number of options | Weighted average exercise price | Weighted average remaining contractual term (in years) | Aggregate intrinsic value | |||||||||||||
Balance as of July 31, 2023 | 2,131,400 | $ | 6.19 | $ | 1,065,700 | |||||||||||
Balance as of January 31, 2024 | 2,131,400 | 6.18 | - | |||||||||||||
Exercisable as of January 31, 2024 | 1,797,000 | $ | 6.19 | $ | - |
The weighted-average grant date per-share fair value of stock options granted during six-month period ended January 31, 2023 was $. As of January 31, 2023,2024 there are $ of total unrecognized costs related to share-based compensation that is expected to be recognized over a period of up to years.
13 |
�� |
BriaCell Therapeutics Corp
Notes to the Condensed Consolidated Financial Statements
(Unaudited, expressed in US Dollars, except share and per share data and unless otherwise indicated)
NOTE 7: SHARE-BASED COMPENSATION (Cont.)
c. |
Three months ended January 31, | Six months ended January 31, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
Dividend yield | % | % | % | % | ||||||||||||
Expected volatility of the share prices | % | % | % | % | ||||||||||||
Risk-free interest rate | % | % | % | %- | % | |||||||||||
Expected term (in years) |
The following table summarizes information about the Company’s outstanding and exercisable options granted to employees as of January 31, |
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 | |||||||||||||||
$ | 440,000 | 4.39 | 165,000 | 4.39 | ||||||||||||||||
$ | 21,000 | 4.08 | 10,500 | 4.08 | ||||||||||||||||
$ | 180,100 | 3.51 | 135,075 | 3.51 | ||||||||||||||||
$ | 31,000 | 3.31 | 27,125 | 3.31 | ||||||||||||||||
$ | 150,000 | 3.04 | 150,000 | 3.04 | ||||||||||||||||
$ | 524,700 | 2.95 | 524,700 | 2.95 | ||||||||||||||||
$ | 12,600 | 2.75 | 12,600 | 2.75 | ||||||||||||||||
$ | 100,000 | 2.59 | 100,000 | 2.59 | ||||||||||||||||
$ | 60,000 | 2.22 | 60,000 | 2.22 | ||||||||||||||||
$ | 612,000 | 2.16 | 612,000 | 2.16 | ||||||||||||||||
2,131,400 | 1,797,000 |
Exercise price | Options outstanding as of January 31, 2023 | Weighted average remaining contractual term (years) | Options exercisable as of January 31, 2023 | Weighted average remaining contractual term (years) | Expiry Date | |||||||||||||||
$ | 180,100 | 4.51 | 45,025 | 4.51 | ||||||||||||||||
$ | 31,000 | 4.31 | 11,625 | 4.31 | ||||||||||||||||
$ | 150,000 | 4.04 | 75,000 | 4.04 | ||||||||||||||||
$ | 524,700 | 3.95 | 508,800 | 3.95 | ||||||||||||||||
$ | 12,600 | 3.75 | 11,560 | 3.75 | ||||||||||||||||
$ | 100,000 | 3.59 | 100,000 | 3.59 | ||||||||||||||||
$ | 60,000 | 3.22 | 60,000 | 3.22 | ||||||||||||||||
$ | 612,000 | 3.16 | 612,000 | 3.16 | ||||||||||||||||
1,670,400 | 1,424,010 |
d. | As result of the Arrangement, BriaPro Options were issued and are outstanding as of January 31, 2024: |
Exercise Price | Options outstanding as of January 31, 2024 | Options exercisable as of January 31, 2024 | Expiry Date | |||||||||
$ | 440,000 | 165,000 | ||||||||||
$ | 21,000 | 10,500 | ||||||||||
$ | 180,100 | 135,075 | ||||||||||
$ | 31,000 | 27,125 | ||||||||||
$ | 150,000 | 150,000 | ||||||||||
$ | 524,700 | 524,700 | ||||||||||
$ | 12,600 | 12,600 | ||||||||||
$ | 100,000 | 100,000 | ||||||||||
$ | 60,000 | 60,000 | ||||||||||
$ | 612,000 | 612,000 | ||||||||||
2,131,400 | 1,797,000 |
e. | Restricted Share Unit Plan |
SCHEDULESUMMARY OF RESTRICTED STOCK UNITS GRANTED
Number of RSU’s outstanding | Aggregate intrinsic value | |||||||
Balance, July 31, 2022 | - | $ | - | |||||
Granted (i) | 19,200 | 123,072 | ||||||
Balance, January 31, 2023 | 19,200 | $ | 143,616 |
Number of RSU’s outstanding | Aggregate intrinsic value | |||||||
Balance, July 31, 2023 | 19,200 | $ | 123,072 | |||||
Balance, January 31, 2024 | 19,200 | $ | 79,104 |
14 |
BriaCell Therapeutics Corp
Notes to the Condensed Consolidated Financial Statements
(Unaudited, expressed in US Dollars, except share and per share data and unless otherwise indicated)
NOTE 7: SHARE-BASED COMPENSATION (Cont.)
f. The total share-based compensation expense related to all of the Company’s equity-based awards, recognized for the three and six-month period ended January 31, 20232024 and 20222023 is comprised as follows:
2023 | 2022 | 2023 | 2022 | |||||||||||||
Three months ended January 31, | Six months ended January 31, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
Research and development expenses | $ | 225,091 | 109,453 | $ | 575,347 | 109,453 | ||||||||||
General and administrative expenses | 41,753 | 705,423 | 803,438 | 1,223,557 | ||||||||||||
Total share-based compensation | $ | 266,844 | 814,876 | $ | 1,378,785 | 1,333,010 |
2024 | 2023 | 2024 | 2023 | |||||||||||||
Three months ended January 31, | Six months ended January 31, | |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
Research and development expenses | $ | 234,253 | 225,091 | $ | 492,062 | 575,347 | ||||||||||
General and administrative expenses | 265,902 | 41,753 | 541,909 | 803,438 | ||||||||||||
Total share-based compensation | $ | 500,155 | 266,844 | $ | 1,033,971 | 1,378,785 |
NOTE 7:8: FINANCIAL INCOME (EXPENSES), NET
SCHEDULE OF FINANCIAL INCOME (EXPENSE)(EXPENSES), NET
2023 | 2022 | 2023 | 2022 | |||||||||||||
Three months ended January 31, | Six months ended January 31, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
Interest income | $ | 240,595 | 12,081 | $ | 428,948 | 18,386 | ||||||||||
Interest expense | - | - | - | (979 | ) | |||||||||||
Change in fair value of warrant liability | (7,629,502 | ) | 14,797,888 | (3,511,712 | ) | (10,456,148 | ) | |||||||||
Gain on government grant | - | 3,388 | - | 3,388 | ||||||||||||
Foreign exchange loss | (6,532 | ) | (6,041 | ) | (16,065 | ) | (6,007 | ) | ||||||||
Loss on extinguishment of debt | - | - | - | - | ||||||||||||
Financial income (expenses), net | $ | (7,395,439 | ) | $ | 14,807,316 | $ | (3,098,829 | ) | $ | (10,441,360 | ) |
2024 | 2023 | 2024 | 2023 | |||||||||||||
Three months ended January 31, | Six months ended January 31, | |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
Interest income | $ | 81,595 | 240,595 | $ | 272,410 | 428,948 | ||||||||||
Change in fair value of warrant liability | (1,567,747 | ) | (7,629,502 | ) | 12,714,331 | (3,511,712 | ) | |||||||||
Foreign exchange gain (loss) | 33 | (6,532 | ) | (10,960 | ) | (16,065 | ) | |||||||||
Financial income (expenses), net | $ | (1,486,119 | ) | $ | (7,395,439 | ) | $ | 12,975,781 | $ | (3,098,829 | ) |
NOTE8:NOTE 9: BASIC AND DILUTED NET LOSS PER SHARESUBSEQUENT EVENT
The Company evaluated the possibility of subsequent events existing in the Company’s unaudited condensed consolidated financial statements through March 18, 2024, the date that the condensed consolidated financial statements were available for issuance. The Company is not aware of any subsequent events which would require recognition or disclosure in the consolidated financial statements, except as follows:
Basic net income (loss) per ordinary share is computed by dividing net income (loss) for each reporting period by the weighted-average number of ordinary shares outstanding during each year. Diluted net income (loss) per ordinary share is computed by dividing net income (loss) for each reporting period by the weighted average number of ordinary shares outstanding during the period, plus dilutive potential ordinary shares considered outstanding during the period, in accordance with ASC No. 260-10 “Earnings Per Share”. The Company experienced a loss in three and six month ended January 31, 2023 and for the six months ended January 31, 2022; hence all potentially dilutive ordinary shares were excluded during those periods due to their anti-dilutive effect.
