Item
1. Financial Statements.
DelMar
Pharmaceuticals, Inc.
Condensed
Consolidated Interim Financial Statements
(Unaudited)
For
the nine months ended March 31, 2020
(expressed
in US dollars unless otherwise noted)
DelMar Pharmaceuticals, Inc.
Condensed Consolidated Interim Balance Sheets
(expressed in US dollars unless otherwise noted)
|
|
Note
|
|
March 31,
2020
$
|
|
|
June 30,
2019
$
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
4,973,378
|
|
|
|
3,718,758
|
|
Prepaid expenses and deposits
|
|
|
|
|
114,865
|
|
|
|
280,248
|
|
Interest, taxes and other receivables
|
|
|
|
|
10,339
|
|
|
|
26,187
|
|
|
|
|
|
|
5,098,582
|
|
|
|
4,025,193
|
|
Intangible assets - net
|
|
|
|
|
3,659
|
|
|
|
12,062
|
|
Total assets
|
|
|
|
|
5,102,241
|
|
|
|
4,037,255
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
|
|
1,085,571
|
|
|
|
1,744,517
|
|
Related party payables
|
|
3
|
|
|
296,184
|
|
|
|
325,208
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
|
1,381,755
|
|
|
|
2,069,725
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock
|
|
|
|
|
|
|
|
|
|
|
Authorized
|
|
|
|
|
|
|
|
|
|
|
5,000,000 shares, $0.001 par value
|
|
|
|
|
|
|
|
|
|
|
Issued and outstanding
|
|
|
|
|
|
|
|
|
|
|
278,530 Series A shares at March 31, 2020 (June 30, 2019 – 278,530)
|
|
3,5
|
|
|
278,530
|
|
|
|
278,530
|
|
648,613 Series B shares at March 31, 2020 (June 30, 2019 – 673,613)
|
|
5
|
|
|
4,524,897
|
|
|
|
4,699,304
|
|
1 special voting share at March 31, 2020 (June 30, 2019 – 1)
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
|
|
|
|
|
|
|
Authorized
|
|
|
|
|
|
|
|
|
|
|
95,000,000 shares at March 31, 2020 and June 30, 2019, $0.001 par value
|
|
|
|
|
|
|
|
|
|
|
11,427,132 issued at March 31, 2020 (June 30, 2019 – 3,839,358)
|
|
5
|
|
|
11,427
|
|
|
|
3,839
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
5
|
|
|
56,395,453
|
|
|
|
50,954,741
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
|
|
5
|
|
|
8,382,588
|
|
|
|
6,588,283
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated deficit
|
|
|
|
|
(65,893,587
|
)
|
|
|
(60,578,345
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income
|
|
|
|
|
21,178
|
|
|
|
21,178
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity
|
|
|
|
|
3,720,486
|
|
|
|
1,967,530
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity
|
|
|
|
|
5,102,241
|
|
|
|
4,037,255
|
|
|
|
|
|
|
|
|
|
|
|
|
Nature of operations, corporate history, and going concern (note 1)
|
|
|
|
|
|
|
|
|
|
|
Subsequent events (note 8)
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed
consolidated interim financial statements.
DelMar Pharmaceuticals, Inc.
Condensed Consolidated Interim Statements of Operations
(Unaudited)
(expressed in US dollars unless otherwise noted)
|
|
Note
|
|
Three months
ended
March 31,
2020
$
|
|
|
Three months
ended
March 31,
2019
$
|
|
|
Nine months ended
March 31,
2020
$
|
|
|
Nine months ended
March 31,
2019
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
5
|
|
|
898,720
|
|
|
|
735,844
|
|
|
|
2,332,388
|
|
|
|
2,702,213
|
|
General and administrative
|
|
5
|
|
|
1,077,642
|
|
|
|
935,530
|
|
|
|
3,045,017
|
|
|
|
2,796,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,976,362
|
|
|
|
1,671,374
|
|
|
|
5,377,405
|
|
|
|
5,499,097
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (income) loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of derivative liability
|
|
4
|
|
|
-
|
|
|
|
189
|
|
|
|
-
|
|
|
|
(852
|
)
|
Foreign exchange (gain) loss
|
|
|
|
|
(2,416
|
)
|
|
|
5,819
|
|
|
|
(536
|
)
|
|
|
16,754
|
|
Interest income
|
|
|
|
|
(16,964
|
)
|
|
|
(13,397
|
)
|
|
|
(73,965
|
)
|
|
|
(49,513
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(19,380
|
)
|
|
|
(7,389
|
)
|
|
|
(74,501
|
)
|
|
|
(33,611
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period
|
|
|
|
|
1,956,982
|
|
|
|
1,663,985
|
|
|
|
5,302,904
|
|
|
|
5,465,486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Computation of basic loss per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period
|
|
|
|
|
1,956,982
|
|
|
|
1,663,985
|
|
|
|
5,302,904
|
|
|
|
5,465,486
|
|
Series B Preferred stock dividend
|
|
5
|
|
|
1,473
|
|
|
|
23,202
|
|
|
|
6,071
|
|
|
|
75,477
|
|
Net loss for the period attributable to common stockholders
|
|
|
|
|
1,958,455
|
|
|
|
1,687,187
|
|
|
|
5,308,975
|
|
|
|
5,540,963
|
|
Basic and fully diluted loss per share
|
|
|
|
|
0.17
|
|
|
|
0.67
|
|
|
|
0.52
|
|
|
|
2.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and fully diluted number of shares
|
|
|
|
|
11,417,456
|
|
|
|
2,518,452
|
|
|
|
10,116,541
|
|
|
|
2,444,065
|
|
The accompanying notes are an integral part of these condensed
consolidated interim financial statements.
DelMar Pharmaceuticals, Inc.
