SEC Form 253G2 filed by Medicus Pharma Ltd.

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, 2025

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission file number: 001-42408

MEDICUS PHARMA LTD.

(Exact Name of Registrant as Specified in Its Charter)

Ontario, Canada		98-1778211
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
300 Conshohocken State Rd., Suite 200 W. Conshohocken, PA		19428
(Address of principal executive offices)		(Zip Code)

(610) 636-0184

(Registrant's telephone number, including area code)

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 shares, no par value		MDCX		The Nasdaq Capital Market
Warrants, each exercisable for one common share at an exercise price of $4.64 per share		MDCXW		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 ☐

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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, anon-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-2of 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.
Yes ☐ No ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2of the Exchange Act).
Yes ☐ No ☒

As of May 8, 2025, there were 13,494,861 common shares, no par value, issued and outstanding.

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MEDICUS PHARMA LTD.

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2025

TABLE OF CONTENTS

		Page
Part I.	Financial Information	1
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of March 31, 2025 (Unaudited) and December 31, 2024	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2025 and 2024 (Unaudited)	2
	Condensed Consolidated Statements of Changes in Shareholders' Equity for the three months ended March 31, 2025 and 2024 (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2025 and 2024 (Unaudited)	4
	Notes to Condensed Consolidated Financial Statements (Unaudited)	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures Regarding Market Risk	23
Item 4.	Controls and Procedures	24
Part II.	Other Information	25
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	25
Part III.	Signatures	27

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") that involve substantial risks and uncertainties. All statements, other than statements of historical facts contained in this Quarterly Report on Form 10-Q regarding our strategy, future operations, future financial position, projected costs, prospects, plans, and objectives of management are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. The words "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "predict," "project," "will," "would," or the negative of such terms and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Such statements are based on assumptions and expectations that may not be realized and are inherently subject to risks, uncertainties, and other factors, many of which cannot be predicted with accuracy and some of which might not even be anticipated.

The forward-looking statements in this Quarterly Report on Form 10-Q and those contained in (i) our Annual Report on Form 10-K filed with the United States Securities and Exchange Commission ("SEC") on March 28, 2025 (the "2024 Annual Report") include, among other things, statements about:

• our financial results, including our ability to generate earnings and achieve and sustain profitability, which may vary significantly from forecasts and from period to period;

• the progress, timing and completion of our research, development and preclinical studies and clinical trials for our products and product candidates;

• our ability to market, commercialize, achieve market acceptance for and sell our products and product candidates;

• our ability to develop, manage and maintain our direct sales and marketing organizations;

• our estimates regarding anticipated operating losses, future revenues, capital requirements and our needs for additional financing;

• market risks regarding consolidation in the healthcare industry;

• the willingness of healthcare providers to purchase our products if coverage, reimbursement and pricing from third party payors for procedures using our products significantly declines;

• our ability to adequately protect our intellectual property and operate our business without infringing upon the intellectual property rights of others;

• the fact that product quality issues or product defects may harm our business;

• any product liability claims; and

• the regulatory, legal and certain operating risks that our operations subject us to.

The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading "Risk Factors" in Part I, Item 1A in the 2024 Annual Report and Part II, Item 1A of this Quarterly Report on Form 10-Q. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

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PART I - FINANCIAL INFORMATION

Item 1. Interim Financial Statements.

MEDICUS PHARMA LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

		March 31, 2025			December 31, 2024
		(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	3,982,430		$	4,164,323
Prepaid expenses and other current assets		1,105,345			1,213,984
Total current assets		5,087,775			5,378,307
Operating lease right-of-use assets		245,091			268,571
Deferred issuance costs		325,000			-
Total assets	$	5,657,866		$	5,646,878
Liabilities and Shareholder's equity
Current liabilities:
Accounts payable	$	2,035,364		$	1,284,612
Accrued expenses and other current liabilities		1,062,040			762,835
Related party payable		118,215			142,459
Operating lease liability, current		120,296			116,323
Total current liabilities		3,335,915			2,306,229
Operating lease liability, non-current		174,397			205,945
Total liabilities		3,510,312			2,512,174
Commitments and contingencies (Note 10)
Shareholders' equity
Common shares, no par value; unlimited shares authorized; 13,417,561 and 11,816,721 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively		32,908,702			30,518,195
Additional paid-in capital		3,245,163			1,520,412
Accumulated deficit		(34,006,311	)		(28,903,903	)
Total shareholders' equity		2,147,554			3,134,704
Total liabilities and shareholders' equity	$	5,657,866		$	5,646,878

The accompanying notes are an integral part of the unaudited condensed financial statements.