a. | As disclosed in note 3, subsequent to January 31, 2024, on February 1, 2024 the Company exercised an option to acquire an additional interest in BC Therapeutics and now owns 51%. |
SCHEDULE OF BASIC AND DILUTED NET LOSS PER SHARE
2023 | 2022 | 2023 | 2022 | |||||||||||||
Three months ended January 31, | Six months ended January 31, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
Basic EPS | ||||||||||||||||
Numerator: | ||||||||||||||||
Net income (loss) | $ | (11,881,762 | ) | $ | 11,160,507 | $ | (12,988,303 | ) | $ | (16,372,978 | ) | |||||
Denominator: | ||||||||||||||||
Shares used in computation of basic earnings per share | 15,518,018 | 15,788,827 | 15,518,018 | 15,547,497 | ||||||||||||
Basic EPS | $ | (0.77 | ) | $ | 0.71 | $ | (0.84 | ) | $ | (1.05 | ) | |||||
Diluted EPS | ||||||||||||||||
Numerator: | ||||||||||||||||
Net income (loss) attributable to common stock, basic and diluted | $ | (11,881,762 | ) | $ | 704,359 | $ | (12,988,303 | ) | $ | (16,372,978 | ) | |||||
Denominator: | ||||||||||||||||
Shares used in computing net EPS of common stock, basic | 15,518,018 | 15,788,827 | 15,518,018 | 15,547,497 | ||||||||||||
Stock Options | - | 337,644 | - | - | ||||||||||||
Warrants | - | 2,279,143 | - | - | ||||||||||||
Shares used in computation of diluted earnings per share | 15,518,018 | 18,405,614 | 15,518,018 | 15,547,497 | ||||||||||||
Diluted EPS | $ | (0.77 | ) | $ | 0.04 | $ | (0.84 | ) | $ | (1.05 | ) |
15 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
References to the “Company,” “our,” “us” or “we” refer to BriaCell Therapeutics Corp. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Introduction
This Management’s Discussion and Analysis (“MD&A”) should be read together with other information, including our unaudited condensed interim consolidated financial statements and the related notes to those statements included in Part I, Item 1 of this Quarterly Report (the “Condensed Consolidated Financial Statements”), our consolidated financial statements appearing in our Annual Report on Form 10-K for the year ended July 31, 20222023 (the “Annual Report”) and Part I, Item 1A, Risk Factors, of the Annual Report. This MD&A provides additional information on our business, recent developments, financial condition, cash flows and results of operations, and is organized as follows:
● | Part 1 - Business Overview. This section provides a general description of our business, which we believe is important in understanding the results of our operations, financial condition, and potential future trends. |
● | Part 2 - Results of Operations. This section provides an analysis of our results of operations for the first half and second quarter of fiscal |
● | Part 3 - Financial Liquidity and Capital Resources. This section provides an analysis of our cash flows and outstanding debt and commitments. Included in this analysis is a discussion of the amount of financial capacity available to fund our ongoing operations and future commitments. |
We prepare and report our unaudited Condensed Consolidated Financial Statements in accordance with U.S. GAAP. Our unaudited Condensed Consolidated Financial Statements, and the financial information contained herein, are reported in U.S Dollars.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings.
Overview
BriaCell Therapeutics Corp. (the “Company”“Company”), is an immuno-oncologya clinical-stage biotechnology company with a strong focus onthat is developing novel immunotherapies to transform cancer immunotherapy.care. Immunotherapies have come to the forefront in the fight against cancer sinceas they harness the body’s own immune system to recognize and destroy cancer cells. BriaCell owns the U.S. patent to SV-BR-1-GM (“Bria-IMT™”), a whole-cell targeted immunotherapy for cancer (U.S. Patent No. 7,674,456), as well as patents related to PKCδ inhibitors (U.S. Patent Nos. 9,364,460 and 9,572,793). The Company is currently advancing ourits Bria-IMT™ targeted immunotherapy program by prioritizing a Phase I/IIa clinical trial with Bria-IMT™ in combination with an immune check point inhibitor (Retifanlimab) in a pivotal1 Phase 3 study in advanced metastatic breast cancer. Bria-IMT™ is currently under Fast Track Designation by the U.S. FDA intended to accelerate the review process of novel treatments that address unmet medical needs. Positive completion of the pivotal study, following review by FDA, could lead to full approval of the Bria-IMT™ immune checkpoint inhibitor combination in advanced metastatic breast cancer. BriaCell reported benchmark-beating patient survival and a companion diagnostic test, BriaDx™, to identify patients most likely toclinical benefit from Bria-IMT™. The Bria-IMT™ regimen was evaluated in four patients in a prior study in 2004-2006 by Dr. Charles Wiseman, the scientific founder, former member of the board of directors of the Company (the “Board”) and principal scientific advisor. Encouraging results were obtained, especially in a patient who matched Bria-IMT™ at HLA alleles and had a grade II tumor. In 2017-2018 BriaCell evaluated 23 patients with advanced metastatic breast cancer with the Bria-IMT™ regimen and obtained confirmationmedian overall survival of the ability of the Bria-IMT™ regimen to induce regression of13.4 months in BriaCell’s advanced metastatic breast cancer patients vs. 6.7-9.8 months for similar patients reported in patients who matchthe literature in its Phase 2 study of Bria-IMT™ at least at one HLA allele and/or if they had grade I or grade II tumors. A combination study with retifanlimab at the 2023 San Antonio Breast Cancer Symposium. A completed Bria-IMT™ Phase 1 combination study with retifanlimab (an anti-PD1 antibody manufactured by Incyte) confirmed tolerability and early-stage efficacy. BriaCell is also developing a personalized off-the-shelf immunotherapy, Bria-OTS™, which provides a platform technology to develop personalized off-the-shelf immunotherapies for numerous types of cancer, and a soluble CD80 protein therapeutic which acts both as a stimulator of the immune checkpoint inhibitor pembrolizumab (KEYTRUDA®) was initiated on September 2018. BriaCell purchased the KEYTRUDA® for this studysystem as BriaCell does not havewell as an agreement with Merck & Co., Inc. for the supply of KEYTRUDA®. Eleven patients were dosed in the combination therapy trial with Bria-IMT™ and the immune checkpoint inhibitor KEYTRUDA® and subsequently dosing with this combination was discontinued. The study was modified under an amended protocol which evaluates the combination of the Bria-IMT™ regimen with Incyte Corporation experimental drugs retifanlimab (anti-PD-1 antibody similar to pembrolizumab). The study is ongoing.