Condensed Consolidated Interim Statements of Stockholders’
Equity
(Unaudited)
(expressed in US dollars unless otherwise noted)
For
the three and nine months ended March 31, 2020
|
|
Number
of
shares
|
|
|
Common
stock
$
|
|
|
Additional
paid-in
capital
$
|
|
|
Accumulated
other
comprehensive
income
$
|
|
|
Preferred stock
$
|
|
|
Warrants
$
|
|
|
Accumulated
deficit
$
|
|
|
Stockholders’
equity
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - June 30, 2019
|
|
|
3,839,358
|
|
|
|
3,839
|
|
|
|
50,954,741
|
|
|
|
21,178
|
|
|
|
4,977,834
|
|
|
|
6,588,283
|
|
|
|
(60,578,345
|
)
|
|
|
1,967,530
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares and warrants - net of issue costs
|
|
|
4,895,000
|
|
|
|
4,895
|
|
|
|
2,489,251
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,088,820
|
|
|
|
-
|
|
|
|
6,582,966
|
|
Exercise of warrants for cash
|
|
|
2,655,000
|
|
|
|
2,655
|
|
|
|
2,421,830
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,397,935
|
)
|
|
|
-
|
|
|
|
26,550
|
|
Conversion of Series B preferred stock to common stock
|
|
|
6,250
|
|
|
|
6
|
|
|
|
174,401
|
|
|
|
-
|
|
|
|
(174,407
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Shares issued for services
|
|
|
6,925
|
|
|
|
7
|
|
|
|
4,836
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,843
|
|
Stock option expense
|
|
|
-
|
|
|
|
-
|
|
|
|
50,985
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
50,985
|
|
Series A preferred cash dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,089
|
)
|
|
|
(2,089
|
)
|
Series B preferred stock dividend
|
|
|
3,700
|
|
|
|
4
|
|
|
|
2,042
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,046
|
)
|
|
|
-
|
|
Loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,605,871
|
)
|
|
|
(1,605,871
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - September 30,
2019
|
|
|
11,406,233
|
|
|
|
11,406
|
|
|
|
56,098,086
|
|
|
|
21,178
|
|
|
|
4,803,427
|
|
|
|
8,279,168
|
|
|
|
(62,188,351
|
)
|
|
|
7,024,914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued for services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
34,672
|
|
|
|
-
|
|
|
|
34,672
|
|
Shares issued for services
|
|
|
4,747
|
|
|
|
5
|
|
|
|
3,339
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,344
|
|
Stock option expense
|
|
|
-
|
|
|
|
-
|
|
|
|
159,852
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
159,852
|
|
Series A preferred cash dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,089
|
)
|
|
|
(2,089
|
)
|
Series B preferred stock dividend
|
|
|
3,700
|
|
|
|
4
|
|
|
|
2,548
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,552
|
)
|
|
|
-
|
|
Loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,740,051
|
)
|
|
|
(1,740,051
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2019
|
|
|
11,414,680
|
|
|
|
11,415
|
|
|
|
56,263,825
|
|
|
|
21,178
|
|
|
|
4,803,427
|
|
|
|
8,313,840
|
|
|
|
(63,933,043
|
)
|
|
|
5,480,642
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued for services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
98,625
|
|
|
|
-
|
|
|
|
98,625
|
|
Shares issued for services
|
|
|
8,752
|
|
|
|
8
|
|
|
|
4,091
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,099
|
|
Warrants expired
|
|
|
-
|
|
|
|
-
|
|
|
|
29,877
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(29,877
|
)
|
|
|
-
|
|
|
|
-
|
|
Stock option expense
|
|
|
-
|
|
|
|
-
|
|
|
|
96,191
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
96,191
|
|
Series A preferred cash dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,089
|
)
|
|
|
(2,089
|
)
|
Series B preferred stock dividend
|
|
|
3,700
|
|
|
|
4
|
|
|
|
1,469
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,473
|
)
|
|
|
-
|
|
Loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,956,982
|
)
|
|
|
(1,956,982
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - March 31, 2020
|
|
|
11,427,132
|
|
|
|
11,427
|
|
|
|
56,395,453
|
|
|
|
21,178
|
|
|
|
4,803,427
|
|
|
|
8,382,588
|
|
|
|
(65,893,587
|
)
|
|
|
3,720,486
|
|
The accompanying notes are an integral part of these condensed
consolidated interim financial statements.
DelMar Pharmaceuticals, Inc.