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MEDICUS PHARMA LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

		Three months ended March 31,
		2025			2024
Operating expenses:
General and administrative	$	3,120,060		$	1,385,981
Research and development		2,006,214			321,377
Total operating expenses		5,126,274			1,707,358
Loss from operations		(5,126,274	)		(1,707,358	)
Other income
Finance income		23,866			-
Total other income		23,866			-
Net loss and comprehensive loss for the year	$	(5,102,408	)	$	(1,707,358	)
Net loss per share attributable to common shareholders - basic and diluted	$	(0.42	)	$	(0.21	)
Weighted average number of common shares outstanding - basic and diluted		12,240,437			8,076,673

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

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MEDICUS PHARMA LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)

		Common shares						Additional			Accumulated
		Shares			Amount			paid-in capital			deficit			Total
Balance as of December 31, 2024		11,816,721		$	30,518,195		$	1,520,412		$	(28,903,903	)	$	3,134,704
Issuance of common shares and warrants in connection with Regulation A, net of issuance costs of $483,020		1,490,000			2,076,507			1,612,474			-			3,688,981
Issuance of common shares in connection with SEPA offering costs		105,840			300,000			-			-			300,000
Issuance of common shares upon exercise of stock warrants		5,000			14,000			-			-			14,000
Stock-based compensation		-			-			112,277			-			112,277
Net loss and comprehensive loss for the period		-			-			-			(5,102,408	)		(5,102,408	)
Balance as of March 31, 2025		13,417,561		$	32,908,702		$	3,245,163		$	(34,006,311	)	$	2,147,554
		Common shares						Additional			Accumulated
		Shares			Amount			paid-in capital			deficit			Total
Balance as of December 31, 2023		8,076,673		$	18,761,250		$	98,585		$	(17,748,387	)	$	1,111,448
Stock-based compensation		-			-			35,953			-			35,953
Net loss and comprehensive loss for the period		-			-			-			(1,707,358	)		(1,707,358	)
Balance as of March 31, 2024		8,076,673		$	18,761,250		$	134,538		$	(19,455,745	)	$	(559,957	)

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

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MEDICUS PHARMA LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

		Three months ended March 31,
		2025			2024
Cash flows from operating activities:
Net loss for the period	$	(5,102,408	)	$	(1,707,358	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		112,277			35,953
Change in operating lease right-of-use assets		23,480			30,945
Changes in operating assets and liabilities:
Prepaid expenses		122,639			61,643
Accounts payable		655,634			364,275
Accrued expenses and other current liabilities		299,203			(9,657	)
Operating lease liability		(27,575	)		-
Related party payable		(24,244	)		47,266
Net cash used in operating activities		(3,940,994	)		(1,176,933	)
Cash flows from financing activities:
Net proceeds from issuance of common shares and warrants in connection with Regulation A		3,784,101			-
Cash paid for financing costs in connection with SEPA		(25,000	)		-
Net cash provided by financing activities		3,759,101			-
Net decrease in cash and cash equivalents during the period		(181,893	)		(1,176,933	)
Cash and cash equivalents, beginning of the year		4,164,323			1,719,338
Cash and cash equivalents, end of the year	$	3,982,430		$	542,405
Supplemental disclosure of non-cash investing and financing activities
Right-of-use assets obtained in exchange for lease liabilities	$	-		$	356,805
Receivable for proceeds of warrant exercises	$	14,000		$	-
Issuance costs included in accounts payable	$	95,120		$	-
Deferred issuance costs on issued shares related to SEPA agreement	$	300,000		$

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

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MEDICUS PHARMA LTD.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

 

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

This Item and other sections of this Quarterly Report on Form 10-Q contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties that impact our business. In particular, we encourage you to review the risks and uncertainties described in "Risk Factors" in Part I, Item 1A in the 2024 Annual Report and Part II, Item 1A of this Quarterly Report on Form 10-Q. These risks and uncertainties could cause actual results to differ materially from those projected or implied by our forward-looking statements contained in this Quarterly Report on Form 10-Q. These forward-looking statements are made as of the date of this Form 10-Q, and we do not intend, and do not assume any obligation, to update these forward-looking statements, except as required by law. All amounts are expressed in United States dollars unless otherwise stated.