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 |
It is estimated by the National Cancer Institute that in 2022, approximately 287,500 women were diagnosed with breast cancer in the United States. That means that every two minutes an American woman is diagnosed with breast cancer and more than 43,000 died in 2022. Although about 100 times less common than in women, breast cancer also affects men. It is estimated that the lifetime risk of men getting breast cancer is about 1 in 1,000, and the American Cancer Society estimates that approximately 2,710 new cases of invasive male breast cancer will be diagnosed and approximately 530 men will die from breast cancer in 2022.
According to the May 2019 “Global Oncology Trends 2021” report by the IQVIA Institute, the global market for cancer drugs (including immunotherapy drugs) is expected to reach nearly $269 billion by the end of 2025, growing at a compound annual growth rate (“CAGR”) of 10% between 2021 and 2025, of which about 20% is expected to be immuno-oncology drugs.
About 12.9% percent of women will be diagnosed with breast cancer at some point during their lifetime. In 2018, there were an estimated 3,676,262 women living with female breast cancer in the United States. Approximately 81% of cases present as invasive breast cancer. Approximately 6% of new breast cancer diagnoses are Stage IV (metastatic breast cancer (“MBC”), which has already spread to other organs). Twenty to thirty percent of all women diagnosed with breast cancer will develop MBC. Breast cancer can be subdivided based on receptor status - the hormone receptors for estrogen (ER) and progesterone (PR), collectively referred to as hormone receptors (HR), and the Her2/neu growth factor co-receptor (HER2). Based on the latest SEER statistics, 74.6% were found to be HR+/HER2−, 10.8% were triple-negative (HR−/HER2−), 10.5% were HR+/HER2+, and 4.0% were HR−/HER2+.1
It is estimated that over 150,000 women in the US are living with MBC. For those with metastatic disease at diagnosis, their 5-year survival rate is 27%. For patients who develop MBC after initially having localized disease, if they had a good response to treatment (i.e. a disease-free interval of more than 24 months), their survival rate is similar to that of patients with MBC at initial diagnosis, but if their disease-free interval is less than 24 months, their prognosis is worse.4 We currently propose that the Bria-IMT™ indication will be for the treatment of patients with MBC who have failed other approved therapies. Similarly, another study showed that the median overall survival among patients with de novo stage IV MBC was 39.2 months, while for patients with relapsed disease it was 27.2 months. Median progression free survival after first-line therapy is only 9 months and the survival benefit decreases with subsequent lines of therapy. One study showed that of 386 patients with MBC, 374 (97%) received first-line therapy, 254 (66%) received second-line therapy, 175 (45%) received third-line therapy, and 105 (27%) received therapy beyond third-line.
Recent Developments
On August 4, 2022,31, 2023, the Company closed the previously announced that it has secured an exclusive license from Universityplan of Maryland, Baltimore County (UMBC)arrangement spinout transaction (the “Arrangement”) pursuant to developwhich certain pipeline assets of the Company, including Bria-TILsRx™ and commercialize Soluble CD80 (sCD80) asprotein kinase C delta (PKCδ) inhibitors for multiple indications including cancer (the “BriaPro Assets”), were spun-out to BriaPro Therapeutics Corp. (“BriaPro”), resulting in a biologic agent for2/3rd owned subsidiary of the treatment of cancer.Company with the remaining 1/3rd held by BriaCell shareholders (“BriaCell Shareholders”).
The novel technology, originally developedPursuant to the terms of the Arrangement, BriaPro has acquired the entire right and interest in and to the BriaPro Assets in consideration for the issuance by Suzanne Ostrand-Rosenberg, Ph.D., Emeritus Faculty at UMBC,BriaPro to the Company of BriaPro common shares. Under the terms of the Arrangement, for each BriaCell share held immediately prior to closing, BriaCell Shareholders receive one (1) common share of BriaPro, and memberone (1) new common share of BriaCell’s scientific advisory board, is titled “Soluble CD80 as a Therapeutic to Reverse Immune Suppression in Cancer Patients” and covered under USPN 8,956,619 B2, USPN 9,650,429 B2, and USPN 10,377,810 B2. In animal models, sCD80 was well-tolerated and stopped tumor growth by potentially restoring natural anti-tumor immunity (see Lucas A Horn, et al. and Samuel T Haile et al. in collaboration with Dr. Ostrand-Rosenberg). Additionally, strong anti-tumor activity of sCD80 has been reported in multiple tumor types (see Lucas A Horn, et al.). Importantly, as demonstrated inBriaCell (retiring their old share) having the same studies, sCD80’s unique actions may involve both awakeningterms and boostingcharacteristics as the immune system to recognizeexisting BriaCell common shares. The Company will remain listed on the NASDAQ Stock Market and destroy tumor cells.Toronto Stock Exchange, and BriaPro is an unlisted reporting issuer in Canada.
As noted above, immediately following the closing of the Arrangement, the Company controlled 2/3rd of the BriaPro common shares representing approximately 66.6% of the issued and outstanding common shares of BriaPro As a result of the Arrangement, there were approximately 47,945,178 BriaPro common shares issued and outstanding immediately following consummation of the Arrangement. The Corporation now beneficially owns or controls approximately 31,963,452 BriaPro common shares, representing 2/3rd of the issued and outstanding BriaPro common shares.
On October 3, 2023, BriaCell initiated its pivotal Phase 3 Study of Bria-IMT™ in advanced metastatic breast Cancer. The study will evaluate the efficacy and safety of the Bria-IMT™ combination regimen with an immune check point inhibitor (Retifanlimab) in patients who have failed at least two approved therapies for the disease. Bria-IMT™ is currently under Fast Track Designation by the U.S. FDA intended to accelerate the review process of novel treatments that address unmet medical needs. Positive completion of the pivotal study, following review by FDA, could lead to full approval of the Bria-IMT™ immune checkpoint inhibitor combination in advanced metastatic breast cancer. FDA has agreed that improvement in overall survival in the Bria-IMT™ combination arm as compared to the physician’s choice of treatment arm will be the primary endpoint of the study. The study will enroll 177 patients in the Bria-IMT™ combination therapy arm and 177 patients in the treatment of physician’s choice arm. To gather additional information on the Bria-IMT™ regimen alone, 50 patients will be enrolled in this regimen and will be eligible for combination therapy following their initial post treatment evaluation. BriaCell expects frequent and responsive FDA communication under its Fast Track status during the pivotal Phase 3 study. The successful completion of the pivotal Phase 3 study would allow BriaCell to subsequently submit a Biologics License Application and accelerate the path to commercialization.
