SEC Form 10-Q filed by BriaCell Therapeutics Corp.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended
For the transition period from to
Commission
File No.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| (Address of Principal Executive Offices, including zip code) |
| (Registrant’s telephone number, including area code) |
| N/A |
| (Former name, former address and former fiscal year, if changed since last report) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
| The
| ||||
| The |
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.
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).
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 | |
| ☒
|
||
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
As of December 16, 2024, common shares, no par value per share, of the Company were issued and outstanding.
BRIACELL THERAPEUTICS CORP.
Form 10-Q
Table of Contents
| 2 |
PART I-FINANCIAL INFORMATION
Item 1. Financial Statements
BRIACELL THERAPEUTICS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
| October 31, 2024 | July 31, 2024 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Amounts receivable and prepaid expenses | ||||||||
| Total current assets | ||||||||
| NON-CURRENT ASSETS: | ||||||||
| Equity Investment in BC Therapeutics | ||||||||
| Intangible assets, net | ||||||||
| Property and equipment, net | ||||||||
| Long term prepaid expenses | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Trade payables | $ | $ | ||||||
| Accrued expenses and other payables | ||||||||
| Total current liabilities | ||||||||
| NON-CURRENT LIABILITIES: | ||||||||
| Warrant liability | ||||||||
| Total non-current liabilities | ||||||||
| SHAREHOLDERS’ EQUITY (DEFICIT): | ||||||||
| Share capital of | ||||||||
| Share-based payment reserved | ||||||||
| Warrant reserve | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Non-controlling interest | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total shareholders’ equity (deficit) | ( | ) | ||||||
| Total liabilities and shareholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 3 |
BRIACELL THERAPEUTICS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
| Three months ended | ||||||||
| October 31, | ||||||||
| 2024 | 2023 | |||||||
| Operating expenses: | ||||||||
| Research and development expenses | $ | |||||||
| General and administrative expenses | ||||||||
| Total operating expenses | ||||||||
| Operating loss | ( | ) | ( | ) | ||||
| Financial income, net | ||||||||
| Change in fair value of the warrant liability | ( | ) | ||||||
| Share of loss on equity investment | ( | ) | ||||||
| Net income (loss) for the period | $ | ( | ) | $ | ||||
| Net loss attributable to non-controlling interest | ( | ) | ( | ) | ||||
| Net income (loss) for the period attributable to BriaCell | ( | ) | ||||||
| Net income (loss) per share attributable to BriaCell – basic | $ | ( | ) | $ | ||||
| Net income (loss) per share attributable to BriaCell – diluted | ( | ) | ( | ) | ||||
| Weighted average number of shares used in computing net basic earnings per share of common stock | ||||||||
| Weighted average number of shares used in computing net diluted earnings per share of common stock | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
BRIACELL THERAPEUTICS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
FOR THE THREE MONTHS ENDED OCTOBER 31, 2024
| Share capital | Additional
paid in | Accumulated
other comprehensive | Accumulated | Non- controlling | Total shareholders’ | |||||||||||||||||||||||
| Number | Amount | capital | loss | Equity | interest | (deficit) | ||||||||||||||||||||||
| Balance, July 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||
| Instruments issued to minority shareholders at the Arrangement Date | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Issuance of options | - | |||||||||||||||||||||||||||
| Income (loss) for the period | - | ( | ) | |||||||||||||||||||||||||
| Balance, October 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | ( | ) | $ | |||||||||||||||||
| Share capital | Additional paid in | Warrant | Accumulated
other | Accumulated | Non- Controlling |
Total shareholders’ | ||||||||||||||||||||||||||
| Number | Amount | capital | reserve | loss | deficit | Interest | (deficit) | |||||||||||||||||||||||||
