10-Q 1 ktra-20240331.htm 10-Q 10-Q
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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 March 31, 2024

or

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number: 001-37823

 

Kintara Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

 

Nevada

99-0360497

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

 

9920 Pacific Heights Blvd, Suite 150
San Diego, CA

92121

(Address of principal executive offices)

(zip code)

 

(858) 350-4364

(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(s)

Name of Each Exchange on Which Registered

Common Stock

KTRA

The Nasdaq Capital Market

 

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 ☐ No

Number of shares of common stock outstanding as of May 14, 2024 was 55,304,613.

 

 


 

TABLE OF CONTENTS

 

Page No.

 

 

PART I. - FINANCIAL INFORMATION

 

 

Item 1.

Financial Statements.

1

Item 2.

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

19

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

30

Item 4

Controls and Procedures.

30

 

 

PART II - OTHER INFORMATION

 

 

Item 1.

Legal Proceedings.

31

Item 1A.

Risk Factors.

31

Item 2.

Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities.

31

Item 3.

Defaults Upon Senior Securities.

31

Item 4.

Mine Safety Disclosures.

31

Item 5.

Other Information.

32

Item 6.

Exhibits.

33

 

i


 

PART 1. - FINANCIAL INFORMATION

Item 1. Financial Statements.

Kintara Therapeutics, Inc.

Condensed Consolidated Interim Financial Statements

(Unaudited)

For the nine months ended March 31, 2024

(expressed in US dollars unless otherwise noted)

1


 

Kintara Therapeutics, Inc.

Condensed Consolidated Interim Balance Sheets

(In thousands, except par value amounts)

 

 

 

 

 

 

March 31,
2024

 

 

June 30,
2023

 

 

 

Note

 

 

$

 

 

$

 

 

 

 

 

 

(unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

6,351

 

 

 

1,535

 

Prepaid expenses, taxes and other receivables

 

 

 

 

 

208

 

 

 

660

 

Clinical trial deposit

 

 

3

 

 

 

196

 

 

 

1,075

 

Total current assets

 

 

 

 

 

6,755

 

 

 

3,270

 

Property and equipment, net

 

 

5

 

 

 

691

 

 

 

709

 

Total assets

 

 

 

 

 

7,446

 

 

 

3,979

 

Liabilities

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

 

 

 

 

1,243

 

 

 

2,784

 

Related party payables

 

 

6

 

 

 

98

 

 

 

298

 

Total current liabilities

 

 

 

 

 

1,341

 

 

 

3,082

 

Milestone payment liability

 

 

9

 

 

 

183

 

 

 

166

 

Total liabilities

 

 

 

 

 

1,524

 

 

 

3,248

 

Stockholders' equity

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

 

 

 

Authorized

 

 

 

 

 

 

 

 

 

5,000 shares, $0.001 par value

 

 

 

 

 

 

 

 

 

Issued and outstanding

 

 

 

 

 

 

 

 

 

279 Series A shares at March 31, 2024 (June 30, 2023 – 279)

 

 

7

 

 

 

279

 

 

 

279

 

14 Series C shares at March 31, 2024 (June 30, 2023 – 14)

 

 

7

 

 

 

9,973

 

 

 

10,366

 

Common stock

 

 

 

 

 

 

 

 

 

Authorized

 

 

 

 

 

 

 

 

 

75,000 shares at March 31, 2024 (June 30, 2023 - 75,000), $0.001 par value

 

 

 

 

 

 

 

 

 

Issued and outstanding

 

 

 

 

 

 

 

 

 

55,305 issued at March 31, 2024 (June 30, 2023 – 1,692)

 

 

7

 

 

 

55

 

 

 

2

 

Additional paid-in capital

 

 

7

 

 

 

153,144

 

 

 

141,438

 

Accumulated deficit

 

 

 

 

 

(157,550

)

 

 

(151,375

)

Accumulated other comprehensive income

 

 

 

 

 

21

 

 

 

21

 

Total stockholders’ equity

 

 

 

 

 

5,922

 

 

 

731

 

Total liabilities and stockholders’ equity

 

 

 

 

 

7,446

 

 

 

3,979

 

Nature of operations, corporate history, going concern and management plans (note 1)

 

 

 

 

 

 

 

 

 

Subsequent events (note 10)

 

 

 

 

 

 

 

 

 

 

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

2


 

Kintara Therapeutics, Inc.