17 |
Under the terms of the agreement, BriaCell gains the worldwide rights to develop and commercialize sCD80, while UMBC maintains ownership of the patents. BriaCell will pay royalties to UMBC upon the commercialization of the product plus patent management costs. The licensing agreement was coordinated by UMBC’s Office of Technology Development.
Bria-IMT™ regimen combined with Incyte’s retifanlimab
The Company’s data showed clinical benefit including extended survival time and tumor reductions in heavily pre-treated advanced breast cancer patients who matched our lead candidate, Bria-IMT™, at HLA type/s, and these findings guided the development of further optimized off-the-shelf personalized immunotherapies for advanced breast cancer and other cancers.
On September 14, 2022, the Company signed an agreement with Caris Life Sciences® (Caris), a leading molecular science and technology company actively developing and delivering innovative solutions to revolutionize healthcare.
The goal is to develop immunotherapies that are personalized for each patient, and Caris’ extensive library of clinical data, cutting-edge biomarker technology, and expertise will be invaluable in achieving our objectives,” The Company expects Caris’ unique platform to help us identify patients who do not respond to existing treatments and are more likely to benefit from the Company’s immunotherapy treatments.
Under the terms of the agreement, Caris will help BriaCell with efficient patient identification, accelerating enrollment for its current Phase I/II clinical trial in advanced metastatic breast cancer of certain genetically defined subgroups. The partnership between BriaCell and Caris leverages Caris’ Right-In-Time (RIT) Clinical Trial Network, a group of over 495 oncology sites that are able to quickly identify and enroll eligible patients in biomarker-directed clinical trials. This service offers patients and physicians access to the most cutting-edge precision medicine in development. Additionally, through Caris’ comprehensive molecular profiling (Whole Exome and Whole Transcriptome Sequencing), Caris will perform tumor profiling for the patients enrolled in the clinical trial.
On October 12, 2022, the Company added Mayo Clinic, Jacksonville, Florida as a clinical site in the Phase I/II study of BriaCell’s lead candidate, Bria-IMT™, with Incyte’s PD-1 inhibitor, retifanlimab, in advanced breast cancer.
On November 10, 2022, the Company announced positive initial efficacy data in its 2021-2022 cohort of 12 advanced breast cancer patients. Disease control, tumor shrinkage, and potential survival benefit were observed amongst 12 patients in the Phase I/IIa clinical study of Bria-IMT™ in combination with Incyte’s retifanlimab.
In summary, these findings show evidence of clinical and survival benefits in heavily pre-treated advanced breast cancer patients, suggesting an additive or synergistic effect of Bria-IMT™ in combination with PD-1 inhibitors, and supporting the strategy of using the Bria-IMT™ combination regimen with retifanlimab for the treatment of advanced breast cancer patients.
Evidence of immune system activation by Bria-OTS+™ and Bria-PROS™
BriaCell’s poster presentation highlights the development details and activities of BriaCell’s next generation (enhanced version) off-the-shelf personalized immunotherapies.
BriaCell has recently developed its novel next generation off-the-shelf personalized immunotherapies, including Bria-OTS+™, and Bria-PROS™, that are designed to produce several immune activating molecules in addition to their original immune activating mechanisms for increased efficacy. This represents a significant advancement in BriaCell’s novel off-the-shelf personalized immunotherapy technology.
Both Bria-OTS+™ for advanced breast cancer, and Bria-PROS™ for advanced prostate cancer, were able to activate naïve T cells, suggesting their potential capabilities to produce very strong immune responses in patients. Results show that the very strong immune responses observed may be due to: 1) direct activation of the components of the immune system such as naïve T cells, and 2) indirect activation of the immune system components via production of immune activating molecules.
BriaCell is impressed with the data showing very strong immune responses for both Bria-OTS+™ and Bria-PROS™. We expect both Bria-OTS+™ and Bria-PROS™ to boost the immune system response and produce strong anti-tumor responses in patients with advanced breast cancer and prostate cancer, respectively.
Patent Issuance
On January 10, 2023, the Company announced that it received an Issue Notification from the United States Patent and Trademark Office for the composition of matter and method of use of its personalized off-the-shelf cell-based immunotherapy for cancer. The patent issued on January 24, 2023 as US Patent No. 11,559,574 with the term extending to May 25, 2040. Additionally, BriaCell was awarded an Australian patent (Patent No. 2017224232, extends to February 27, 2037) covering composition of matter and method of use for its whole-cell cancer immunotherapy technology in Australia.
Intellectual Property: US Patent No. 11,559,574, titled “Whole-cell cancer vaccines and methods for selection thereof,” will issue on January 24, 2023, and covers the composition of matter and method of use of BriaCell’s personalized off-the-shelf whole-cell immunotherapies. The novel technology involves the development of several HLA specific whole-cell immunotherapies in advance, and selection of the appropriate off-the-shelf (i.e. pre-made) immunotherapies for each patient (i.e. personalized therapy) based on the patient’s HLA type using a fast and easy saliva test. Once issued, the patent will provide intellectual property protection through May 25, 2040, and a patent term extension under Hatch-Waxman potentially applies (which would extend such protection for an additional five years).
Additionally, BriaCell was awarded Australian Patent No. 2017224232, titled “Whole-cell cancer vaccines and methods for selection thereof,” for claims covering composition of matter and method of use for BriaCell’s whole-cell immunotherapy for cancer in Australia.
BriaCell currently holds multiple issued patents and pending patent applications to cover its whole-cell immunotherapy’s composition of matter and method of use worldwide. For a summary of BriaCell’s issued patents, please visit https://briacell.com/patents/ ..
Bria-OTS™ Program Timelines
FDA has provided guidance regarding the development of cells and final cell-bank testing for BriaCell’s Bria-OTS™ clinical-grade cell lines. Once completed in accordance with FDA’s requirements, BriaCell expects to initiate the Bria-OTS™ study under an Investigational New Drug Application (IND) in the first half of 2023.
Clinical Sites
The following clinical sites are actively enrolling patients for BriaCell’s ongoing Phase II combination study:
End of Phase II Meeting with the Food and Drug Administration
On January 18, 2023 BriaCell received agreement and positive feedback from its End of Phase II meeting with the FDA regarding BriaCell’s lead clinical candidate, Bria-IMT™ in combination with a checkpoint inhibitor (under Fast Track designation), in advanced metastatic breast cancer.