| Balance, July 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||
| Issuance of Options | - | |||||||||||||||||||||||||||||||
| Exercise of prefunded warrants | ||||||||||||||||||||||||||||||||
| Exercise of broker warrants | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of units | ||||||||||||||||||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance, October 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 5 |
BRIACELL THERAPEUTICS CORP.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
| Three
months ended October 31, | ||||||||
| 2024 | 2023 | |||||||
| Cash flow from operating activities | ||||||||
| Net income (loss) for the period | $ | ( | ) | $ | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Amortization | ||||||||
| Depreciation | ||||||||
| Share-based compensation | ||||||||
| Equity losses | ||||||||
| Change in fair value of warrants | ( | ) | ||||||
| Changes in assets and liabilities: | ||||||||
| Decrease (increase) in amounts receivable | ( | ) | ||||||
| (Increase) decrease in prepaid expenses | ( | ) | ||||||
| Decrease in accounts payable | ( | ) | ( | ) | ||||
| Increase (decrease) in accrued expenses and other payables | ( | ) | ||||||
| Total cash flow from operating activities | ( | ) | ( | ) | ||||
| Cash flows from Investing activities | ||||||||
| Equity investment in BC Therapeutics | ( | ) | ||||||
| Total cash flow from investing activities | ( | ) | ||||||
| Cash flows from financing activities | ||||||||
| Proceeds from exercise of warrants | ||||||||
| Proceeds from the issuance of shares, net of issuance costs | ||||||||
| Total cash flow from financing activities | ||||||||
| Increase (decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of the period | ||||||||
| Cash and cash equivalents at end of the period | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 6 |
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
| 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”. The Company also trades on the Nasdaq Capital Market (“NASDAQ”) under the symbols “BCTX” and “BCTXW”. | |
| b. | BriaCell is an immuno-oncology biotechnology company. The Company is currently advancing its Bria-IMT targeted immunotherapy program against end-stage breast cancer to Phase 3 study which has been approved by the FDA. BriaCell is also developing a personalized off-the-shelf immunotherapy, Bria-OTS™, and a soluble CD80 protein therapeutic which acts both as a stimulator of the immune system as well as an immune checkpoint inhibitor. | |
| c. | Basis of presentation of the financial statements: | |
| 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 8 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, 2024, filed with the SEC on October 28, 2024. 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. |
| d. | Going concern
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 October 31, 2024 was $ | |
| e. | The Company has two wholly-owned U.S. subsidiaries: (i) BriaCell Therapeutics Corp. (“BTC”), which was incorporated in April 3, 2014, under the laws of the state of Delaware, and (ii) BTC has a wholly-owned subsidiary, Sapientia Pharmaceuticals, Inc. (“Sapientia”), which was incorporated in September 20, 2012, under the laws of the state of Delaware. The Company also has one Canadian subsidiary: BriaPro Therapeutics Corp, (“BriaPro”) which was incorporated on May 15, 2023, under the Business Corporations Act (British Columbia). See also note 1f. (Sapientia and BTC and BriaPro together, the “Subsidiaries”). | |
| f. | On August 31, 2023, the Company closed a plan of arrangement spinout transaction (the “Arrangement”) pursuant to which certain pipeline assets of the Company, including Bria-TILsRx™ and protein kinase C delta (PKCδ) inhibitors for multiple indications including cancer (the “BriaPro Assets”), were spun-out to BriaPro Therapeutics Corp. (“BriaPro”), resulting in a 2/3rd owned subsidiary of the Company with the remaining 1/3rd held by BriaCell shareholders (“BriaCell Shareholders”). | |
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
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 in issuance at the time of the Arrangement 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. Warrants issued by the Company, subsequent to the Arrangement are not subject to the terms above.