Condensed Consolidated Interim Statements of Operations

(Unaudited)

(In thousands, except per share amounts)

 

 

 

 

 

 

Three months ended
March 31,

 

 

Nine months ended
March 31,

 

 

 

Note

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

 

$

 

592

 

$

 

2,005

 

$

 

2,562

 

$

 

7,235

 

General and administrative

 

 

 

 

 

1,493

 

 

 

1,297

 

 

 

3,504

 

 

 

4,212

 

 

 

 

 

 

(2,085

)

 

 

(3,302

)

 

 

(6,066

)

 

 

(11,447

)

Other income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange

 

 

 

 

 

 

 

 

(1

)

 

 

(8

)

 

 

10

 

Interest, net

 

 

 

 

 

74

 

 

 

39

 

 

 

78

 

 

 

123

 

 

 

 

 

 

74

 

 

 

38

 

 

 

70

 

 

 

133

 

Net loss for the period

 

 

 

 

 

(2,011

)

 

 

(3,264

)

 

 

(5,996

)

 

 

(11,314

)

Computation of basic loss per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the period

 

 

 

 

 

(2,011

)

 

 

(3,264

)

 

 

(5,996

)

 

 

(11,314

)

Series A Preferred cash dividend

 

 

7

 

 

 

(2

)

 

 

(2

)

 

 

(6

)

 

 

(6

)

Series C Preferred stock dividend

 

 

7

 

 

 

 

 

 

 

 

 

(173

)

 

 

(362

)

Net loss for the period attributable to common stockholders

 

 

 

$

 

(2,013

)

$

 

(3,266

)

$

 

(6,175

)

$

 

(11,682

)

Basic and fully diluted loss per share

 

 

 

$

 

(0.05

)

$

 

(1.94

)

$

 

(0.37

)

$

 

(7.32

)

Basic and fully diluted weighted average number of shares

 

 

 

 

 

44,562

 

 

 

1,681

 

 

 

16,772

 

 

 

1,596

 

 

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

3


 

Kintara Therapeutics, Inc.

Condensed Consolidated Interim Statements of Stockholders’ Equity (Deficiency)

(Unaudited)

For the nine months ended March 31, 2024

(In thousands)

 

 

 

Number
of
shares

 

 

Common
stock
$

 

 

Additional
paid-in
capital
$

 

 

Accumulated
other
comprehensive
income
$

 

 

Preferred
stock
$

 

 

Accumulated
deficit
$

 

 

Total stockholders'
equity (deficiency)
$

 

Balance - June 30, 2023

 

 

1,692

 

 

 

2

 

 

 

141,438

 

 

 

21

 

 

 

10,645

 

 

 

(151,375

)

 

 

731

 

Issuance of shares on vesting of restricted stock units

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of Series C Preferred stock to common stock

 

 

1

 

 

 

 

 

 

37

 

 

 

 

 

 

(37

)

 

 

 

 

 

 

Stock option expense

 

 

 

 

 

 

 

 

160

 

 

 

 

 

 

 

 

 

 

 

 

160

 

Restricted stock unit expense

 

 

 

 

 

 

 

 

47

 

 

 

 

 

 

 

 

 

 

 

 

47

 

Series A Preferred cash dividend

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2

)

 

 

(2

)

Series C Preferred stock dividend

 

 

49

 

 

 

 

 

 

173

 

 

 

 

 

 

 

 

 

(173

)

 

 

 

Loss for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,962

)

 

 

(2,962

)

Balance - September 30, 2023

 

 

1,746

 

 

 

2

 

 

 

141,855

 

 

 

21

 

 

 

10,608

 

 

 

(154,512

)

 

 

(2,026

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of shares pursuant to equity line - net of issue costs

 

 

400

 

 

 

 

 

 

105

 

 

 

 