Company Overview

The Company is a clinical stage, multi-strategy holding company focused on investing in and accelerating novel life sciences and bio-technology companies through FDA approved clinical trials. Utilizing a thesis driven collaborative process, the Company attempts to acquire and advance clinical stage assets through clinical development and commercialization. The Company looks into opportunities across all therapeutics areas where an unmet need exists for improved patient safety and efficacy. The Company is actively exploring to expand its drug development pipeline through qualified and accretive acquisitions and partnerships.

The Company has two wholly owned subsidiaries, Medicus Pharma Inc., a company incorporated in the state of Delaware on October 12, 2023, and SkinJect, Inc. ("SkinJect").

SkinJect is focused on the development of a novel drug delivery system using dissolvable microneedle arrays ("MNAs") for the treatment of certain skin cancers. To that end, the Company licensed certain technology co-developed by the University of Pittsburgh and Carnegie Mellon University. The Company established and validated fabrication processes relative to the MNAs, completed pre-clinical testing and secured approval to proceed with clinical trials activity from the Food and Drug Administration.

The Company then completed a dose escalation study ("'SKNJCT-001") that assessed the safety of MNA patch in patients with BCC. There were no serious adverse events nor any demonstrated alterations in any clinical measurements during the trial. The conclusion of the study was that MNA patch was well tolerated with no evidence of dose limiting toxicity.

The Company had initiated a clinical study ("SKNJCT-002") aimed at evaluating clinical efficacy. The first part involved the enrollment of 15 healthy volunteers and was designed to study the penetration of placebo-containing Dynamic Mechanical Allodynia ("DMA") patches at five different anatomic locations. After the first seven health volunteers were enrolled, due to the variability of array application observed by the investigator, SkinJect made the decision to pause the trial. The study was never resumed, and it was ultimately closed without further enrollment. There were no adverse events reported in the enrolled subjects.

In January 2024, the Company submitted the clinical design for a randomized, double-blinded, placebo-controlled ("P-MNA"), multi-center study ("SKNJCT-003") enrolling up to 60 subjects presenting with nodular type BCC of the skin. The FDA responded in March 2024 and requested additional clinical information. A final protocol was submitted to the FDA in July 2024, which included the information requested by the FDA, along with updated CMC, stability and sterility data. On July 31, 2024, the FDA responded to the latest submission and requested certain additional information and clarification. The Company has responded to the FDA on August 2, 2024. On December 2 13, 2024, the Company announced that the phase 2 clinical study (SKNJCT-003) was underway in nine clinical sites in the United States and that it had already randomized more than 35% of the 60 patients expected to be enrolled in the study.  As of the date of this MD&A, the Company has activated nine clinical sites in the United States and has randomized more than 50% of the 90 patients expected to be enrolled in the study.

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The Share Consolidation

On June 25, 2024, the Company's shareholders approved an amendment to the Company's articles of incorporation to provide for the Share Consolidation, or reverse stock split, of the Company's issued and outstanding common shares at such a consolidation ratio to be determined by the Company's board of directors in its sole discretion, to permit the Company to satisfy all conditions and necessary regulatory approvals to list the common shares on a U.S. national securities exchange as the Company's board of directors may determine in its sole direction. Our board of directors approved the Share Consolidation on October 15, 2024, and the Share Consolidation was completed by the Company on October 28, 2024, at the ratio of 1-for-2.

After the completion of the Share Consolidation, the number of the Company's issued and outstanding common shares decreased from 21,693,560 to 10,846,721. The par value of the Company's common shares remains unchanged at $nil per share after the Share Consolidation. The Share Consolidation was completed in preparation for a U.S. listing.

Initial Public Offering

On November 14, 2024, the Company completed the sale of 970,000 Units, with each Unit consisting of one common share and one warrant ("Public Warrant") to purchase one common share at the price of $4.125 per Unit. In addition, the underwriters exercised an option to purchase 145,500 Public Warrants (the "Overallotment Warrants") at a price of $0.01 per warrant.

Total gross proceeds from the IPO were $4,002,705, including the proceeds from the Overallotment Warrants. The Company incurred total issuance costs of $2,128,014, including underwriter fees, and legal and other professional fees incurred directly related to the issuance.