BriaCell and the FDA have agreed on the primary end point, the essential elements of the study design, and the type of patients to be enrolled in BriaCell’s upcoming pivotal clinical study. This pivotal registration study will be enrolling advanced metastatic breast cancer patients for whom no approved treatment options exist.
Registration study success could lead to a Biologics License Application (BLA) submission for the approval of the combination regimen for commercialization in advanced metastatic breast cancer.
Updated Clinical Data
On Feb. 23, 2023 BriaCell reported updated survival data from its previously disclosed group of 12 patients (11 patients enrolled in 2021/2022) in the ongoing Phase II clinical trial evaluating Bria-IMT™ in combination with Incyte’s retifanlimab for the treatment of advanced metastatic breast cancer.
9 of 11 (82%) patients remain alive from 2021/2022 dosing, suggesting strong survival benefits.
7 of 11 (64%) patients showed either disease control or progression-free survival (“PFS”) benefits compared with their most recent prior therapy regimen suggesting clinical benefit, including survival and delayed cancer progression in this very difficult to treat patient population.
Median PFS of 3.5 months (with one subject ongoing) compares favorably with other recent studies of patients with advanced disease including other approved agents in earlier lines of therapy (Tripathy “ATTAIN” 2022, Perez 2015 “BEACON”, Cortes 2018, O’Shaughnessy 2022 “ASCENT”).
Regimen remains well tolerated with no dose limiting toxicities.
This clinical data from BriaCell’s combination regimen highlights survival benefits in a cohort (3rd line or later) with a life expectancy of merely months or weeks in some cases. Patients in this cohort had failed a median of 5 other treatments prior to enrolling in BriaCell’s study. Other reportable benefits such as less pain and better quality of life were also observed in these patients.
Subsets of top-responding patients: 4 of 5 patients with Grade I/II cancer, and 6 of 8 hormone receptor positive (HR+) patients had either disease control or improved PFS suggesting potentially better responding subgroup/s of patients. These subgroups represent large segments of the advanced breast cancer patient population.
Enrollment update: 9 additional patients have been screened/enrolled in the study, incremental to the 12 patients announced in December 2022. With patients continuing to enroll and remain on the treatment, more data including overall survival data will be disclosed at regular intervals.
Other Corporate Matters
On Feb. 09, 2023 BriaCell announced the results of its annual general and special meeting of shareholders of the Company (the “Shareholders”) for the year ended July 31, 2022 held on February 9, 2023 (the “Meeting”). A total of 6,663,370 common shares of the Company (the “Common Shares”) were voted, representing 42.94% of the Company’s issued and outstanding Common Shares. At the Meeting, the Shareholders overwhelmingly voted in favor of all proposed resolutions that consisted of the following:
Having received Shareholder approval, the Company’s Omnibus Plan remains subject to final approval from the Toronto Stock Exchange. The formal report on voting results with respect to all matters voted upon during the Meeting will be filed on the Company’s SEDAR profile at www.sedar.com .
Results of Operations for the Three Months Ended January 31, 20232024 and 20222023
Three months ended January 31, | ||||||||
2023 | 2022 | |||||||
(Unaudited) | (Unaudited) | |||||||
Operating Expenses: | ||||||||
Research and development expenses | $ | 3,053,357 | $ | 1,708,179 | ||||
General and administrative expenses | 1,432,966 | 1,938,630 | ||||||
Total operating expenses | 4,486,323 | 3,646,809 | ||||||
Operating loss | (4,486,323 | ) | (3,646,809 | ) | ||||
Financial income (expenses), net | ||||||||
Interest income | 240,595 | 12,081 | ||||||
Change in fair value of warrant liability | (7,629,502 | ) | 14,797,888 | |||||
Gain on government grant | - | 3,388 | ||||||
Foreign exchange gain | (6,532 | ) | (6,041 | ) | ||||
Total financial income (expenses), net | (7,395,439 | ) | 14,807,316 | |||||
Prodit (loss) and Comprehensive profit (loss) for the period | $ | (11,881,762 | ) | $ | 11,160,507 | |||
Net loss per share – basic and diluted | $ | (0.77 | ) | $ | 0.71 | |||
Weighted average number of shares used in computing net basic and diluted earnings per share of common stock | 15,518,018 | 15,788,827 |
Three months ended January 31, | ||||||||
2024 | 2023 | |||||||
(Unaudited) | (Unaudited) | |||||||
Operating Expenses: | ||||||||
Research and development expenses | $ | 8,257,455 | $ | 3,053,357 | ||||
General and administrative expenses | 1,571,991 | 1,432,966 | ||||||
Total operating expenses | 9,829,446 | 4,486,323 | ||||||
Operating loss | (9,829,446 | ) | (4,486,323 | ) | ||||
Financial expenses, net | (1,486,119 | ) | (7,395,439 | ) | ||||
Share of loss on equity investments | (18,345 | ) | - | |||||
Net loss for the period | $ | (11,333,910 | ) | $ | (11,881,762 | ) | ||
Net loss attributable to non-controlling interest | (39,307 | ) | - | |||||
Net loss for the period attributable to BriaCell | (11,294,603 | ) | (11,881,762 | ) | ||||
Net loss per share attributable to BriaCell – basic and diluted | $ | (0.71 | ) | $ | (0.77 | ) |
Research and Development Costs
Research costs are comprised primarily of (i) salaries and wages to Company employees at our laboratory; and (ii) clinical trials and investigational drug costs, which include the testing and manufacture of our investigational drugs and costs of our clinical trials.
The following is a breakdown of our research and development costs by project:
Three months ended January 31, | Three months ended January 31, | |||||||||||||||
2023 | 2022 | 2024 | 2023 | |||||||||||||
Clinical trials | $ | 1,438,231 | $ | 635,195 | $ | 4,359,850 | $ | 1,438,231 | ||||||||
Pre-clinical projects | 745,236 | 599,007 | 2,992,990 | 745,236 | ||||||||||||
Chemical, Manufacturing and Control Costs (“CMC Costs”) | 331,590 | 178,012 | 420,112 | 331,590 | ||||||||||||
Other | 538,300 | 295,965 | 484,503 | 538,300 | ||||||||||||
$ | 3,053,357 | $ | 1,708,179 | $ | 8,257,455 | $ | 3,053,357 |
Our clinical trial expenses include the extra costs for our immunotherapy program, Bria-IMT™, a 46-subject Phase I/IIa clinical trial. Clinical trial expenses increased in 2024 as patients stayed in the trial for a longer period of time (i.e. a longer than expected overall survival). Additionally, our costs increased significantly compared with the same period in 2023 as we recruited more patients intofor much higher set up costs for the pivotal Phase 3 study of Bria-IMT™ trialcombination regimen with Retifanlimab in advanced breast cancer, and began setting upadditional expenses in preparation for the upcoming clinical studies of Bria-OTS™ trial..
Pre-clinical projects include expenses incurred in our off-the-shelf personalized immunotherapies, including Bria-OTS+™, and Bria-PROS™. Our pre-clinical costs have increased in 20232024 as we hired more staff to accelerate our existing pre-clinical program and added an additionadditional pre-clinical program (sCD80).