 

 

 

 

 

 

 

 

105

 

Issuance of shares pursuant to ATM - net of issue costs

 

 

8,013

 

 

 

8

 

 

 

2,571

 

 

 

 

 

 

 

 

 

 

 

 

2,579

 

Conversion of Series C Preferred stock to common stock

 

 

8

 

 

 

 

 

 

356

 

 

 

 

 

 

(356

)

 

 

 

 

 

 

Stock option expense

 

 

 

 

 

 

 

 

165

 

 

 

 

 

 

 

 

 

 

 

 

165

 

Restricted stock unit expense

 

 

 

 

 

 

 

 

38

 

 

 

 

 

 

 

 

 

 

 

 

38

 

Series A Preferred cash dividend

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2

)

 

 

(2

)

Loss for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,023

)

 

 

(1,023

)

Balance - December 31, 2023

 

 

10,167

 

 

 

10

 

 

 

145,090

 

 

 

21

 

 

 

10,252

 

 

 

(155,537

)

 

 

(164

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of shares pursuant to ATM - net of issue costs

 

 

45,138

 

 

 

45

 

 

 

7,847

 

 

 

 

 

 

 

 

 

 

 

 

7,892

 

Stock option expense

 

 

 

 

 

 

 

 

156

 

 

 

 

 

 

 

 

 

 

 

 

156

 

Restricted stock unit expense

 

 

 

 

 

 

 

 

51

 

 

 

 

 

 

 

 

 

 

 

 

51

 

Series A Preferred cash dividend

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2

)

 

 

(2

)

Loss for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,011

)

 

 

(2,011

)

Balance - March 31, 2024

 

 

55,305

 

 

 

55

 

 

 

153,144

 

 

 

21

 

 

 

10,252

 

 

 

(157,550

)

 

 

5,922

 

 

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

4


 

Kintara Therapeutics, Inc.

Condensed Consolidated Interim Statements of Stockholders’ Equity

(Unaudited)

For the nine months ended March 31, 2023

(In thousands)

 

 

 

Number
of
shares

 

 

Common
stock
$

 

 

Additional
paid-in
capital
$

 

 

Accumulated
other
comprehensive
income
$

 

 

Preferred
stock
$

 

 

Accumulated
deficit
$

 

 

Total stockholders'
equity
$

 

Balance - June 30, 2022

 

 

1,311

 

 

 

1

 

 

 

135,575

 

 

 

21

 

 

 

12,554

 

 

 

(136,356

)

 

 

11,795

 

Issuance of shares - net of issue costs

 

 

262

 

 

 

1

 

 

 

1,902

 

 

 

 

 

 

 

 

 

 

 

 

1,903

 

Stock option expense

 

 

 

 

 

 

 

 

518

 

 

 

 

 

 

 

 

 

 

 

 

518

 

Series A Preferred cash dividend

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2

)

 

 

(2

)

Series C Preferred stock dividend

 

 

43

 

 

 

 

 

 

362

 

 

 

 

 

 

 

 

 

(362

)

 

 

 

Loss for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,596

)

 

 

(4,596

)

Balance - September 30, 2022

 

 

1,616

 

 

 

2

 

 

 

138,357

 

 

 

21

 

 

 

12,554

 

 

 

(141,316

)

 

 

9,618

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of Series C Preferred stock to common stock

 

 

42

 

 

 

 

 

 

1,778

 

 

 

 

 

 

(1,778

)

 

 

 

 

 

 

Additional shares issued on reverse stock split

 

 

15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock option expense

 

 

 

 

 

 

 

 

436

 

 

 

 

 

 

 

 

 

 

 

 

436

 

Series A Preferred cash dividend

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2

)

 

 

(2

)

Loss for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,454

)

 

 

(3,454

)

Balance - December 31, 2022

 

 

1,673

 

 

 

2

 

 

 

140,571

 

 

 

21

 

 

 

10,776

 

 

 

(144,772

)

 

 

6,598

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of Series C Preferred stock to common stock

 

 

3

 

 

 

 

 

 

131

 

 

 

 

 

 

(131

)