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 $
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. |
| 7 |
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 condensed 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 condensed consolidated financial statements, and the reported amount of expenses during the reporting periods. Actual results could differ from those estimates. |
b. Prepaid expenses
| The Company has prepaid certain expenses in respect of its pivotal phase III trial and estimates the period over which such expenses will be incurred. As of July 31, 2024, the Company revised its estimate of the time to completion in respect of this trial. Amounts estimated to be expenses in more than 12 months have been classified to long-term prepaid expenses. |
c. The useful life of property and equipment
| Property and equipment are depreciated over their useful lives. Useful lives are based on management’s estimates of the period that the assets will be used which are periodically reviewed for continued appropriateness. Changes to estimates can result in significant variations in the amounts charged to the consolidated statement of operations and comprehensive loss in specific periods. |
d. Investment equity method:
| 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 the loss from equity method investments on the statements of operation and comprehensive loss. The Company
has a |
e. 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 reflect this election. The pronouncements below relate to standards that impact the Company. | ||
| 1. | In December 2023, the FASB issued ASU 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This standard modifies the rules on income tax disclosures to require entities to disclose specific categories in the rate reconciliation, the income or loss from continuing operations before income tax expense or benefit, and income tax expense or benefit from continuing operations. ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state, and local jurisdictions. The ASU is effective for years beginning after December 15, 2024, but early adoption is permitted. This ASU should be applied on a prospective basis, although retrospective application is permitted. The Company is currently evaluating the impact of this standard on its financial statements and disclosures. | |
| 2. | In March 2024, the FASB issued ASU 2024-01 - Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards. This standard clarifies whether profits interest and similar awards fall within the scope of stock-based compensation guidance as defined in ASC Topic 718, introducing examples to demonstrate this. The ASU includes scenarios where profits interest awards are classified as equity instruments or liability awards and situations where they fall outside ASC Topic 718, being accounted for under ASC Topic 710. The ASU is effective for years beginning after December 15, 2024, but early adoption is permitted. This ASU should be applied on a prospective basis, although retrospective application is permitted. The Company is currently evaluating the impact of this standard on its financial statements and disclosures. |
| 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 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 initially provided a loan of $ to BC Therapeutics, with no interest to be paid. Subsequently, in accordance with the SPA, this loan was converted into an equity investment in BC Therapeutics at a rate of $ per share, resulting in a % ownership interest (“Initial Investment”). | ||
| Pursuant to the SPA (“Initial Investment”), Briacell also received two options to invest an additional $ per option at $ per BC Therapeutics share. The first option expired on February 15, 2024 (“First BC Therapeutics Option”) and the second option expired on June 30, 2024 (“Second BC Therapeutics Options”, together, the “BC Therapeutic 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: %. | ||
| 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. | ||
| The Company initially acquired a
significant interest in BC Therapeutics on February 1, 2024, by exercising the First BC Therapeutics Option, increasing its
ownership to %.
On August 7, 2024, following the expiration of the original Second BC Therapeutics Option, the Company and BC Therapeutics amended
the SPA to introduce new options, allowing the exercise in tranches of at least shares at $ per share. During the quarter
ended October 31, 2024, the Company exercised this option in three tranches, totaling $ | ||
| In accordance with ASC 810, the Company continues to account for the investment under the equity method of accounting as the Company does not exercise control over BC Therapeutics. |
Changes in the Company’s equity investment in BC Therapeutics is summarized as follows:
| Balance – August 1, 2023 | $ | |||
| Funding (including the value of the BC Therapeutics Options) | ||||
| Share of losses | ( | ) | ||
| Balance – July 31, 2024 | ||||
| Funding | ||||
| Share of losses | ( | ) | ||
| Balance – October 31, 2024 | $ |
The following amounts represent the Company’s % share of the assets of BC Therapeutics:
As of October 31, 2024 | ||||
| Current assets: Cash | $ | |||
| Net assets | $ | |||
| 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 4: CONTINGENT LIABILITIES AND COMMITMENTS
| a. | BriaPro Warrants | |
| Upon
the exercise of BriaCell Warrants, BriaCell shall, as agent for BriaPro, collect and pay to BriaPro an amount based on an agreed
formula (detailed in note 1(f)). As of October 31, 2024, this amount totaled up to $ | ||
| b. | Lease | |
| The
Company was previously in a |
NOTE 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 October 31, 2024 and July 31, 2024:
| Fair Value Measurements at | ||||||||||||||||||||||||
| October 31, 2024 | July 31, 2024 | |||||||||||||||||||||||
| Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | |||||||||||||||||||
| Financial Assets: | ||||||||||||||||||||||||
| Cash and cash equivalents | ||||||||||||||||||||||||
| Total assets measured at fair value | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Financial liabilities: | ||||||||||||||||||||||||
| Warrants liability | ||||||||||||||||||||||||
| Total liabilities measured at fair value | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
We classify our 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.
| 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 6: SHAREHOLDERS’ EQUITY
a. Authorized share capital
The
authorized share capital consists of an number of common shares with
b. Issued share capital
| (i) | The Company issued the following shares during the three-month period ended October 31, 2024: |
| 1. | On
September 12, 2024, the Company completed a registered direct offering for the purchase and sale of common shares of the
Company at an offering price of $ per share, for aggregate gross proceeds of approximately $ | |
| In
connection with the September 2024 Offering, the Company issued | ||
| The amount was credited to the warrant reserve at the date of the September 2024 Offering. |
2.