Regulation A Offering

On March 10, 2025, the Company completed an offering of 1,490,000 units at $2.80 per unit pursuant to Tier II of Regulation A under the Securities Act, with each unit consisting of one common share and one warrant ("Regulation A Warrant") to purchase one common share. The Regulation A Warrants have an exercise price of $2.80 and expire on March 10, 2030. The aggregate gross proceeds to the Company from the Offering were $4,172,000. As of March 31, 2025, 5,000 of the 1,490,000 Regulation A Warrants have been exercised for cash, for proceeds to the Company of $14,000 (the "Regulation A financing"). 

Results of Operations

The following table outlines our statements of loss and comprehensive loss for the three months ended March 31, 2025 and 2024:

		Three months ended March 31,
		2025			2024
		$			$			Change
General and administrative		3,120,060			1,385,981			1,734,079
Research and development		2,006,214			321,377			1,684,837
Total operating expenses		5,126,274			1,707,358			3,418,916
Loss from operations		(5,126,274	)		(1,707,358	)		(3,418,916	)
Other income :
Finance income, net		23,866			-			23,866
Total other income		23,866			-			23,866
Net loss and comprehensive loss		(5,102,408	)		(1,707,738	)		(3,395,050	)
Net loss per common share (basic and diluted)		(0.42	)		(0.21	)

 

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General and administrative

General and administrative expenses for the three months ended March 31, 2025 and 2024 are comprised of:

		Three months ended March 31,
		2025			2024
		$			$			Change
Professional fees		1,360,680			438,302			922,378
Consulting fees		284,946			455,814			(170,868	)
Salaries, wages and benefits		357,517			201,016			156,501
General office, insurance and administration expenditures		539,696			177,810			361,886
Business development and investor relations		464,944			77,086			387,858
Stock-based compensation		112,277			35,953			76,324
		3,120,060			1,385,981			1,734,079

Professional fees increased by $922,378 for the three months ended March 31, 2025, compared to the equivalent period in the prior year. The increase was primarily due to increases in legal and accounting fees related to the Company's operations. Professional fees include fees incurred for legal and accounting services that fluctuate from period to period based on the nature of the transactions the Company undertakes. The primary reason for the increase is due to increased regulatory requirements following the Company's initial public offering and transition to U.S. domestic issuer status.

Consulting fees decreased by $170,968 for the three months ended March 31, 2025, compared to the equivalent period in the prior year. Consulting fees include fees paid to individuals and professional firms who provide advisory services to the Company and fluctuate from period to period based on the nature of the transactions the Company undertakes. The primary reason for the increase is due to decreased business activity in the current year compared to the prior year when the Company was focused on completing the initial public offering.

Salaries, wages and benefits increased by $156,501 for the three months ended March 31, 2025, compared to the equivalent period in the prior year. The increase was primarily due to an increase in headcount from the previous year.

General office, insurance and administration expenditures increased by $361,886 for the three months ended March 31, 2025, compared to the equivalent period in the prior year. The increase was primarily due to the Company now incurring more significant insurance related expenses and general office related expenditures in support of expanded operations.

Business development and investor relations expenses increased by $387,858 for the three months ended March 31, 2025, compared to the equivalent period in the prior year. Business development and investor relations expenses for the three months ended March 31, 2025, were primarily incurred as a result of increased marketing efforts in the current year as a result of the Company being a listed public entity on the Nasdaq.

Stock-based compensation increased by $76,324 for the three months ended March 31, 2025, compared to the equivalent period in the prior year. Stock-based compensation changes based on the variability in the number of options granted, vesting periods of the options and the grant date fair value. During the three months ended March 31, 2025, the stock-based compensation expense relates to the vesting of share options granted during the second half of 2024.

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There is an expected increase in general and administrative expenses associated with being a public company, including costs related to accounting, audit, legal, regulatory, and tax-related services associated with maintaining compliance with applicable securities law requirements; additional director and officer insurance costs; and investor and public relations costs.

Research and development ("R&D")

Research and development ("R&D") costs include costs incurred under agreements with third-party contract research organizations, contract manufacturing organizations and other third parties that conduct preclinical and clinical activities on our behalf and manufacture our product candidates, and other costs associated with our R&D programs, including laboratory materials and supplies.