 

 

 

 

 

 

Issuance of shares for services

 

 

16

 

 

 

 

 

 

110

 

 

 

 

 

 

 

 

 

 

 

 

110

 

Stock option expense

 

 

 

 

 

 

 

 

290

 

 

 

 

 

 

 

 

 

 

 

 

290

 

Restricted stock unit expense

 

 

 

 

 

 

 

 

54

 

 

 

 

 

 

 

 

 

 

 

 

54

 

Series A Preferred cash dividend

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2

)

 

 

(2

)

Loss for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,264

)

 

 

(3,264

)

Balance - March 31, 2023

 

 

1,692

 

 

 

2

 

 

 

141,156

 

 

 

21

 

 

 

10,645

 

 

 

(148,038

)

 

 

3,786

 

 

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

5


 

Kintara Therapeutics, Inc.

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

 

 

 

 

Nine months ended
March 31,

 

 

 

 

 

 

2024

 

 

2023

 

 

 

Note

 

 

$

 

 

$

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

Loss for the period

 

 

 

 

 

(5,996

)

 

 

(11,314

)

Adjustments to reconcile net loss to net cash used in operating activities

 

 

 

 

 

 

 

 

 

Amortization of clinical trial deposit

 

 

3

 

 

 

 

 

 

2,150

 

Depreciation of property and equipment

 

 

5

 

 

 

38

 

 

 

45

 

Change in fair value of milestone liability

 

 

 

 

 

17

 

 

 

1

 

Stock option expense

 

 

7

 

 

 

481

 

 

 

1,244

 

Restricted stock unit expense

 

 

7

 

 

 

136

 

 

 

164

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

 

Prepaid expenses, taxes and other receivables

 

 

 

 

 

452

 

 

 

210

 

Clinical trial deposit

 

 

 

 

 

879

 

 

 

(1,700

)

Accounts payable and accrued liabilities

 

 

 

 

 

(1,541

)

 

 

(616

)

Related party payables

 

 

 

 

 

(200

)

 

 

(541

)

Net cash used in operating activities

 

 

 

 

 

(5,734

)

 

 

(10,357

)

Cash flows from investing activities

 

 

 

 

 

 

 

 

 

Purchase of equipment

 

 

5

 

 

 

(20

)

 

 

(232

)

Net cash used in investing activities

 

 

 

 

 

(20

)

 

 

(232

)

Cash flows from financing activities

 

 

 

 

 

 

 

 

 

Net proceeds from the issuance of shares - equity line

 

 

7

 

 

 

105

 

 

 

1,860

 

Net proceeds from the issuance of shares - ATM

 

 

7

 

 

 

10,471

 

 

 

 

Series A Preferred cash dividend

 

 

6

 

 

 

(6

)

 

 

(6

)

Net cash provided by financing activities

 

 

 

 

 

10,570

 

 

 

1,854

 

Decrease in cash and cash equivalents

 

 

 

 

 

4,816

 

 

 

(8,735

)

Cash and cash equivalents – beginning of period

 

 

 

 

 

1,535

 

 

 

11,780

 

Cash and cash equivalents – end of period

 

 

 

 

 

6,351

 

 

 

3,045

 

Supplementary information (note 8)

 

 

 

 

 

 

 

 

 

 

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

6


 

Kintara Therapeutics, Inc.

Notes to Condensed Consolidated Interim Financial Statements

(Unaudited)

March 31, 2024

(expressed in US dollars and in thousands, except par value and per share amounts, unless otherwise noted)

1 Nature of operations, corporate history, and going concern and management plans

Nature of operations

Kintara Therapeutics, Inc. (the “Company”) is a clinical-stage drug development company with a focus on the development of novel cancer therapies for patients with unmet medical needs. The Company is developing one late-stage therapeutic - REM-001 for cutaneous metastatic breast cancer (“CMBC”). In order to accelerate the Company’s development timelines, it leverages existing preclinical and clinical data from a wide range of sources. The Company may seek marketing partnerships in order to potentially offset clinical costs and to generate future royalty revenue from approved indications of its current and future product candidates.