CMC costs include the manufacturing of Bria-IMT™ and Bria-OTS™ and all quality control and quality assurance testing on the investigational product. CMC costs increased in 2023 to support the addition patients in our trials.
Other costs are ancillary expenses we incur such as costs to maintain our patents, investigation of early-stage projects, scientific advisory board expenses, contracts with vendors for pre-clinical work, and administration costs associated with all our research and development expenditure. Other costs increased in 20232024 as we investigated additional potential pre-clinical projects.
The following is a breakdown of our research and development costs by nature of expenses:
Three months ended January 31, | Three months ended January 31, | |||||||||||||||
2023 | 2022 | 2024 | 2023 | |||||||||||||
Clinical trial sites and investigational drug costs | $ | 1,288,577 | $ | 1,022,705 | $ | 6,200,980 | $ | 1,288,577 | ||||||||
Wages and salaries | 1,282,441 | 524,108 | 1,401,679 | 1,282,441 | ||||||||||||
Laboratory Rent | 48,000 | 25,800 | 108,000 | 48,000 | ||||||||||||
Supplies | 207,061 | 20,762 | 312,543 | 207,061 | ||||||||||||
Professional fees | 2,187 | 5,351 | - | 2,187 | ||||||||||||
Insurance product | - | - | ||||||||||||||
Share-based compensation | 225,091 | 109,453 | 234,253 | 225,091 | ||||||||||||
$ | 3,053,357 | $ | 1,708,179 | $ | 8,257,455 | $ | 3,053,357 |
18 |
For the three-month period ended January 31, 2023,2024, total research costs amounted to $3,053,357,$8,257,455 as compared to $1,708,179$3,053,357 for the three-month period ended January 31, 2022.2023. The rise in these costs is primarily attributed to the continued expansion of the Company’s clinical trials, specifically our Bria-IMT™ trial. Clinical Trialstrials and investigational drug costs increased from $1,022,705 in 2022 to $1,288,577 in 2023.2023 to $6,200,980 in 2024. Laboratory costs increase during 20232024 as well, including the hiring of additional lab employees which increased from $524,108 in 2022 to $1,282,441 in 2023 to $1,401,679 in 2024 and increased supplies from $20,762 in 2022 to $207,061 in 2023.2023 to $312,543 in 2024. Finally, the increase in share basedshare-based compensation (non-cash) expenses, from $109,453 in 2022 to $225,091 in 2023 to $234,253 in 2024 also contributed to the increase in research and development expenses.
General and Administrative Expenses
For the three-month period ended January 31, 2023,2024, general and administrative expenses amounted to $1,432,966$1,571,991 as compared to $1,938,630$1,432,966 for the three-month period ended January 31, 2022.2023. The decreaseincrease relates primarily to shareholder communication expenses and in share-based compensation (non-cash) expense, offset by a decrease in share based compensation (non-cash) expense.insurance expenses and professional fees.
Financial income (expenses), net
For the three-month period ended January 31, 2023,2024, financial expense, net, amounted to $7,395,439,$1,486,119 as compared to income of $14,807,316$7,395,439 for the three-month period ended January 31, 2022.2023. The large difference is due to the change in value of the Company’s warrant liability which amounted to a loss of $1,567,746 in the three-month period ending January 31, 2024, and a loss of $7,629,502 in the three-month period ending January 31, 2023, and a gain of $14,797,888 in the three-month period ending January 31, 2022.2023.
Loss for the period
The Company reported a loss for the three-month period ended January 31, 2023,2024, of $11,881,762,$11,294,603, as compared to a gainloss of $11,160,507$11,881,762 for the three-month period ended January 31, 2022.2023. The loss in 20232024 is due to a significant increase in the fair value of the warrant liability with the addition of increased operational spending. The gainloss in the prior period is primarily due to the large decreaseincrease in fair value of the warrant liability.
Results of Operations for the Six Months Ended January 31, 20232024 and 20222023
Six months ended January 31, | ||||||||
2023 | 2022 | |||||||
(Unaudited) | (Unaudited) | |||||||
Operating Expenses: | ||||||||
Research and development expenses | 6,308,572 | 2,583,815 | ||||||
General and administrative expenses | 3,580,902 | 3,347,803 | ||||||
Total operating expenses | 9,889,474 | 5,931,618 | ||||||
Operating loss | (9,889,474 | ) | (5,931,618 | ) | ||||
Interest income | 428,948 | 18,386 | ||||||
Interest expense | - | (979 | ) | |||||
Change in fair value of warrant liability | (3,511,712 | ) | (10,456,148 | ) | ||||
Gain of government grant | - | 3,388 | ||||||
Foreign exchange gain | (16,065 | ) | (6,007 | ) | ||||
Total financial expenses, net | (3,098,829 | ) | (10,441,360 | ) | ||||
Loss and Comprehensive loss for the period | $ | (12,988,303 | ) | $ | (16,372,978 | ) | ||
Net loss per share – basic and diluted | $ | (0.84 | ) | $ | (1.05 | ) | ||
Weighted average number of shares used in computing net basic and diluted earnings per share of common stock | 15,518,018 | 15,547,497 |
Six months ended January 31, | ||||||||
2024 | 2023 | |||||||
(Unaudited) | (Unaudited) | |||||||
Operating Expenses: | ||||||||
Research and development expenses | $ | 15,114,712 | $ | 6,308,572 | ||||
General and administrative expenses | 3,217,762 | 3,580,902 | ||||||
Total operating expenses | 18,332,474 | 9,889,474 | ||||||
Operating loss | (18,332,474 | ) | (9,889,474 | ) | ||||
Financial expenses, net | 12,975,781 | (3,098,829 | ) | |||||
Share of loss on equity investments | (18,345 | ) | - | |||||
Net loss for the period | $ | (5,375,038 | ) | (12,988,303 | ) | |||
Net loss attributable to non-controlling interest | (81,978 | ) | - | |||||
Net loss for the period attributable to BriaCell | (5,293,060 | ) | (12,988,303 | ) | ||||
Net loss per share attributable to BriaCell – basic and diluted | $ | (0.33 | ) | $ | (0.84 | ) | ||
Weighted average number of shares used in computing net basic earnings per share of common stock | 15,981,726 | 15,518,018 | ||||||
Weighted average number of shares used in computing net diluted earnings per share of common stock | 15,981,726 | 15,518,018 |
19 |
Research and Development Costs
Research costs are comprised primarily of (i) salaries and wages to Company employees at our laboratory; and (ii) Clinical trials and investigational drug costs, which include the testing and manufacture of our investigational drugs and costs of our clinical trials.