Condensed Consolidated Interim Statements of Stockholders’
Equity …continued
(Unaudited)
(expressed in US dollars unless otherwise noted)
For
the three and nine months ended March 31, 2019
|
|
Number
of
shares
|
|
|
Common
stock
$
|
|
|
Additional
paid-in
capital
$
|
|
|
Accumulated
other
comprehensive
income
$
|
|
|
Preferred stock
$
|
|
|
Warrants
$
|
|
|
Accumulated
deficit
$
|
|
|
Stockholders’
equity
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - June 30, 2018
|
|
|
2,296,667
|
|
|
|
2,297
|
|
|
|
43,198,193
|
|
|
|
21,178
|
|
|
|
6,425,410
|
|
|
|
8,229,482
|
|
|
|
(52,441,337
|
)
|
|
|
5,435,223
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued for services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
30,661
|
|
|
|
-
|
|
|
|
30,661
|
|
Shares issued for services
|
|
|
706
|
|
|
|
1
|
|
|
|
4,138
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,139
|
|
Performance stock unit expense
|
|
|
-
|
|
|
|
-
|
|
|
|
61,514
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
61,514
|
|
Stock option expense
|
|
|
-
|
|
|
|
-
|
|
|
|
132,902
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
132,902
|
|
Series A preferred cash dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,089
|
)
|
|
|
(2,089
|
)
|
Series B preferred stock dividend
|
|
|
4,960
|
|
|
|
4
|
|
|
|
36,081
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(36,085
|
)
|
|
|
-
|
|
Loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,991,804
|
)
|
|
|
(1,991,804
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - September 30, 2018
|
|
|
2,302,333
|
|
|
|
2,302
|
|
|
|
43,432,828
|
|
|
|
21,178
|
|
|
|
6,425,410
|
|
|
|
8,260,143
|
|
|
|
(54,471,315
|
)
|
|
|
3,670,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise and exchange of warrants
|
|
|
296,667
|
|
|
|
297
|
|
|
|
2,936,881
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,210,697
|
)
|
|
|
-
|
|
|
|
726,481
|
|
Conversion of Series B preferred stock to common stock
|
|
|
10,000
|
|
|
|
10
|
|
|
|
279,041
|
|
|
|
-
|
|
|
|
(279,051
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Warrants issued for services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,859
|
)
|
|
|
-
|
|
|
|
(2,859
|
)
|
Shares issued for services
|
|
|
607
|
|
|
|
-
|
|
|
|
2,617
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,617
|
|
Performance stock unit expense
|
|
|
-
|
|
|
|
-
|
|
|
|
61,514
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
61,514
|
|
Stock option expense
|
|
|
-
|
|
|
|
-
|
|
|
|
122,751
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
122,751
|
|
Series A preferred cash dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,089
|
)
|
|
|
(2,089
|
)
|
Series B preferred stock dividend
|
|
|
4,735
|
|
|
|
5
|
|
|
|
16,185
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(16,190
|
)
|
|
|
-
|
|
Loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,809,697
|
)
|
|
|
(1,809,697
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2018
|
|
|
2,614,342
|
|
|
|
2,614
|
|
|
|
46,851,817
|
|
|
|
21,178
|
|
|
|
6,146,359
|
|
|
|
6,046,587
|
|
|
|
(56,299,291
|
)
|
|
|
2,769,264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise and exchange of warrants – issue costs
|
|
|
-
|
|
|
|
-
|
|
|
|
(16,186
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(16,186
|
)
|
Warrants issued for services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,732
|
|
|
|
-
|
|
|
|
8,732
|
|
Shares issued for services
|
|
|
956
|
|
|
|
1
|
|
|
|
3,512
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,513
|
|
Performance stock unit expense
|
|
|
-
|
|
|
|
-
|
|
|
|
60,177
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
60,177
|
|
Stock option expense
|
|
|
-
|
|
|
|
-
|
|
|
|
99,735
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
99,735
|
|
Series A preferred cash dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,089
|
)
|
|
|
(2,089
|
)
|
Series B preferred stock dividend
|
|
|
4,735
|
|
|
|
5
|
|
|
|
23,197
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(23,202
|
)
|
|
|
-
|
|
Loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,663,985
|
)
|
|
|
(1,663,985
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - March 31, 2019
|
|
|
2,620,033
|
|
|
|
2,620
|
|
|
|
47,022,252
|
|
|
|
21,178
|
|
|
|
6,146,359
|
|
|
|
6,055,319
|
|
|
|
(57,988,567
|
)
|
|
|
1,259,161
|
|
The accompanying notes are an integral part of these condensed
consolidated interim financial statements.
DelMar Pharmaceuticals, Inc.
Condensed Consolidated Interim Statements of Cash Flows
(Unaudited)
March 31, 2020
(expressed in US dollars unless otherwise noted)
|
|
|
|
Nine months ended March 31,
|
|
|
|
|
|
2020
|
|
|
2019
|
|
|
|
Note
|
|
$
|
|
|
$
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
Loss for the period
|
|
|
|
|
(5,302,904
|
)
|
|
|
(5,465,486
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
|
|
8,403
|
|
|
|
13,548
|
|
Change in fair value of derivative liability
|
|
4
|
|
|
-
|
|
|
|
(852
|
)
|
Warrants issued for services
|
|
|
|
|
133,297
|
|
|
|
36,534
|
|
Shares issued for services
|
|
|
|
|
12,286
|
|
|
|
10,269
|
|
Performance stock unit expense
|
|
|
|
|
-
|
|
|
|
183,205
|
|
Stock option expense
|
|
5
|
|
|
307,028
|
|
|
|
355,388
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and deposits
|
|
|
|
|
165,383
|
|
|
|
794,859
|
|
Interest, taxes and other receivables
|
|
|
|
|
15,848
|
|
|
|
30,433
|
|
Accounts payable and accrued liabilities
|
|
|
|
|
(658,946
|
)
|
|
|
(425,383
|
)
|
Related party payables
|
|
|
|
|
(29,024
|
)
|
|
|
(47,189
|
)
|
Net cash used in operating activities
|
|
|
|
|
(5,348,629
|
)
|
|
|
(4,514,674
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
Net proceeds from the issuance of shares and warrants
|
|
5
|
|
|
6,582,966
|
|
|
|
-
|
|
Net proceeds from the exercise of warrants
|
|
5
|
|
|
26,550
|
|
|
|
726,179
|
|
Series A preferred stock dividend
|
|
3
|
|
|
(6,267
|
)
|
|
|
(6,267
|
)
|
Deferred financing costs
|
|
|
|
|
-
|
|
|
|
(25,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing
activities
|
|
|
|
|
6,603,249
|
|
|
|
694,912
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
|
|
1,254,620
|
|
|
|
(3,819,762
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents - beginning of period
|
|
|
|
|
3,718,758
|
|
|
|
5,971,995
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents - end of period
|
|
|
|
|
4,973,378
|
|
|
|
2,152,233
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary information (note 7)
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed
consolidated interim financial statements.
DelMar Pharmaceuticals, Inc.