R&D expenses increased by $1,684,837 for the three months ended March 31, 2025, compared to the equivalent periods in the prior year. This increase is primarily due to costs incurred related to SKNJCT-003 which had minimal activity during the three months ended March 31, 2024.

As of March 20, 2025, the Company has commenced activating its clinical trial sites and has randomized more than 50% of the 60 patients expected to be enrolled in the study. Subsequent to March 31, 2025, the Company announced on April 21, 2025 that the Institutional Review Board approved the increase in the number of patients in the study from 60 to 90, that the clinical study will expand from the nine clinical sites in the United States to include an additional site in the United States and two clinical trial sites in Europe and that the Company has randomized more than 45 participants in the study.

We expect our R&D expenses to increase substantially for the foreseeable future as we continue with the SKNJCT-003 study and trials.

The principal risks related to the Company's future performance are that the trials are unsuccessful, the Company does not receive FDA approval to proceed with the next stage of its research and development, or the Company is unsuccessful in obtaining future funding needed to continue its research and development. These are customary risks for a development stage pharmaceutical Company and are less acute than for a Company with a less advanced product.  Nevertheless, there can be no assurance that the Company will be able to complete its trials of the MNA, that the trials will be successful, or that the product will ultimately reach commercialization.

Other income:

Finance income, net, was $23,866 and $0 for the three months ending March 31, 2025 and 2024, respectively.  Finance income for the three months ended March 31, 2025 relates to interest income earned on short-term money market investments.

Liquidity and Capital Resources

We are a clinical stage development company and we currently do not earn any revenues from our preclinical programs and are therefore considered to be in the R&D stage. As required, the Company will continue to finance its operations through the sale of equity or pursue non-dilutive funding sources available to the Company in the future. The continuation of our R&D activities is dependent on our ability to obtain financing.

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The financial statements and this Management's Discussion and Analysis of Financial Condition and Results of Operations (this "MD&A") have been prepared on the basis of accounting principles applicable to a going concern, which assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations.

The Company expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. In addition to the SEPA (as defined below), management believes that the Company has access to additional capital resources through public and/or private equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements. However, if the Company is unable to secure additional capital, it may be required to take additional measures to reduce costs in order to conserve its cash in amounts sufficient to sustain operations and meet its obligations. These measures could cause significant delays or entirely prevent the Company's continued efforts to commercialize its current or future products, which are critical to the realization of its business plan and the future operations of the Company. This uncertainty, along with the Company's history of losses, indicates that there is substantial doubt about the Company's ability to continue as a going concern within one year after the date that the financial statements are issued. The financial statements and this MD&A do not include any adjustments to the amounts and classification of assets and liabilities that would be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.

As of March 31, 2025, the Company had cash and cash equivalents of $3,982,430 compared to cash and cash equivalents of $4,164,323 as of December 31, 2024. During the three months ended March 31, 2025, the Company received net proceeds of $3,784,101 from the issuance of common shares and warrants in connection with the Regulation A Offering. As of March 31, 2025, the Company has an accumulated deficit of $34,006,311 and net loss and comprehensive loss of $5,102,408 for the three months ended March 31, 2025.  For the three months ended March 31, 2024 the Company had net loss and comprehensive loss of $1,707,358. The Company has a working capital surplus of $1,751,860 as of March 31, 2025.

On March 10, 2025, the Company closed the Regulation A Offering of 1,490,000 Regulation A Offering Units, with each Regulation A Offering Units consisting of one common share and one Regulation A Warrant. Total gross proceeds from the Regulation A Offering were $4,172,000. As of March 31, 2025, 5,000 of the 1,490,000 Regulation A Warrants have been exercised for cash, for proceeds to the Company of $14,000. 

The Company does not expect to generate positive cash flow from operations for the foreseeable future due to additional R&D expenses, including expenses related to drug discovery, preclinical testing, clinical trials, chemistry, manufacturing and controls and operating expenses associated with supporting these activities. It is expected that negative cash flow from operations will continue until such time, if ever, that we receive regulatory approval to commercialize any of our products under development and/or we receive royalty or milestone revenue from any such products that exceeds our expenses.

Standby Equity Purchase Agreement

The Company has entered into a Standby Equity Purchase Agreement dated February 10, 2025 (the "SEPA") with YA II PN, LTD (the "Investor"), an investment fund managed by Yorkville Advisors Global, LP. Pursuant to the SEPA, the Company has the option, at its sole discretion, to sell up to $15,000,000 of the Company's common shares to the Investor at any time during the 36-months following the date of the SEPA.