The following is a breakdown of our research and development costs by project:
Six months ended January 31, | Six months ended January 31, | |||||||||||||||
2023 | 2022 | 2024 | 2023 | |||||||||||||
Clinical trials | $ | 3,041,327 | $ | 960,804 | $ | 7,987,140 | $ | 3,041,327 | ||||||||
Pre-clinical projects | 1,608,402 | 906,067 | 5,061,969 | 1,608,402 | ||||||||||||
CMC Costs | 741,608 | 269,264 | 967,309 | 741,608 | ||||||||||||
Other | 917,235 | 447,679 | 1,098,294 | 917,235 | ||||||||||||
$ | 6,308,572 | $ | 2,583,815 | $ | 15,114,712 | $ | 6,308,572 |
Our clinical trial expenses include the extra costs for our immunotherapy program, Bria-IMT™, a 46-subject Phase I/IIa clinical trial. Clinical trial expenses increased in 2024 as patients stayed in the trial for a longer period of time (i.e. longer than expected overall survival). Additionally, our costs increased significantly compared with those in the same period in 2023 as we recruited more patients intofor much higher set up costs for the pivotal Phase 3 study of Bria-IMT™ trialcombination regimen with Retifanlimab in advanced breast cancer, and began setting upadditional expenses in preparation for the upcoming clinical studies of Bria-OTS™ trial..
Pre-clinical projects include expenses incurred in our off-the-shelf personalized immunotherapies, including Bria-OTS+™, and Bria-PROS™. Our pre-clinical costs have increased in 2023 as we hired more staff to accelerate our existing pre-clinical program and added an additionadditional pre-clinical program (sCD80).
CMC costsCosts include the manufacturing of Bria-IMT™ and Bria-OTS™. CMC costsCosts increased in 20232024 to support the additional patients in our trials.pivotal Phase 3 study, and the upcoming clinical studies of Bria-OTS™.
Other costs are ancillary expenses we incur such as costs to maintain our patents, investigation of early-stage projects, scientific advisory board expenses, contracts with vendors for pre-clinical work, and administration costs associated with all our research and development expenditure. Other costs increased in 20232024 as we investigated additional potential pre-clinical projects.
The following is a breakdown of our research and development costs by nature of expenses:
Six months ended January 31, | Six months ended January 31, | |||||||||||||||
2023 | 2022 | 2024 | 2023 | |||||||||||||
Clinical trial sites and Investigational drug costs | $ | 3,330,516 | $ | 1,497,780 | $ | 11,598,418 | $ | 3,330,516 | ||||||||
Wages and salaries | 1,998,985 | 809,648 | 2,422,404 | 1,998,985 | ||||||||||||
Laboratory Rent | 96,000 | 55,954 | 196,480 | 96,000 | ||||||||||||
Supplies | 300,425 | 80,391 | 401,566 | 300,425 | ||||||||||||
Professional fees | 7,299 | 28,933 | 3,782 | 7,299 | ||||||||||||
Insurance product | - | 1,656 | ||||||||||||||
Share-based compensation | 575,347 | 109,453 | 492,062 | 575,347 | ||||||||||||
$ | 6,308,572 | $ | 2,583,815 | $ | 15,114,712 | $ | 6,308,572 |
For the six-month period endedending January 31, 2023,2024, research costs amounted to $15,114,712, a significant increase from the $6,308,572 as compared to $2,583,815 forincurred during the six-monthsame period ended January 31, 2022. The rise in these costs is2023. This upturn was primarily attributed tofuelled by the continued 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 specifically our Bria-IMT™ trial. Clinical Trials and investigational drugdrugs, surging from $3,330,516 in 2023 to $11,598,418 in 2024. Concurrently, laboratory costs increased from $1,497,780 in 2022due to $3,330,516 in 2023. Laboratory costs increase during 2023 as well, including the hiringrecruitment of additional lab employees, which increasedgrowing from $809,648 in 2022$96,000 to $1,998,985 in 2023 and increased supplies$196,480. Notably, non-cash share-based compensation expenses decreased from $80,391 in 2022 to $300,425 in 2023. Finally, the increase in share based compensation (non-cash) expenses, from $109,453 in 2022 to $575,347 in 2023 also contributed to $492,062 in 2024, mitigating some of the overall increase in research and development expenses.
General and Administrative Expenses
For the six-month period ended January 31, 2023,2024, general and administrative expenses amounted to $3,580,902$3,217,762 as compared to $3,347,803$3,580,902 for the six-month period ended January 31, 2022. These increases relate primarily2023. This reduction is mainly attributed to increaseda decrease in non-cash share-based compensation expenses, which declined from $803,438 in 2023 to $541,909 in 2024 and insurance premiums, professional fees, and salaries.expenses which declined from $847,241 in 2023 to $583,997 in 2024.
Financial income (expenses), net
For the six-month period endedending January 31, 2023,2024, net financial expense, net,income amounted to $12,975,781, a significant increase from the loss of $3,098,829 as comparedrecorded in the same period of 2023. This substantial difference is primarily attributed to $10,441,360the change in the value of the Company’s warrant liability, which is directly affected by the shortened life of the warrants and decrease in share price, resulting in a gain of $12,714,331 for the six-month period ended January 31, 2022. The large difference is due to the change in value of the Company’s warrant liability which amounted2024, compared to a loss of $3,511,712 in the six-month period endingended January 31, 2023, and a loss of $10,456,148 in the six-month period ending January 31, 2022. The Company recorded $428,948 in interest income in the six-month period ending January 31, 2023, as compared to $18,386 in the six-month period ending January 31, 2022.2023.
Loss for the period
The Company reported a loss for the period ended January 31, 2023,2024, of $12,988,303,$5,375,038, as compared to $16,372,978$12,988,303 for the period ended January 31, 2022.2023. The reduced loss in 2023 is2024 was primarily due to a significant increase in operational spending, offset by a large gain resulting from the decrease in the fair value of the warrant withliability. In contrast, the addition of increased operational spending. The higherlarger loss in the prior period iswas primarily due to the largerhigher operational spending and an increase in fairthe value of the Company’s warrant liability.
Going Concern Uncertainty
The financial statements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The continuing operations of the Company are dependent upon its ability to continue to raise adequate financing and to commence profitable operations in the future.
As of January 31, 2023,2024, the Company has total assets of $34,161,267$12,231,047 (July 31, 20222023 - $42,577,041)$27,163,577) and a positive working capital balance of $33,268,148$7,817,634 (July 31, 20222023 -$41,405,613)25,147,050). The Company had negative cash flows from operating activities during the six-month period ended January 31, 2024 of $15,006,564.
The Company is planning to finance its research and developmental activities from its existing and future working capital resources and will continue to evaluate additional sources of capital and financing. The Company believes that its existing capital resources will be adequate to satisfy its expected liquidity requirements for at least twelve months from the issuanceuncertainty of the consolidatedCompany’s ability to raise such financial statements.capital casts significant doubt on the Company’s ability to continue as a going concern.
Liquidity and Capital Resources
As of January 31, 2023,2024, the Company has working capital of $33,268,148$7,817,634 (July 31, 20222023 - $41,405,613)$25,147,050) and an accumulated deficit of $73,338,140$85,945,291 (July 31, 20222023 - $60,349,837)$80,652,231).
As of January 31, 2023,2024, the Company’s capital resources consist primarily of cash and cash equivalents, comprising mostly of cash on deposit with banks, investments in money market funds, investments in U.S. government securities, U.S. government agency securities, and investment grade corporate debt securities. Our investment policy and strategy are focused on preservation of capital and supporting our liquidity requirements.