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
March 31, 2020
(expressed in US dollars unless otherwise noted)
|
1
|
Nature
of operations, corporate history, and going concern
|
Nature
of operations
DelMar
Pharmaceuticals, Inc. (the “Company”) is a clinical stage drug development company with a focus on the treatment of
solid tumor cancers. The Company is currently conducting two phase 2 clinical trials in the United States and China with its product
candidate, VAL-083, as a potential new treatment for glioblastoma multiforme, the most common and aggressive form of brain cancer.
Historical research indicates that VAL-083 is also active in other solid tumor cancers such as ovarian, lung, pediatric brain
cancer, as well as other solid tumors of the central nervous system. The Company may pursue opportunities in these cancers in
the future. In order to accelerate the Company’s development timelines, it leverages existing preclinical and clinical data
from a wide range of sources. The Company may seek marketing partnerships in order to potentially offset clinical costs
and to generate future royalty revenue from approved indications of its product candidate.
Corporate
history
The
Company is a Nevada corporation formed on June 24, 2009 under the name Berry Only, Inc. On January 25, 2013, the Company entered
into and closed an exchange agreement (the “Exchange Agreement”), with Del Mar Pharmaceuticals (BC) Ltd. (“Del
Mar (BC)”), 0959454 B.C. Ltd. (“Callco”), and 0959456 B.C. Ltd. (“Exchangeco”) and the security
holders of Del Mar (BC). Upon completion of the Exchange Agreement, Del Mar (BC) became a wholly-owned subsidiary of the Company
(the “Reverse Acquisition”).
DelMar
Pharmaceuticals, Inc. is the parent company of Del Mar (BC), a British Columbia, Canada corporation incorporated on April 6, 2010,
which is a clinical stage company with a focus on the development of drugs for the treatment of cancer. The Company is also the
parent company to Callco and Exchangeco which are British Columbia, Canada corporations. Callco and Exchangeco were formed to
facilitate the Reverse Acquisition.
References
to the Company refer to the Company and its wholly-owned subsidiaries, Del Mar (BC), Callco and Exchangeco.
Going
concern
These condensed
consolidated interim financial statements have been prepared on a going concern basis, which assumes that the Company will continue
its operations for the foreseeable future and contemplates the realization of assets and the settlement of liabilities in the
normal course of business.
For the nine months
ended March 31, 2020, the Company reported a loss of $5,302,904, and a negative cash flow from operations of $5,348,629. The Company
had an accumulated deficit of $65,893,587 and had cash and cash equivalents of $4,973,378 as of March 31, 2020. The Company is
in the development stage and has not generated any revenues to-date. The Company does not have the prospect of achieving revenues
until such time that its product candidate is commercialized, or partnered, which may not ever occur. In the near future, the Company
will require additional funding to maintain its clinical trials, research and development projects, and for general operations.
These circumstances indicate substantial doubt exists about the Company’s ability to continue as a going concern within one
year from the date of filing of these condensed consolidated financial statements.
DelMar Pharmaceuticals, Inc.
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
March 31, 2020
(expressed in US dollars unless otherwise noted)
Consequently,
management is pursuing various financing alternatives to fund the Company’s operations so it can continue as a going concern.
However, the coronavirus (“COVID-19”) pandemic has created significant economic uncertainty and volatility in the
credit and capital markets. Management plans to secure the necessary financing through the issue of new equity and/or the entering
into of strategic partnership arrangements but the ultimate impact of the COVID-19 pandemic on the Company’s ability
to raise additional capital is unknown and will depend on future developments, which are highly uncertain and cannot be predicted
with confidence, including the duration of the COVID-19 outbreak and any new information which may emerge concerning the severity
of the COVID-19 pandemic. The Company may not be able to raise sufficient additional capital
and may tailor its drug candidate development program based on the amount of funding the Company is able to raise in the future.
Nevertheless, there is no assurance that these initiatives will be successful.
These
financial statements do not give effect to any adjustments to the amounts and classification of assets and liabilities that may
be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.
|
2
|
Significant
accounting policies
|
Reverse
stock split
On
May 7, 2019, the Company filed a Certificate of Change with the Secretary of State of Nevada that effected a 1-for-10 (1:10) reverse
stock split of its common stock, par value $0.001 per share, which became effective on May 8, 2019. Pursuant to the Certificate
of Change, the Company’s authorized common stock was decreased in the same proportion as the split resulting in a decrease
from 70,000,000 authorized shares of common stock to 7,000,000 shares authorized. The par value of its common stock was unchanged
at $0.001 per share, post-split. All common shares, warrants, stock options, conversion ratios, and per share information in these
condensed consolidated interim financial statements give retroactive effect to the 1-for-10 reverse stock split. The Company’s
authorized and issued preferred stock was not affected by the split.
Amended
articles of incorporation
On
June 26, 2019, the Company amended its articles of incorporation to increase the number of authorized shares of common stock from
7,000,000 to 95,000,000 shares.
Basis
of presentation
The
condensed consolidated interim financial statements of the Company have been prepared in accordance with United States Generally
Accepted Accounting Principles (“U.S. GAAP”) and are presented in United States dollars. The functional currency of
the Company and each of its subsidiaries is the United States dollar.
The
accompanying condensed consolidated interim financial statements include the accounts of the Company and its wholly-owned subsidiaries,
Del Mar BC, Callco, and Exchangeco. All intercompany balances and transactions have been eliminated in consolidation.
The
principal accounting policies applied in the preparation of these condensed consolidated interim financial statements are set
out below and have been consistently applied to all periods presented.
DelMar Pharmaceuticals, Inc.
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
March 31, 2020
(expressed in US dollars unless otherwise noted)
Unaudited
interim financial data
The
accompanying unaudited condensed consolidated interim financial statements have been prepared in accordance with the rules and
regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they
do not include all of the information and the notes required by U.S. GAAP for complete financial statements. These unaudited condensed
consolidated interim financial statements should be read in conjunction with the audited financial statements of the Company as
of, and for the fiscal year ended, June 30, 2019 included in the Form 10-K filed with the SEC on September 9, 2019. In the opinion
of management, the unaudited condensed consolidated interim financial statements reflect all adjustments, consisting of normal
and recurring adjustments, necessary for a fair presentation. The results for three and nine months ended March 31, 2020 are not
necessarily indicative of the results to be expected for the fiscal year ending June 30, 2020, or for any other future annual
or interim period.