Corporate history

The Company is a Nevada corporation formed on June 24, 2009, under the name Berry Only, Inc. On January 25, 2013, the Company entered into and closed an exchange agreement (the “Exchange Agreement”), with Del Mar Pharmaceuticals (BC) Ltd. (“Del Mar (BC)”), 0959454 B.C. Ltd. (“Callco”), and 0959456 B.C. Ltd. (“Exchangeco”) and the security holders of Del Mar (BC). Upon completion of the Exchange Agreement, Del Mar (BC) became a wholly-owned subsidiary of the Company (the “Reverse Acquisition”).

On August 19, 2020, the Company completed its merger with Adgero Biopharmaceuticals Holdings, Inc., a Delaware corporation (“Adgero”) in which Adgero continued its existence under Delaware law and became a direct, wholly-owned subsidiary of the Company. Following the completion of the merger, the Company changed its name from DelMar Pharmaceuticals, Inc. to Kintara Therapeutics, Inc. and began trading on The Nasdaq Capital Market LLC (“Nasdaq”) under the symbol “KTRA”.

Kintara Therapeutics, Inc. is the parent company of Del Mar (BC), a British Columbia, Canada corporation and Adgero which are clinical-stage companies with a focus on the development of drugs for the treatment of cancer. The Company is also the parent company to Callco and Exchangeco which are British Columbia, Canada corporations. Callco and Exchangeco were formed to facilitate the Reverse Acquisition. In connection with the Adgero merger, the Company also became the parent company of Adgero Biopharmaceuticals, Inc. (“Adgero Bio”), formerly a wholly-owned subsidiary of Adgero.

References to the Company refer to the Company and its wholly-owned subsidiaries.

Going concern and management plans

 

These condensed consolidated interim financial statements have been prepared on a going concern basis which assumes that the Company will continue its operations for the foreseeable future and contemplates the realization of assets and the settlement of liabilities in the normal course of business.

For the nine months ended March 31, 2024, the Company reported a loss of $5,996 and a negative cash flow from operations of $5,734. The Company had an accumulated deficit of $157,550 and had cash and cash equivalents of $6,351 as of March 31, 2024. The Company is in the clinical stage and has not generated any revenues to date. The Company does not have the prospect of achieving revenues until such time that its product candidate is commercialized, or partnered, which may not ever occur. On August 2, 2022, the Company entered into a stock purchase agreement under which the Company has issued 662 shares of common stock for $2,008 in net proceeds as of March 31, 2024. In addition, on June 28, 2023, the Company announced that it had been awarded approximately $2,000 in grant funding to be received over a two-year period for its REM-001 project. During the nine months ended March 31, 2024, the Company issued an additional 53,151 shares of common stock for net proceeds of $10,471 from its at-the-market (“ATM”) facility, and announced that it is suspending the development of VAL-083. Even with the proceeds from the grant funding, the stock purchase financing, and the ATM sales, the Company will require additional funding to maintain its clinical trials, research and development projects, and for general operations.

These circumstances indicate substantial doubt exists about the Company’s ability to continue as a going concern within one year from the date of filing of these condensed consolidated interim financial statements.

On April 2, 2024, the Company entered into a merger agreement with TuHURA Biosciences, Inc. (Note 10).

Consequently, management is pursuing various financing alternatives to fund the Company’s operations so it can continue as a going concern. Management plans to continue to pursue opportunities to secure the necessary financing through the issue of new

7


 

equity, including debt, entering into strategic partnership arrangements, and/or pursuing additional strategic transactions in the event the Company does not receive stockholder approval for the proposed merger transaction or the merger is not otherwise consummated. However, the Company’s ability to raise additional capital could be affected by various risks and uncertainties including, but not limited to, global unrest. The Company may not be able to raise sufficient additional capital and may need to tailor its drug candidate development programs based on the amount of funding the Company is able to raise in the future. Nevertheless, there is no assurance that these initiatives will be successful.

These condensed consolidated interim financial statements do not give effect to any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.