Historically, the Company has financed its operation through private and public placement of equity securities, as well as debt financing. The Company’s ability to fund its longer-term cash requirements is subject to multiple risks, many of which are beyond its control. The Company intends to raise additional capital, either through debt or equity financings in order to achieve its business plan objectives. Management believes that it can be successful in obtaining additional capital; however, there can be no assurance that the Company will be able to do so. There is no assurance that any funds raised will be sufficient to enable the Company to attain profitable operations or continue as a going concern. To the extent that the Company is unsuccessful, the Company may need to curtail or cease its operations and implement a plan to extend payables or reduce overhead until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successfulsuccessful.
During the six-month period ended January 31, 2023,2024, the Company’s overall position of cash and cash equivalents decreased by $14,481,449$15,006,563 from the six-month period ended January 31, 20222023 (including effects of foreign exchange). This decrease in cash can be attributed to the following:
The Company’s net cash used in operating activities during the six-month period ended January 31, 2023,2024, was $7,494,122,$15,006,564, as compared to $4,334,808$7,494,122 for the six-month period ended January 31, 2022.2023.
Cash used in financing activities for the six-month period ended January 31, 2023,2024, was $47,294,nil, as compared to $4,952,192$47,294 for the six-month period ended January 31, 2022.2023.
Off-Balance Sheet Arrangements
None.
Tabular Disclosure of Contractual Obligations
None.
Critical Accounting Policies and Estimates
There have been no material changes to our critical accounting policies and estimates from the information provided in the MD&A section in our Annual Report.
New Accounting Policies Adopted
The Company did not adopt any new accounting policies during the six-month period ended January 31, 2023.2024.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Company’s financial instruments consist of cash and cash equivalents, amounts receivable, investments, trade payable , and accrued expenses and other payables. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments. The fair value of these financial instruments approximates their carrying values, unless otherwise noted.
Management understands that the Company is exposed to financial risk arising from fluctuations in foreign exchange rates and the degree of volatility of these rates as a portion of the Company’s transactions occur in Canadian Dollars (mainly costs relating to being a public company in Canada), and the Company’s functional and presentation currency is the US dollar. The Company does not use derivative instruments to reduce its exposure to foreign currency risk.
The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management process. The overall objectives of the Board are to set policies that seek to reduce risk as far as possible without unduly affecting the Company’s competitiveness and flexibility.
The type of risk exposure and the way in which such exposure is managed is as follows:
Credit riskRisk
The Company has no significant concentration of credit risk arising from operations. Management believes that the credit risk concentration with respect to financial instruments is remote.
Liquidity Risk
The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities as they come due. As of January 31, 2023,2024, the Company has total assets of $34,161,267$12,231,047 (July 31, 20222023 - $42,577,041)$27,163,577 ) and a positive working capital balance of $33,368,149$7,817,634 (July 31, 20222023 –$41,405,613)25,147,050).
Market Risk
Interest rate risk
Interest Rate risk is the risk that the fair value of a financial instrument will fluctuate because of changes in market interest rates. The Company does not believe it is exposed to material interest rate risk as it has no interest-bearing debt.
Price risk
As the Company has no revenues, price risk is remote.
Exchange risk
The Company is exposed to foreign exchange risk as a portion of the Company’s transactions occur in Canadian Dollars (mainly costs relating to being a public company in Canada) and, therefore, the Company is exposed to foreign currency risk at the end of the reporting period through its Canadian denominated trade payable and cash. As of January 31, 2023,2024, a 5% depreciation or appreciation of the Canadian dollar against the US dollar would not have a material effect on the in total loss and comprehensive loss.
Fair Values
The carrying values of cash and cash equivalents, amounts receivable, trade payable, and accrued expenses and other payables approximate their fair values due to their short terms to maturity.
The cashCash and cash equivalents are valued using quoted market prices in active markets. The fair value of the warrant liability is determined based on the nature of the warrant. For publicly traded warrants we use the quoted market price and for all other warrants we use the Black-Scholes pricing model.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
Our management, with the participation of our principal executive officer and principal accounting and financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 under the Securities Exchange Act of 1934, as amended, or the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on such evaluation, our principal executive officer and principal accounting and financial officer have concluded that as of January 31, 2023,2024, our disclosure controls and procedures were not effective as a result of material weaknesses in our internal control over financial reporting. We continue to implement plans that are improving these material weaknesses, including implementation of independent review and approval of transactions and reconciliations in certain processes through hiring additional personnel and segregating duties amongst our team. We are instituting processes to document and retain evidence to support reviews and reconciliations.at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There have not been material changes in our internal control over financial reporting during the quarter ended January 31, 2023,2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, except for our remediation efforts described above.reporting.
23 |
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
On May 19, 2021, Alpha Capital Anstalt (“Alpha”) filed a lawsuit in the New York State Supreme Court, Commercial Division, New York County against BriaCell Therapeutics Corp. (“BriaCell”), alleging that BriaCell breached a loan contract when it refused to reprice and extend the term of warrants purported held by Alpha in spring 2021, seeking monetary and injunctive relief for delivery of those amended warrants. Counterclaiming and defending against Alpha’s complaint, BriaCell alleges that Alpha’s loan to BriaCell is unenforceable both because the loan is criminally usurious under New York law and because Alpha acted as an unregistered securities dealer in violation of American securities law. BriaCell also has alleged that Canadian securities law, regulation, and rules prohibited it from amending the warrants to comply with Alpha’s spring 2021 demands. On May 11, 2022, Alpha moved to dismiss BriaCell’s operative Amended Counterclaim. At oral argument on January 19, 2023, Justice Cohen granted in part and denied in part Alpha’s partial motion to dismiss BriaCell’s Amended Counterclaim and Affirmative Defenses. In relevant part, Justice Cohen refused to dismiss any of BriaCell’s substantive counterclaims, allowing BriaCell to continue to prosecute its Unjust Enrichment, Money Had and Received, Recovery of Excess, and Implied Covenant of Good Faith and Fair Dealing claims against Alpha. At this time, the parties cannot estimate the value of their respective claims and damages.
None.
The Company disagrees with Alpha’s claims, is defending these claims, and has filed a counter claim. At this time, whilst it is impossible to provide any guarantee as to the outcome of the lawsuit, it is the Company’s assessment, based on advice from the Company’s legal counsel at this time, and based on the information known by the Company, that it is more likely than not that BriaCell will not have to pay Alpha in the litigation.
Item 1A. Risk Factors.
As of the date of this Quarterly Report on Form 10-Q, there have been no material changes from the risk factors previously disclosed in our Annual Report for the year ended July 31, 2022.2023.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.There were no unregistered sales of equity securities during the three months ended January 31, 2024
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
None.
Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
EXHIBIT INDEX
* | Filed herewith. |
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BRIACELL THERAPEUTICS CORP. | ||
March | By: | /s/ William V. Williams |
Name: | William V. Williams | |
Title: | Chief Executive Officer | |
(Principal Executive Officer) | ||
March | By: | /s/ Gadi Levin |
Name: | Gadi Levin | |
Title: | Chief Financial Officer | |
(Principal Financial and Accounting Officer) |