Use
of estimates
The
preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions about future
events that affect the reported amounts of assets, liabilities, expenses, contingent assets, and contingent liabilities as at
the end of, or during, the reporting period. Actual results could significantly differ from those estimates. Significant areas
requiring management to make estimates include the derivative liability, the valuation of equity instruments issued for services,
and clinical trial accruals. Further details of the nature of these assumptions and conditions may be found in the relevant notes
to these condensed consolidated interim financial statements.
Accruals
for research and development expenses and clinical trials
As
part of the process of preparing its financial statements, the Company is required to estimate its expenses resulting from its
obligations under contracts with vendors, clinical research organizations and consultants, and under clinical site agreements
in connection with conducting clinical trials. The financial terms of these contracts are subject to negotiations, which vary
from contract to contract and may result in payment terms that do not match the periods over which materials or services are provided
under such contracts. The Company’s objective is to reflect the appropriate expenses in its financial statements by matching
those expenses with the period in which services are performed and efforts are expended. The Company accounts for these expenses
according to the timing of various aspects of the expenses. The Company determines accrual estimates by taking into account discussion
with applicable personnel and outside service providers as to the progress of clinical trials, or the services completed. During
the course of a clinical trial, the Company adjusts its clinical expense recognition if actual results differ from its estimates.
The Company makes estimates of its accrued expenses as of each balance sheet date based on the facts and circumstances known to
it at that time. The Company’s clinical trial accruals are dependent upon the timely and accurate reporting of contract
research organizations and other third-party vendors. Although the Company does not expect its estimates to be materially different
from amounts actually incurred, its understanding of the status and timing of services performed relative to the actual status
and timing of services performed may vary and may result in it reporting amounts that are too high or too low for any particular
period. For the three and nine months ended March 31, 2020 and 2019, there were no material adjustments to the Company’s
prior period estimates of accrued expenses for clinical trials.
Loss
per share
Income
or loss per share is calculated based on the weighted average number of common shares outstanding. For the three and nine month
periods ended March 31, 2020 and 2019 diluted loss per share does not differ from basic loss per share since the effect of the
Company’s warrants, stock options, performance stock units, and convertible preferred shares is anti-dilutive. As of March
31, 2020, potential common shares of 10,209,456 (2019 – 862,502) related to outstanding warrants, 778,750 (2019 –
292,683) relating to stock options, nil (2019 – 120,000) relating to performance stock units, and 162,177 (2019 –
210,279) relating to outstanding Series B convertible preferred shares were excluded from the calculation of net loss per common
share.
DelMar Pharmaceuticals, Inc.
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
March 31, 2020
(expressed in US dollars unless otherwise noted)
Recent
accounting pronouncements
From
time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other
standard setting bodies that are adopted by the Company as of the specified effective date.
Recently
adopted
Accounting Standard Update (“ASU”)
2016-02 — Leases (Topic 842)
The
new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability
on the consolidated balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance
or operating, with classification affecting the pattern of expense recognition in the consolidated income statement. ASU 2016-02
is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods, with
early adoption permitted. A modified retrospective transition approach is required for lessees for capital and operating leases
existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with
certain practical expedients available. The adoption of ASU 2016-02 did not have a material impact on the Company’s results
of operations or financial results.
ASU
2018-07 — Stock Compensation (Topic 718) Improvements to Nonemployee Shares-based Payment Accounting
The
amendments in this update are intended to the reduce cost and complexity and to improve financial reporting for share-based payments
issued to nonemployees. The ASU expands the scope of Topic
718, Compensation —Stock Compensation, which currently only includes share-based payments issued to employees, to also
include share-based payments issued to nonemployees for goods and services. The existing guidance on nonemployee share-based payments
is significantly different from current guidance for employee share-based payments. This ASU expands the scope of the employee
share-based payments guidance to include share-based payments issued to nonemployees. By doing so, the FASB improves the accounting
of nonemployee share-based payments issued to acquire goods and services used in its own operations. The amendments in this ASU
are effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within that fiscal
year. The adoption of ASU 2018-07 did not have a material impact on the Company’s results of operations or financial results.
Not
yet adopted
ASU
2017-11 — I. Accounting for Certain Financial Instruments with Down Round Features, II. Replacement of the Indefinite Deferral
for Mandatorily Redeemable Financial Instruments of Certain Non-public Entities and Certain Mandatorily Redeemable Noncontrolling
Interests with a Scope Exception
DelMar Pharmaceuticals, Inc.
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
March 31, 2020
(expressed in US dollars unless otherwise noted)
The
amendments in this update are intended to reduce the complexity associated with the accounting for certain financial instruments
with characteristics of liabilities and equity. Specifically, a down round feature would no longer cause a freestanding equity-linked
financial instrument (or an embedded conversion option) to be accounted for as a derivative liability at fair value with changes
in fair value recognized in current earnings. In addition, the indefinite deferral of certain provisions of Topic 480 have been
re-characterized to a scope exception. The re-characterization has no accounting effect. ASU 2017-11 is effective for public business
entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is
permitted. The Company has not yet evaluated the impact of adoption of this ASU on its condensed consolidated interim financial
statements and related disclosures.