On October 2, 2024, the Company closed a registered direct offering for the purchase and sale of common shares of the Company
and warrants to purchase up to an aggregate of common shares of the Company for aggregate gross proceeds of $
In connection with the October 2024 Offering, the Company issued
The
fair value of the
The
fair value of the
The amounts were credited to the warrant reserve at the date of the October 2024 Offering.
During
October 2024, October 2024 Warrants with an exercise price of $ were exercised for gross proceeds of $
| 11 |
c. Share Purchase Warrants
| Number of options outstanding | Weighted average exercise price (*) | |||||||
| Balance, July 31, 2024 | $ | |||||||
| Exercised | ( | ) | ( | ) | ||||
| Granted in the October 2024 Offering | ||||||||
| Balance, October 31, 2024 | $ | |||||||
| (ii) | As of October 31, 2024, warrants outstanding were as follows: |
Number of Warrants | Exercise Price(*) | Exercisable At October 31, 2024 | Expiry Date | |||||||||
| $ | ||||||||||||
| $ | – | |||||||||||
| $ | ||||||||||||
| $ | (*) | |||||||||||
| $ | ||||||||||||
| (*) |
d. Compensation Warrants
| (i) | A summary of changes in compensation warrants for the three-month period ended October 31, 2024 is presented below: |
Number of warrants outstanding | Weighted average exercise price (*) | |||||||
| Balance, July 31, 2024 | ||||||||
| Granted in the September 2024 Offering | ||||||||
| Granted in the October 2024 Offering | ||||||||
| Balance, October 31, 2024 | $ | |||||||
| (ii) | As of October 31, 2024, compensation warrants outstanding were as follows: |
Number of Warrants | Exercise Price | Exercisable At October 31, 2024 | Expiry Date | |||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | (*) | |||||||||||
| $ | (**) | |||||||||||
| $ | ||||||||||||
| (*) |
| (**) |
| 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 6: SHAREHOLDERS’ EQUITY (Cont.)
e. Warrant liability continuity
The following table presents the summary of the changes in the fair value of the warrants:
| Warrants liability | ||||
| Balance as of August 1, 2024 | $ | |||
| Change in fair value during the period | $ | |||
| Balance as of October 31, 2024 | $ | |||
The key inputs used in the valuation of the non-public warrants as of October 31, 2024 and at July 31, 2024 were as follows:
| October 31, 2024 | July 31, 2024 | |||||||
| 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 October 31, 2024 were as follows:
| August
31, 2023 (Effective Date) | October 31, 2024 | |||||||
| Share price | $ | $ | ||||||
| Exercise price | $ | - | $ | - | ||||
| Expected life (years) | - | - | ||||||
| Volatility | % | - | % | |||||
| Dividend yield | % | % | ||||||
| Risk free rate | % | % | ||||||
| 13 |
| 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, restricted
share units (“RSU’s”), and deferred share units (collectively, the “Awards”)
for the benefit of any employee, officer, director, or consultant of the Company or any subsidiary
of the Company. The maximum number of shares available for issuance under the Omnibus Plan
shall not exceed
| |
| b. | The following table summarizes the number of options granted to directors, officers, employees and consultants under the option plan for three-month period ended October 31, 2024 and related information: |
| Number of options | Weighted average exercise price | Weighted average remaining contractual term (in years) | Aggregate intrinsic value | |||||||||||||
| Balance as of July 31, 2024 | $ | $ | ||||||||||||||
| Balance as of October 31, 2024 | ||||||||||||||||
| Exercisable as of October 31, 2024 | $ | $ | ||||||||||||||
As of October 31, 2024, there are $ of total unrecognized costs related to share-based compensation that is expected to be recognized over a period of up to months.
| 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.)