The Investor's obligation to purchase the common shares is subject to a number of conditions, including that the Company file a registration statement with the SEC registering the resale of the common shares issuable thereunder, and that the registration statement is declared effective by the SEC.

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The total number of common shares issuable under the terms of the SEPA is limited to a number equivalent to 19.99% of the outstanding common shares, as of the date of the SEPA unless certain pricing conditions are met, which could have the effect of limiting the total proceeds made available to the Company under the SEPA. The issuance of common shares under the SEPA is subject to further limitations, including that the common shares beneficially owned by the Investor and its affiliates at any one time will not exceed 4.99% of the then-outstanding common shares.

Common shares issued and sold to the Investor under the SEPA will be priced at 97% of the market price (as defined in the SEPA) of the common shares during a specified three-day pricing period. The Company reserves the right to set a minimum acceptable price for the common share issuances.

Cash flows

		For the three months ended March 31
		2025			2024
		$			$			Change
Cash used in operating activities		(3,940,994	)		(1,176,933	)		(2,764,061	)
Cash provided by financing activities		3,759,101			-			3,759,101
Net change in cash during the period		(181,893	)		(1,176,933	)		995,040
Cash, beginning of the period		4,164,323			1,719,338			2,444,985
Cash, end of the period		3,982,430			542,405			3,440,025

Cash flows used in operating activities

Cash flows used in operating activities for the three months ended March 31, 2025 were $3,940,994 compared to cash flows used in operating activities of $1,176,933 for the three months ended March 31, 2024. The increase is primarily due to increased spending on research and development activities for our SKNJCT-003 study and trials and increased general and administrative expenses related to our recent initial public offering and resulting U.S. reporting obligations.

Cash flows provided by financing activities

Cash flows provide by financing activities for the three months ended March 31, 2025, were $3,759,101 due to proceeds from issuance of common shares and warrants, net of offering costs from the Regulation A Offering.  The Company did not have any financing activities for the three months ended March 31, 2024.

Contractual Obligations

We have no significant contractual arrangements other than those noted in our financial statements.

Off-Balance Sheet Arrangements

As of March 31, 2025, we have not entered into any off-balance sheet arrangements.

Critical Accounting Policies

Critical Accounting Policies and Estimates

We periodically review our financial reporting and disclosure practices and accounting policies to ensure that they provide accurate and transparent information relative to the current economic and business environment. As part of this process, we have reviewed our selection, application and communication of critical accounting policies and financial disclosures. Management has discussed the development and selection of the critical accounting policies with our audit committee, and our audit committee has reviewed the disclosure relating to critical accounting policies in this MD&A.

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Significant accounting judgments and estimates

Management's assessment of our ability to continue as a going concern involves making a judgment, at a particular point in time, about inherently uncertain future outcomes and events or conditions. Please see the "Liquidity and Capital Resources" section in this document for a discussion of the factors considered by management in arriving at its assessment.

Other important accounting policies and estimates made by management are the assumptions used in determining the valuation of stock-based compensation.

Research and development

All research and development costs are expensed as incurred. Research and development costs consist primarily of salaries, employee benefits, costs associated with preclinical studies and clinical trials (including amounts paid to clinical research organizations and other professional services). Payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received.

The Company records accruals for estimated research and development costs, comprising payments for work performed by third party contractors, laboratories, participating clinical trial sites, and others. Some of these contractors bill monthly based on actual services performed, while others bill periodically based upon achieving certain contractual milestones. For the latter, the Company accrues the expenses as goods or services are used or rendered. Clinical trial site costs related to patient enrollment are accrued as patients enter and progress through the trial. Upfront costs, such as costs associated with setting up clinical trial sites for participation in the trials, are expensed immediately once incurred as research and development expenses.

Stock-based compensation

The Company expenses stock-based compensation to employees and non-employees over the requisite service period based on the estimated grant-date fair value of the awards. The Company records the expense for stock-based compensation awards subject to vesting over the requisite service period using an estimate of the number of options that will eventually vest. The Company estimates the fair value of stock option grants and shares purchasable under the Company's Equity Incentive Plan (the "Plan") using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management's best estimates and involve inherent uncertainties and the application of management's judgment. The Company accounts for forfeitures as they occur. All stock-based compensation costs are recorded in the statements of operations and comprehensive loss based upon the underlying employees or non-employee's roles within the Company.