2 Significant accounting policies

Reverse stock split

On November 10, 2022, the Company filed a Certificate of Change to the Company’s Articles of Incorporation, as amended, in order to effectuate a 1:50 reverse stock split (the “Reverse Stock Split”) of its issued and outstanding common stock as well as its authorized shares of common stock. As a result of the Reverse Stock Split, every 50 shares of issued and outstanding common stock were converted into one share of common stock with a proportionate reduction in the Company's authorized shares of common stock. Any fractional shares of common stock resulting from the Reverse Stock Split were rounded up to the nearest whole post-Reverse Stock Split share. The Reverse Stock Split did not change the par value of the Company's common stock. All outstanding securities entitling their holders to acquire shares of common stock were adjusted as a result of the Reverse Stock Split. All common share and per share data are retrospectively restated to give effect to the Reverse Stock Split for all periods presented herein.

Basis of presentation

The condensed consolidated interim financial statements of the Company have been prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”) and are presented in United States dollars. The functional currency of the Company and each of its subsidiaries is the United States dollar.

The accompanying condensed consolidated interim financial statements include the accounts of the Company and its wholly-owned subsidiaries, Adgero, Adgero Bio, Del Mar (BC), Callco, and Exchangeco. All intercompany balances and transactions have been eliminated in consolidation.

The principal accounting policies applied in the preparation of these condensed consolidated interim financial statements are set out below and have been consistently applied to all periods presented.

Unaudited interim financial data

The accompanying unaudited condensed consolidated interim financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. Accordingly, they do not include all of the information and the notes required by U.S. GAAP for complete financial statements. These unaudited condensed consolidated interim financial statements should be read in conjunction with the June 30, 2023, audited consolidated financial statements of the Company included in the Company’s Form 10-K filed with the SEC on September 18, 2023. In the opinion of management, the unaudited condensed consolidated interim financial statements reflect all adjustments, consisting of normal and recurring adjustments, necessary for a fair presentation. The results for nine months ended March 31, 2024, are not necessarily indicative of the results to be expected for the fiscal year ending June 30, 2024, or for any other future annual or interim period.

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions about future events that affect the reported amounts of assets, liabilities, expenses, contingent assets, and contingent liabilities as at the end of, or during, the reporting period. Actual results could significantly differ from those estimates. Significant areas requiring management to make estimates include the valuation of equity instruments issued for services, milestone payment liability, and clinical trial accruals. Further details of the nature of these assumptions and conditions may be found in the relevant notes to these condensed consolidated interim financial statements.

8


 

Loss per share

Income or loss per share is calculated based on the weighted average number of common shares outstanding. For the nine-month periods ended March 31, 2024, and 2023, diluted loss per share does not differ from basic loss per share since the effect of the Company’s warrants, stock options, restricted stock units, and convertible preferred shares is anti-dilutive. As of March 31, 2024, potential common shares of 693 (2023 – 713) related to outstanding common share warrants, 42 (2023 – 42) related to outstanding Series C preferred stock warrants, 222 (2023 – 198) related to stock options, 66 (2023 - 18) related to restricted stock units, and 235 (2023 – 245) relating to outstanding Series C convertible preferred shares were excluded from the calculation of net loss per common share.

Government assistance

Government grants, including grants from similar bodies, are recognized when there is reasonable assurance that the Company has met the requirements of the approved grant program and there is reasonable assurance that the grant will be received. Grants that compensate the Company for expenses incurred are recognized in income or loss in reduction thereof in the same period in which the expenses are recognized. The Company uses a net presentation basis whereby the grant offsets the research and development expenses as it is being recovered under the grant program.

Recently issued accounting standards

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed consolidated interim financial statements.

3 Clinical trial deposit

In October 2020, the Company announced that it had entered into a final agreement with a contract research organization (“CRO”) for the management of the Company’s registrational study of VAL-083 for glioblastoma. Under the agreement, the Company supplied the drug for the study and the CRO managed all operational aspects of the study including site activation and patient enrollment. The Company was required to make certain payments under the agreement related to patient enrollment milestones. For the three and nine months ended March 31, 2024, the Company has recognized a recovery of $512 (2023 - $1,075 expense) and an expense of $563 (2023 - $3,990), respectively, for this study in relation to clinical site initiation and patient enrollment.