| c. | The following table summarizes information about the Company’s outstanding and exercisable options granted to employees as of October 31, 2024. |
Exercise price | Options outstanding as of October 31, 2024 | Weighted average remaining contractual term (years) | Options exercisable as of October 31, 2024 | Weighted average remaining contractual term (years) | Expiry Date | |||||||||||||||
| $ | ||||||||||||||||||||
| $ | ||||||||||||||||||||
| $ | ||||||||||||||||||||
| $ | ||||||||||||||||||||
| $ | ||||||||||||||||||||
| $ | ||||||||||||||||||||
| $ | ||||||||||||||||||||
| $ | ||||||||||||||||||||
| $ | ||||||||||||||||||||
| $ | ||||||||||||||||||||
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| d. | As result of the Arrangement, BriaPro Options were issued and are outstanding as of October 31, 2024: |
Exercise Price | Options outstanding as of October 31, 2024 | Options exercisable
as | Expiry Date | |||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| e. | Restricted Share Unit Plan |
Number of RSU’s outstanding | Aggregate intrinsic value | |||||||
| Balance, July 31, 2024 | $ | |||||||
| Balance, October 31, 2024 | $ | |||||||
| f. | The total share-based compensation expense related to all of the Company’s equity-based awards, recognized for the three-month period ended October 31, 2024 and 2023 is comprised as follows: |
Three months ended October 31, | ||||||||
| 2024 | 2023 | |||||||
| Research and development expenses | $ | |||||||
| General and administrative expenses | ||||||||
| Total share-based compensation | $ | |||||||
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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)
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 reported a loss for the three-month period ending October 31, 2023, leading to the exclusion of potentially dilutive ordinary shares. Conversely, a gain was recorded for the three-month period ending October 31, 2024, resulting in the inclusion of all potentially dilutive ordinary shares.
Three months ended October 31, | ||||||||
| 2024 | 2023 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Basic EPS | ||||||||
| Numerator: | ||||||||
| Net income (loss) | $ | ( | ) | $ | ||||
| Denominator: | ||||||||
| Shares used in computation of basic earnings per share | ||||||||
| Basic EPS | $ | ( | ) | $ | ||||
| Diluted EPS | ||||||||
| Numerator: | ||||||||
| Net income (loss) attributable to common stock, basic | $ | ( | ) | $ | ||||
| Adjustment: Change in fair value of warrant liability | ( | ) | ||||||
| Net (loss) attributable to common stock, diluted | $ | ( | ) | $ | ( | ) | ||
| Denominator: | ||||||||
| Shares used in computing net EPS of common stock, basic | ||||||||
| Stock Options | ||||||||
| Warrants | ||||||||
| Shares used in computation of diluted earnings per share | ||||||||
| Diluted EPS | $ | ( | ) | $ | ( | ) | ||
NOTE 9: FINANCIAL INCOME (EXPENSES), NET
Three months ended October 31, | ||||||||
| 2024 | 2023 | |||||||
| Interest income | $ | $ | ||||||
| Foreign exchange loss | ( | ) | ( | ) | ||||
| Financial income, net | $ | $ | ||||||
NOTE 10: SUBSEQUENT EVENTS
| a. | Between December 3, 2024 and December 10, 2024, a October 2024
Warrants were exercised into |
| b. | On December 13, 2024, the Company closed a public offering for the purchase
and sale of common shares of the Company and warrants to purchase up to an aggregate of |
| 17 |
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, 2024 (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 quarter of fiscal 2024 in comparison to the first quarter of fiscal 2023. | |
| ● | Part 3 - Financial Liquidity and Capital Resources. This section provides an analysis of our cash flows and outstanding debt and commitments. Included in this analysis is a discussion of the amount of financial capacity available to fund our ongoing operations and future commitments. |
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 is a clinical-stage biotechnology company that is developing novel immunotherapies to transform cancer care. Immunotherapies have come to the forefront in the fight against cancer as they harness the body’s own immune system to recognize and destroy cancer cells. The Company is currently advancing its Bria-IMT™ targeted immunotherapy in combination with an immune check point inhibitor (Retifanlimab) in a pivotal Phase 3 study in metastatic breast cancer. Bria-IMT™ is currently under Fast Track Designation by the U.S. Food and Drug Administration(the “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 metastatic breast cancer. BriaCell reported benchmark-beating patient survival and clinical benefit in metastatic breast cancer with median overall survival of 13.4 months in BriaCell’s metastatic breast cancer patients vs. 6.7-9.8 months for similar patients reported in the literature in its Phase 2 study of Bria-IMT™ 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 personalized off-the-shelf immunotherapies, Bria-OTS™ and 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 system as well as an immune checkpoint inhibitor.