Updated share information

As of March 31, 2025, we had 13,417,561 Common Shares issued and outstanding. In addition, there were 1,185,000 Common Shares issuable upon the exercise of outstanding stock and 2,603,260 Common Shares issuable upon the exercise of two outstanding classes of warrants.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a smaller reporting company, we are not required to provide the information required by this Item.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Report, is recorded, processed, summarized, and reported within the time period specified in the SEC's rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our current chief executive officer and chief financial officer (our "Certifying Officers"), the effectiveness of our disclosure controls and procedures as of March 31, 2025, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of March 31, 2025, our disclosure controls and procedures were not effective, because of certain material weaknesses in our internal control over financial reporting which were identified during the quarter ended March 31, 2025, as further described below.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

During the quarter ended March 31, 2025, in connection with the preparation of our consolidated financial statements for the years ended December 31, 2024 and 2023, we identified the following material weaknesses in our internal control over financial reporting: (i) lack of degree of precision in the review of materials used to record transactions in accordance with US GAAP, and (ii) lack of formalized or documented policies related to the overall information technology ("IT") system environment, including IT security and cybersecurity, centrally managed security patches and antivirus/malware protection, and user access.

Management is committed to implementing changes to our internal control over financial reporting to ensure that the control deficiencies that contributed to the material weaknesses are remediated. To address our material weaknesses, we plan to implement measures to improve our internal control over financial reporting to remediate any control deficiencies. These measures include (i) designing and implementing procedures to improve the precision and quality in the review of materials used in financial reporting, and (ii) designing and implementing policies related to our overall IT system environment.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

There is no material litigation, arbitration or governmental proceeding currently pending against us or any members of our management team in their capacity as such, and we and the members of our management team have not been subject to any such proceeding in the 12 months preceding the date hereof.

Item 1A. Risk Factors

Factors that could cause our actual results to differ materially from those in this Quarterly Report on Form 10-Q include the risk factors described in the Company's 2024 Annual Report . Any of these risk factors could result in a significant or material adverse effect on the Company's business, financial condition and/or results of operations. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factors disclosed in the 2024 Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

As previously disclosed, on February 10, 2025, the Company entered into the SEPA with Yorkville. As consideration for Yorkville's commitment to purchase the common shares pursuant the SEPA, the Company paid Yorkville a structuring fee in the amount of $25,000 and issued to Yorkville 105,840 common shares, which common shares were issued pursuant to the exemption provided by Section 4(a)(2) of the Securities Act.

As previously disclosed, on March 10, 2025, the Company completed an offering of 1,490,000 units, each unit consisting of one common share and one warrant to purchase one common share at an exercise price of $2.80 with an expiration date of March 10, 2030 (each a "Regulation A Warrant") pursuant to Tier II of Regulation A under the Securities Act ("Regulation A"). The Company issued 5,000 common shares upon the exercise of 5,000 Regulation A Warrants during the period covered by this Form 10-Q, pursuant to Regulation A. There has been no material change in the use of proceeds described in the final offering circular filed with the SEC on March 7, 2025.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

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No.		Description of Exhibit
10.1		Standby Equity Purchase Agreement, dated as of February 10, 2025, by and between Medicus Pharma Ltd. and YA II PN, LTD. (incorporated by reference from Exhibit 1.1 to the Registrant's Current Report on Form 8-K, filed with the SEC on February 11, 2025)
10.2		Common Share Purchase Warrant (incorporated by reference from Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed with the SEC on March 11, 2025)
10.3		Warrant Agency Agreement, dated as of March 10, 2025, by and between Medicus Pharma Ltd. and Odyssey Transfer and Trust Company, as warrant agent (incorporated by reference from Exhibit 4.3 to the Registrant's Current Report on Form 8-K, filed with the SEC on March 11, 2025)
31.1*		Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

 

*	Filed herewith.

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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.

	MEDICUS PHARMA LTD.
Date: May 12, 2025	By:	/s/ Raza Bokhari
	Name:	Raza Bokhari
	Title:	Executive Chairman and Chief Executive Officer
		(Principal Executive Officer)
Date: May 12, 2025	By:	/ James Quinlan
	Name:	James Quinlan
	Title:	Chief Financial Officer
		(Principal Financial and Accounting Officer)