On October 31, 2023, the Company announced that preliminary topline results from this registrational study for VAL-083 did not perform better than the current standards of care in glioblastoma. As a result, the Company announced that it has terminated the development of VAL-083. In the nine months ended March 31, 2024, the remaining deposit of $1,075 was offset against amounts owing to the CRO and the agreement with the CRO was terminated with an additional final cost of $1,000, which was paid in the nine months ended March 31, 2024.

In the nine months ended March 31, 2024, the Company recorded $196 as a deposit with a CRO for the management of the Company’s 15-patient study of REM-001 for cutaneous metastatic breast cancer (“CMBC”).

4 Clinical trials grant

Effective July 1, 2023, the Company was awarded a $2,000 Small Business Innovation Research grant from the National Institutes of Health ("NIH") to support the clinical development of REM-001 for the treatment of cutaneous metastatic breast cancer. The grant will be received in two tranches: approximately $1,250 for the period July 1, 2023, to June 30, 2024, and approximately $750 for the period July 1, 2024, to June 30, 2025. As a result of receiving the grant, the REM-001, 15-patient clinical trial will be re-started. The grant is expended to the Company as a reimbursement of expenditures incurred. During the three and nine months ended March 31, 2024, the Company received $194 (2023 - nil) and $404 (2023 - nil), respectively, for grants received against research and development expenditures in the period.

The grant is subject to various performance conditions and funding risk where the financial conditions of the NIH may change from time to time. The Company recognizes the grant only to the extent there is reasonable assurance the grant will be funded to the Company.

9


 

5 Property and equipment, net

 

 

 

$
(thousands)

 

Balance, June 30, 2023

 

 

709

 

Additions

 

 

20

 

Depreciation

 

 

(38

)

Balance, March 31, 2024

 

 

691

 

At March 31, 2024, the total capitalized cost of property and equipment was $879 (June 30, 2023 - $859), of which $599 is not in use. The Company has recognized $38 (2023 - $45) in depreciation expense in the nine months ended March 31, 2024, on equipment in use.

6 Related party transactions

Valent Technologies, LLC Agreements

On November 20, 2023, Dr. Brown was terminated from his position as the Company’s Chief Scientific Officer as a result of cost-cutting measures adopted by the Company; he remains a consultant to the Company. Dr. Brown is a principal of Valent Technologies, LLC (“Valent”) and as a result Valent is a related party to the Company.

On September 12, 2010, the Company entered into a Patent Assignment Agreement (the “Valent Assignment Agreement”) with Valent pursuant to which Valent transferred to the Company all its right, title and interest in, and to, the patents for VAL-083 owned by Valent. The Company now owns all rights and title to VAL-083 and is responsible for further development and commercialization. In accordance with the terms of the Valent Assignment Agreement, Valent is entitled to receive a future royalty on all revenues derived from the development and commercialization of VAL-083. In the event that the Company terminates the agreement, the Company may be entitled to receive royalties from Valent’s subsequent development of VAL-083 depending on the development milestones the Company has achieved prior to the termination of the Valent Assignment Agreement.

On September 30, 2014, the Company entered into an exchange agreement (the “Valent Exchange Agreement”) with Valent and Del Mar (BC). Pursuant to the Valent Exchange Agreement, Valent exchanged its loan payable in the outstanding amount of $279 (including aggregate accrued interest to September 30, 2014, of $29), issued to Valent by Del Mar (BC), for 279 shares of the Company’s Series A Preferred Stock. The Series A Preferred Stock has a stated value of $1.00 per share (the “Series A Stated Value”) and is not convertible into common stock. The holder of the Series A Preferred Stock is entitled to dividends at the rate of 3% of the Series A Stated Value per year, payable quarterly in arrears. For the three and nine months ended March 31, 2024, the Company recorded $2 (2023 - $2) and $6 (2023 - $6), respectively, related to the dividends paid to Valent. The dividends have been recorded as a direct increase in accumulated deficit.