| 18 |
Recent Developments
On October 15, 2024, the Company provided an update on its pivotal Phase 3 study in metastatic breast cancer - 35 clinical sites (18 main and 17 satellite) are active and enrolling patients. Additional sites are in various stages of start-up. Interim data will be analyzed once 144 events (deaths) occur, comparing the overall survival (OS) in patients treated with the Bria-IMT™ combination regimen versus those treated with physician’s choice as the primary endpoint. Positive results of the pivotal Phase 3 study could result in full approval and marketing authorization for Bria-IMT™ in MBC patients. Secondary analyses include comparison of the Bria-IMT™ combination regimen vs Bria-IMT™ monotherapy. BriaCell recently announced impressive Phase 2 survival data in a similar MBC patient population. The Bria-IMT™ combination regimen has received FDA Fast Track designation.
On October 22, 2024, the Company reported that in the Company’s Phase 2 clinical study, patients treated with the same Bria-IMT™ regimen formulation being used in the ongoing Phase 3 pivotal trial experienced a one-year survival rate of 55% (i.e. 55% of patients remain alive at least one year after starting on the study). This rate exceeds the survival data of the current standard of care for similar patients (see Table 1). Notably, 4 of 13 patients recruited in 2022 remain in survival follow-up as well.
On November, 21, 2024, the Company announced that the first patient was dosed in its Phase 1/2 study (ClinicalTrials.gov identifier: NCT06471673) to evaluate the safety and efficacy of Bria-OTS™, BriaCell’s personalized next generation immunotherapy. The study will investigate Bria-OTS™ alone and in combination with immune check point inhibitor tislelizumab® (manufactured and supplied by BeiGene, Ltd.) for the treatment of metastatic breast cancer. Bria-OTS™ is an enhanced form of Bria-IMT™, currently in pivotal Phase 3 study for metastatic breast cancer.
On November 23, 2024, Marc Lustig resigned from the board of directors of the Company.
On December 13, 2024, the Company closed a public offering for the purchase and sale of 7,400,000 common shares of the Company and warrants to purchase up to an aggregate of 7,400,000 common shares of the Company for aggregate gross proceeds of approximately $5.55 million before deducting underwriting discounts, commissions, and other offering expenses (the “December 2024 Offering”). Each common share was sold together with one warrant to purchase one common share at a combined purchase price of $0.75. The warrants have an exercise price of $0.9375 per share, and are immediately exercisable for a period of five years from the closing date. In addition, the Company issued 370,000 agent warrants. The agent warrants are immediately exercisable for a period of five years from the closing date at an exercise price of $0.9375.
Results of Operations for the Three Months Ended October 31, 2024, and 2023
| Three months ended | ||||||||
| October 31, | ||||||||
| 2024 | 2023 | |||||||
| Operating expenses: | ||||||||
| Research and development expenses | $ | 3,665,341 | 6,857,257 | |||||
| General and administrative expenses | 1,487,491 | 1,645,771 | ||||||
| Total operating expenses | 5,152,832 | 8,503,028 | ||||||
| Operating loss | (5,152,832 | ) | (8,503,028 | ) | ||||
| Financial income, net | 11,714 | 179,822 | ||||||
| Change in fair value of the warrant liability | (616,643 | ) | 14,282,078 | |||||
| Share of loss on equity investment | (71,515 | ) | - | |||||
| Net income (loss) for the period | $ | (5,829,276 | ) | $ | 5,958,872 | |||
| Net loss attributable to non-controlling interest | (27,101 | ) | (42,671 | ) | ||||
| Net income (loss) for the period attributable to BriaCell | (5,802,175 | ) | 6,001,543 | |||||
| Net income (loss) per share attributable to BriaCell – basic | $ | (0.22 | ) | $ | 0.38 | |||
| Net income (loss) per share attributable to BriaCell – diluted | (0.22 | ) | (0.50 | ) | ||||
| Weighted average number of shares used in computing net basic earnings per share of common stock | 26,641,036 | 15,619,676 | ||||||
| Weighted average number of shares used in computing net diluted earnings per share of common stock | 26,641,036 | 16,674,891 | ||||||
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.