During
the nine months ended March 31, 2020, other than ASU 2017-11, there have been no new, or existing recently issued, accounting
pronouncements that are of significance, or potential significance, that impact the Company’s condensed consolidated interim
financial statements.
|
3
|
Related
party transactions
|
The
Series A Preferred Stock is held by Valent Technologies, LLC (“Valent”), an entity owned by Dr. Dennis Brown, the
Company’s Chief Scientific Officer. Therefore, Valent is a related party to the Company. For the three months ended March
31, 2020 and 2019 respectively, the Company recorded $2,089 related to the dividend payable to Valent on the Series A Preferred
Stock and for the nine months ended March 31, 2020 and 2019 respectively, the Company recorded $6,267 related to the dividend
(note 5). The dividends have been recorded as a direct increase in accumulated deficit.
The
Company has issued common stock purchase warrants. Based on the terms of certain of these warrants the Company determined that
the warrants were a derivative liability which is recognized at fair value at the date of the transaction and re-measured at fair
value each reporting period with the changes in fair value recorded in the condensed consolidated interim statement of operations.
The
derivative liabilities balance was zero at March 31, 2020 and June 30, 2019. The derivative liabilities balance consisted of 2,180
agent warrants at March 31, 2020 and June 30, 2019.
Changes
in the Company’s derivative liability are summarized as follows:
|
|
Three months ended
|
|
|
|
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
Opening balance
|
|
|
-
|
|
|
|
76
|
|
Change in fair value of warrants
|
|
|
-
|
|
|
|
189
|
|
|
|
|
|
|
|
|
|
|
Closing balance
|
|
|
-
|
|
|
|
265
|
|
Less current portion
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Long term portion
|
|
|
-
|
|
|
|
265
|
|
DelMar Pharmaceuticals, Inc.
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
March 31, 2020
(expressed in US dollars unless otherwise noted)
|
|
Nine months ended
|
|
|
|
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
Opening balance
|
|
|
-
|
|
|
|
1,117
|
|
Change in fair value of warrants
|
|
|
-
|
|
|
|
(852
|
)
|
|
|
|
|
|
|
|
|
|
Closing balance
|
|
|
-
|
|
|
|
265
|
|
Less current portion
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Long term portion
|
|
|
-
|
|
|
|
265
|
|
Series
B Preferred stock
|
|
Series B Preferred Stock
|
|
|
|
2020
|
|
|
|
Number of shares
|
|
|
$
|
|
|
|
|
|
|
|
|
Balance – June 30, 2019
|
|
|
673,613
|
|
|
|
4,699,304
|
|
Conversion of Series B Preferred stock to common stock
|
|
|
(25,000
|
)
|
|
|
(174,407
|
)
|
|
|
|
|
|
|
|
|
|
Balance – March 31, 2020
|
|
|
648,613
|
|
|
|
4,524,897
|
|
During
the year ended June 30, 2016, the Company issued an aggregate of 902,238 shares of Series B Preferred Stock at a purchase price
of $8.00 per share. Each share of Series B Preferred Stock is convertible into 0.25 shares of common stock equating to a conversion
price of $32.00 (the “Conversion Price”) and will automatically convert to common stock at the earlier of 24 hours
following regulatory approval of VAL-083 with a minimum closing bid price of $80.00, or five years from the respective final closing
dates. The holders of the Series B Preferred Stock are entitled to an annual cumulative, in arrears, dividend at the rate of 9%
payable quarterly. The 9% dividend accrues quarterly commencing on the date of issue and is payable quarterly on June 30, September
30, December 31, and March 31 of each year commencing on June 30, 2016. Dividends are payable solely by delivery of shares
of common stock, in an amount for each holder equal to the aggregate dividend payable to such holder with respect to the shares
of Series B Preferred Stock held by such holder divided by the Conversion Price. The Series B Preferred Stock does not contain
any repricing features. Each share of Series B Preferred Stock entitles its holder to vote with the common stock on an as-converted
basis.
DelMar Pharmaceuticals, Inc.
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
March 31, 2020
(expressed in US dollars unless otherwise noted)
The
Series B Preferred Stock shall with respect to distributions of assets and rights upon the occurrence of a liquidation, rank (i)
senior to the Company’s common stock and (ii) senior to the Special Voting Preferred Stock and (iii) senior to any other
class or series of capital stock of the Company hereafter created which does not expressly rank pari passu with, or senior to,
the Series B Preferred Stock. The Series B Preferred Stock shall be pari passu in liquidation to the Company’s Series A
Preferred Stock. The liquidation value of the Series B Preferred Stock at March 31, 2020 is the stated value of $5,188,904 (June
30, 2019 - $5,388,904).
In
addition, the Company and the holders entered into a royalty agreement, pursuant to which the Company will pay the holders of
the Series B Preferred Stock, in aggregate, a low, single-digit royalty based on their pro rata ownership of the Series B Preferred
Stock on products sold directly by the Company or sold pursuant to a licensing or partnering arrangement (the “Royalty Agreement”).
Upon
conversion of a holder’s Series B Preferred Stock to common stock, such holder shall no longer receive ongoing royalty payments
under the Royalty Agreement but will be entitled to receive any residual royalty payments that have vested. Rights to the royalties
shall vest during the first three years following the applicable closing date, in equal thirds to holders of the Series B Preferred
Stock on each of the three vesting dates, upon which vesting dates such royalty amounts shall become vested royalties.
Pursuant
to the Series B Preferred Stock dividend, during the three months ended March 31, 2020, the Company issued 3,700 (2019 –
4,735) shares of common stock for an amount of $1,473 (2019 – $23,202) and during the nine months ended March 31, 2020,
the Company issued 11,100 (2019 – 14,430) shares of common stock for an amount of $6,071 (2019 – $75,477). These dividends
have been recognized as a direct increase in accumulated deficit.
A
total of 648,613 (2019 – 841,113) shares of Series B Preferred Stock are outstanding as of March 31, 2020, such that a total
of 162,177 (2019 – 210,279) shares of common stock are issuable upon conversion of the Series B Preferred Stock as at March
31, 2020. Converted shares are rounded up to the nearest whole share.