On February 13, 2024, the Company sent an Opt-Out Notice to Valent under the Valent Assignment Agreement whereby the Company assigned all rights, title and interest in and to the patents for VAL-083 to Valent. As a result, the Company granted Valent a non-exclusive, fully-paid, royalty-free, perpetual, worldwide and non-transferable license, subject to limited exceptions. The Company is entitled to receive royalties from Valent’s subsequent commercialization of VAL-083 equal to 5% of Valent Net Sales (as defined in the Valent Assignment Agreement).

Related party payables

As of March 31, 2024, there is an aggregate amount of $98 (June 30, 2023 - $298) payable to the Company’s officers and directors for fees, expenses, and accrued bonuses and other liabilities.

7 Stockholders’ equity

Preferred stock

Series C Preferred Stock

 

 

 

Series C Preferred Stock

 

 

 

Number
of shares

 

 

$
(in thousands)

 

Balance – June 30, 2023

 

 

14,208

 

 

 

10,366

 

Conversion of Series C Preferred stock to common stock

 

 

(540

)

 

 

(393

)

Balance – March 31, 2024

 

 

13,668

 

 

 

9,973

 

 

10


 

In August 2020, the Company issued 25,028 shares of Series C Convertible Preferred Stock (the “Series C Preferred Stock”) in three separate closings of a private placement (Series C-1, C-2, and C-3). Each share of Series C Preferred Stock was issued at a purchase price of $1,000 per share and is convertible into shares of common stock based on the respective conversion prices which were determined at the closing of each round of the private placement. The conversion prices for the Series C-1 Preferred Stock, Series C-2 Preferred Stock, and the Series C-3 Preferred Stock are $58.00, $60.70, and $57.50, respectively. Subject to ownership limitations, the owners of the Series C-1 Preferred Stock, the Series C-2 Preferred Stock, and the Series C-3 Preferred Stock are entitled to receive dividends, payable in shares of common stock at a rate of 10%, 15%, 20% and 25%, respectively, of the number of shares of common stock issuable upon conversion of the Series C Preferred Stock, on the 12th, 24th, 36th and 48th month, anniversary of the initial closing of the private placement. The Company paid the 12th, 24th, and 36th month anniversary dividends of 10%, 15%, and 20% common stock dividends on August 19, 2021, 2022, and 2023, respectively.

The Series C Preferred Stock dividends do not require declaration by the board of directors and are accrued annually as of the date the dividend is earned in an amount equal to the fair value of the Company’s common stock on the dates the respective dividends are paid. The fair value of the Series C Preferred Stock dividend paid on August 19, 2023, was determined by multiplying the dividends paid of 49 shares of common stock by the Company’s closing share price on August 18, 2023, of $3.53 per share for a total fair value of $173. Any outstanding shares of Series C Preferred Stock will automatically convert to shares of common stock on August 19, 2024. In addition, as part of the Series C Preferred financing, the Company issued warrants to the placement agent (“Series C Agent Warrants”).

The Series C Preferred Stock shall with respect to distributions of assets and rights upon the occurrence of a liquidation, rank (i) senior to the Company’s common stock and (ii) senior to any other class or series of capital stock of the Company hereafter created which does not expressly rank pari passu with, or senior to, the Series C Preferred Stock. The Series C Preferred Stock is pari passu in liquidation to the Company’s Series A Preferred Stock. The liquidation value of the Series C Preferred Stock at March 31, 2024, is the stated value of $9,973 (June 30, 2023 - $10,366).

The Company’s Series C Preferred Stock outstanding, conversion shares, and aggregate dividends as of March 31, 2024, are as follows:

 

Series

 

Number

 

 

Conversion
price
$

 

 

Number of
conversion
shares
(in
thousands)

 

 

Dividend Shares (in thousands)

 

Series 1

 

 

10,925

 

 

 

58.00

 

 

 

188

 

 

 

151

 

Series 2

 

 

898

 

 

 

60.70

 

 

 

15

 

 

 

10

 

Series 3

 

 

1,845

 

 

 

57.50

 

 

 

32

 

 

 

24

 

 

 

 

13,668