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The following is a breakdown of our research and development costs by nature of expenses:
| Three months ended October 31, | ||||||||
| 2024 | 2023 | |||||||
| Clinical trial sites and investigational drug costs | $ | 2,439,667 | $ | 5,397,438 | ||||
| Wages and salaries | 949,089 | 1,020,725 | ||||||
| Laboratory Rent | 114,330 | 88,480 | ||||||
| Supplies | 99,430 | 89,023 | ||||||
| Depreciation | 22,839 | - | ||||||
| Professional fees | 7,268 | 3,782 | ||||||
| Share-based compensation | 32,718 | 257,809 | ||||||
| $ | 3,665,341 | $ | 6,857,257 | |||||
For the three-month period ending October 31, 2024, research costs amounted to $3,665,341, a significant decrease from the $6,857,257 incurred during the same period in 2023. This reduction was primarily driven by lower clinical trial sites and investigational drug costs, which decreased from $5,397,438 in 2023 to $2,439,667 in 2024. The decrease reflects the conclusion of the Bria-IMT™ Phase 1/2a trial and a focus on optimizing expenditures for the pivotal Phase 3 trial. Wages and salaries decreased slightly, from $1,020,725 in 2023 to $949,089 in 2024, reflecting resource allocation adjustments. Laboratory rent increased to $114,330 in 2024, up from $88,480 in 2023, due to expanded use of facilities to support ongoing research. Supplies also increased, from $89,023 in 2023 to $99,430 in 2024, driven by higher operational needs. Depreciation expenses of $22,839 were recognized in 2024, reflecting investments in capital assets to support research activities. Professional fees increased to $7,268 in 2024, compared to $3,782 in 2023, primarily due to consulting and support for clinical operations. Notably, share-based compensation expenses decreased significantly, from $257,809 in 2023 to $32,718 in 2024, contributing to the overall reduction in research and development expenses.
Our clinical trial expenses are broken down as follows:
| Three months ended October 31, | ||||||||
| 2024 | 2023 | |||||||
| Bria-IMT™ Pivotal Phase 3 study | $ | 2,185,543 | $ | 2,278,258 | ||||
| Bria-IMT™ Phase 1/2a | 142,496 | 1,214,440 | ||||||
| Indirect research and development expenses allocated to trials | 111,628 | 134,592 | ||||||
| $ | 2,439,667 | $ | 3,627,290 | |||||
Clinical trial expenses for the three months ended October 31, 2024, were $2,439,667, compared to $3,627,290 during the same period in 2023. The decrease in expenses is primarily attributable to the conclusion of patient recruitment and related activities in the Bria-IMT™ Phase 1/2a clinical trial in fiscal 2024. This reduction in costs aligns with our transition to the pivotal Phase 3 study of Bria-IMT™, which has become the primary focus of our clinical development efforts.
For the three-month period ending October 31, 2024, Bria-IMT™ Pivotal Phase 3 Study costs amounted to $2,185,543, remaining consistent with the prior year’s $2,278,258. This consistency reflects our strategic decision to optimize spending while focusing expenditures on this pivotal trial, underscoring our commitment to prioritizing the Phase 3 study as the cornerstone of our clinical development program. Resources were effectively allocated toward patient recruitment, trial operations, and preparation for key milestones.
For the three-month period ending October 31, 2024, Bria-IMT™ Phase 1/2a costs amounted to $142,496, a significant decrease compared to $1,214,440 during the same period in 2023. This decrease is attributed to the trial’s conclusion in fiscal 2024, with only minimal remaining expenses related to final data analysis and study close-out activities.
For the three-month period ending October 31, 2024, indirect research and development expenses allocated to trials amounted to $111,628, compared to $134,592 in the prior year. This reduction is primarily due to streamlined trial operations and a shift in resource allocation toward the pivotal Phase 3 study.