Series
A Preferred Stock
Effective
September 30, 2014, the Company filed a Certificate of Designation of Series A Preferred Stock (the “Series A Certificate
of Designation”) with the Secretary of State of Nevada. Pursuant to the Series A Certificate of Designation, the Company
designated 278,530 shares of preferred stock as Series A Preferred Stock. The shares of Series A Preferred Stock have a stated
value of $1.00 per share (the “Series A Stated Value”) and are not convertible into common stock. The holder of the
Series A Preferred Stock is entitled to dividends at the rate of 3% of the Series A Stated Value per year, payable quarterly in
arrears. Upon any liquidation of the Company, the holder of the Series A Preferred Stock will be entitled to be paid, out of any
assets of the Company available for distribution to stockholders, the Series A Stated Value of the shares of Series A Preferred
Stock held by such holder, plus any accrued but unpaid dividends thereon, prior to any payments being made with respect to the
common stock. The Series A Preferred Stock is held by Valent (note 3).
The
Series A Preferred Stock shall with respect to distributions of assets and rights upon the occurrence of a liquidation, rank (i)
senior to the Company’s common stock, and (ii) senior to the Company’s Special Voting Preferred Stock and (iii) senior
to any other class or series of capital stock of the Company hereafter created which does not expressly rank pari passu with,
or senior to, the Series A Preferred Stock. The Series A Preferred Stock shall be pari passu in liquidation to the Company’s
Series B Preferred Stock. The liquidation value of the Series A Preferred stock at March 31, 2020 and June 30, 2019 is the stated
value of $278,530.
DelMar Pharmaceuticals, Inc.
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
March 31, 2020
(expressed in US dollars unless otherwise noted)
There
was no change to the Series A Preferred stock for the three or nine month periods ended March 31, 2020 or 2019.
Common
stock
Stock
Issuances
Nine
months ended March 31, 2020
Underwritten
public offering
On
August 16, 2019, the Company closed on the sale of (i) 4,895,000 shares of its common stock, par value $0.001 per share (the “Common
Stock”), (ii) pre-funded warrants (“PFW”) to purchase an aggregate of 2,655,000 shares of Common Stock and (iii)
common warrants to purchase an aggregate of 7,762,500 shares of Common Stock (“2020 Investor Warrants”), including
800,000 shares of Common Stock and 2020 Investor Warrants to purchase an aggregate of 1,012,500 shares of Common Stock sold pursuant
to a partial exercise by the underwriters of the underwriters’ option to purchase additional securities, in the Company’s
underwritten public offering (the “Offering”). Each share of Common Stock or PFW, as applicable, was sold together
with a 2020 Investor Warrant to purchase one share of Common Stock at a combined effective price to the public of $1.00 per share
of Common Stock and accompanying 2020 Investor Warrant.
The
net proceeds from the Offering, including from the partial exercise of the underwriters’ option to purchase additional securities,
were $6,582,966, after deducting underwriting discounts and commissions, and other offering expenses.
The
2020 Investor Warrants are exercisable at $1.00 per share until their expiry on August 16, 2024 and the PFW are exercisable at
$0.01 per share at any time after August 16, 2019. The Company also issued 377,500 warrants to the underwriters of the Offering.
The underwriter warrants are exercisable at $1.15 per share commencing February 10, 2020 until their expiry on August 14, 2022.
During
the nine months ended March 31, 2020, all of the 2,655,000 PFW were exercised at $0.01 per PFW for proceeds of $26,550.
2017
Omnibus Incentive Plan
As
approved by the Company’s stockholders at the annual meeting of stockholders held on April 11, 2018, on July 7, 2017, as
amended on February 1, 2018, the Company’s board of directors approved adoption of the Company’s 2017 Omnibus Equity
Incentive Plan (the “2017 Plan”). The board of directors also approved a form of Performance Stock Unit Award Agreement
to be used in connection with grants of performance stock units (“PSUs”) under the 2017 Plan. Under the 2017 Plan,
780,000 shares of Company common stock are reserved for issuance, less the number of shares of common stock issued under the Del
Mar (BC) 2013 Amended and Restated Stock Option Plan (the “Legacy Plan”) or that are subject to grants of stock options
made, or that may be made, under the Legacy Plan. A total of 164,235 shares of common stock have been issued under the Legacy
Plan and/or are subject to outstanding stock options granted under the Legacy Plan, and a total of 614,515 shares of common stock
have been issued under the 2017 Plan and/or are subject to outstanding stock options granted under the 2017 Plan leaving 1,250
shares of common stock available at March 31, 2020 for issuance under the 2017 Plan if all such options under the Legacy Plan
were exercised.
DelMar Pharmaceuticals, Inc.
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
March 31, 2020
(expressed in US dollars unless otherwise noted)
The
maximum number of shares of Company common stock with respect to which any one participant may be granted awards during any calendar
year is 8% of the Company’s fully diluted shares of common stock on the date of grant (excluding the number of shares of
common stock issued under the 2017 Plan and/or the Legacy Plan or subject to outstanding awards granted under the 2017 Plan and/or
the Legacy Plan). No award will be granted under the 2017 Plan on or after July 7, 2027, but awards granted prior to that date
may extend beyond that date.
During
the nine months ended March 31, 2020, and subject to approval by the Company’s stockholders, the Company’s board of
directors approved an increase in the number of shares of common stock available to be issued under the 2017 Plan by 1,500,000.
The increase brings the total number of shares available under the 2017 Plan to 2,280,000.
During the nine months ended March 31, 2020, the Company’s
board of directors approved an aggregate 1,041,016 stock options to officers and directors of the Company. Of the total grant,
549,199 stock options are subject to stockholder approval of the 2017 Plan share increase. The total grant date aggregate fair
value of the remaining 491,817 stock options granted was $238,760. All of these stock options granted to officers and directors
have an exercise price of $0.61 and expire on September 5, 2029. Of the 1,041,016 stock options approved by the board of directors,
375,000 vest pro rata monthly over one year from the date of approval by the board of directors and 666,016 vest as to one-sixth
on the six-month anniversary of the date of approval by the board of directors with the remaining five-sixths vesting pro rate
monthly over 30 months commencing on the seven-month anniversary of the board of directors’ approval date.