We remain focused on advancing the pivotal Phase 3 study of Bria-IMT™ in advanced breast cancer and continue to direct resources accordingly to ensure its timely progression.
General and Administrative Expenses
For the three-month period ending October 31, 2024, general and administrative expenses amounted to $1,487,491, showing a decrease from $1,645,771 in the same period of 2023. The decrease in general and administrative expenses primarily stems from lower insurance premiums, professional fees and share-based compensation expenses. The Company has reduced general and administrative expenses in order to devote more resources to its clinical program.
Financial income (expenses), net
For the three-month period ending October 31, 2024, net financial income amounted to $11,714, a significant decrease from the $179,822 recorded in the same period of 2023. Financial income for the three-month period ending October 31, 2024 primarily consists of interest income of $13,050, offset by a foreign exchange loss of $1,336. In comparison, For the three-month period ending October 31, 2023, interest income was $190,815, while foreign exchange losses totaled $10,993. The decrease in financial income from 2023 to 2024 reflects lower interest income due to reduced cash and cash equivalents available for investment in interest-bearing funds
Profit (loss) for the period
For the three-month period ended October 31, 2024, the Company reported a loss of $5,829,276 compared to a gain of $5,958,872 for the same period in 2023. The loss in the three-month period ended October 31, 2024, primarily resulted from the significant change in the fair value of the warrant liability, which accounted for a loss of $616,643 in 2024 compared to a gain of $14,282,078 in 2023. This highlights the substantial impact that warrant liability valuation has on the Company’s overall financial performance, despite decreased operational spending during the period, particularly in research and development.
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Liquidity, Capital Resources and 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 October 31, 2024, and a positive working capital balance of $3,230,459 (July 31, 2024 negative balance of $3,807,303).
As of October 31, 2024, the Company has total assets of $10,414,330 (July 31, 2024 - $5,872,261), a positive working capital of $3,230,459 (July 31, 2024 – negative balance of $3,807,303) and an accumulated deficit of $91,245,872 (July 31, 2024 - $85,443,697).
As of October 31, 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 successful. To this end, for several months during calendar year 2024, certain directors and officers agreed to defer payment of their directors’ fees/compensation until we completed a financing, after which, these fees were paid in full. Further, certain officers have indicated their willingness to receive a portion of their compensation in equity of the Company, subject to applicable Nasdaq rules. In addition, we continue to reduce expenditure on certain non-core activities whilst maintaining our focus on our Phase 3 Bria-IMT™ pivotal study in advanced metastatic breast cancer.
During the period ended October 31, 2024, the Company’s overall position of cash and cash equivalents increased by $4,930,176 from the period ended July 31, 2024 (including effects of foreign exchange). This increase in cash can be attributed to the following:
The Company’s net cash used in operating activities during the period ended October 31, 2024, was $6,955,076 as compared to $7,605,245 for the period ended October 31, 2023.
Cash gained in financing activities for the period ended October 31, 2024, was 11,960,252 as compared to nil for the period ended October 31, 2023.
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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 period ended October 31, 2024.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Company’s financial instruments consist of cash and cash equivalents, investments, warrant liability, short term loans, 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 risk
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 October 31, 2024, the Company has total assets of $10,414,330 (July 31, 2024 - $5,872,261) and a positive working capital balance of $3,230,459 (July 31, 2024 - negative working capital balance of $3,807,303).
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. Loans payable include both fixed and variable interest rates; however, the Company does not believe it is exposed to material interest rate risk.
Price risk
As the Company has no revenues, price risk is remote.
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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 accounts payable and cash. As of October 31, 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, trade payable, warrant liability, short term loans, and accrued expenses and other payables approximate their fair values due to their short terms to maturity.
Cash 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 October 31, 2024, our disclosure controls and procedures were effective 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 October 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
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, 2024.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
There were no unregistered sales of equity securities during the three months ended October 31, 2024.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not Applicable.
| 23 |
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. |
| 24 |
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. | ||
| December 16, 2024 | By: | /s/ William V. Williams |
| Name: | William V. Williams | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) | ||
| December 16, 2024 | By: | /s/ Gadi Levin |
| Name: | Gadi Levin | |
| Title: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) | ||
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