In
addition, during the nine months ended March 31, 2020, the Company granted 250,000 stock options to an officer of the Company,
subject to stockholder approval of the share increase to the 2017 Plan. The options have an exercise price of $0.735 and expire
November 12, 2029. The options vest upon the achievement of certain clinical development milestones.
Stock
Options
Stock option disclosure in the tables
below excludes 799,199 stock option grants approved by the board of directors that are subject to approval by the Company’s
stockholders of the share reserve increase under the 2017 Plan. Of these options, 549,199 are exercisable at $0.61 per share until
September 5, 2029 and 250,000 are exercisable at $0.735 until November 12, 2029.
The
following table sets forth the aggregate stock options outstanding under all plans as of March 31, 2020:
|
|
Number of
stock
options
|
|
|
Weighted average
exercise
price
|
|
|
|
outstanding
|
|
|
$
|
|
Balance – June 30, 2019
|
|
|
288,183
|
|
|
|
22.31
|
|
Granted
|
|
|
491,817
|
|
|
|
0.61
|
|
Expired
|
|
|
(1,250
|
)
|
|
|
(40.00
|
)
|
|
|
|
|
|
|
|
|
|
Balance – March 31, 2020
|
|
|
778,750
|
|
|
|
8.58
|
|
DelMar Pharmaceuticals, Inc.
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
March 31, 2020
(expressed in US dollars unless otherwise noted)
The following table summarizes stock options
outstanding and exercisable under all plans at March 31, 2020:
Exercise price
$
|
|
|
Number
Outstanding at
March 31,
2020
|
|
|
Weighted
average
remaining
contractual
life
(years)
|
|
|
Number
exercisable
at
March 31,
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.61
|
|
|
|
491,817
|
|
|
|
9.43
|
|
|
|
288,168
|
|
|
6.10
|
|
|
|
30,000
|
|
|
|
8.60
|
|
|
|
24,445
|
|
|
7.00
|
|
|
|
5,451
|
|
|
|
8.23
|
|
|
|
3,180
|
|
|
8.70
|
|
|
|
12,000
|
|
|
|
7.59
|
|
|
|
12,000
|
|
|
9.83
|
|
|
|
83,647
|
|
|
|
8.14
|
|
|
|
51,117
|
|
|
10.60
|
|
|
|
3,600
|
|
|
|
8.03
|
|
|
|
2,400
|
|
|
11.70
|
|
|
|
30,000
|
|
|
|
2.91
|
|
|
|
30,000
|
|
|
14.11
|
|
|
|
2,500
|
|
|
|
2.17
|
|
|
|
2,500
|
|
|
20.00
|
|
|
|
13,125
|
|
|
|
1.52
|
|
|
|
13,125
|
|
|
21.10
|
|
|
|
14,400
|
|
|
|
7.27
|
|
|
|
12,000
|
|
|
29.60
|
|
|
|
4,500
|
|
|
|
4.84
|
|
|
|
4,500
|
|
|
37.60
|
|
|
|
4,500
|
|
|
|
5.86
|
|
|
|
4,500
|
|
|
41.00
|
|
|
|
4,000
|
|
|
|
6.61
|
|
|
|
4,000
|
|
|
42.00
|
|
|
|
41,250
|
|
|
|
2.81
|
|
|
|
41,250
|
|
|
44.80
|
|
|
|
3,000
|
|
|
|
5.86
|
|
|
|
3,000
|
|
|
49.50
|
|
|
|
22,460
|
|
|
|
4.31
|
|
|
|
22,460
|
|
|
53.20
|
|
|
|
8,000
|
|
|
|
6.10
|
|
|
|
8,000
|
|
|
61.60
|
|
|
|
1,500
|
|
|
|
3.00
|
|
|
|
1,500
|
|
|
92.00
|
|
|
|
3,000
|
|
|
|
3.17
|
|
|
|
3,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
778,750
|
|
|
|
|
|
|
|
531,145
|
|
Included
in the number of stock options outstanding are 2,500 stock options granted at an exercise price of CA $20.00. The exercise price
of these options shown in the above table have been converted to US $14.11 using the period ending closing exchange rate. Stock
options issued during the nine months ended March 31, 2020 have been valued using a Black-Scholes pricing model with the following
assumptions:
|
|
March 31,
2020
|
|
|
|
Dividend rate
|
|
0%
|
Volatility
|
|
99% to 102%
|
Risk-free rate
|
|
1.50%
|
Term – years
|
|
5.5 to 6.5
|
DelMar Pharmaceuticals, Inc.
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
March 31, 2020
(expressed in US dollars unless otherwise noted)
The
estimated volatility of the Company’s common stock at the date of issuance of the stock options is based on the historical
volatility of the Company. The risk-free interest rate is based on rates published by the government for bonds with a maturity
similar to the expected remaining life of the stock options at the valuation date. The expected life of the stock options has
been estimated using the plain vanilla method.
The
Company has recognized the following amounts as stock option expense for the periods noted:
|
|
Three months ended
March 31,
|
|
|
Nine months ended
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
22,754
|
|
|
|
12,889
|
|
|
|
55,058
|
|
|
|
64,466
|
|
General and administrative
|
|
|
73,437
|
|
|
|
86,846
|
|
|
|
251,970
|
|
|
|
290,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
96,191
|
|
|
|
99,735
|
|
|
|
307,028
|
|
|
|
355,388
|
|
All
of the stock option expense for the periods ended March 31, 2020 and 2019 has been recognized as additional paid in capital. The
aggregate intrinsic value of stock options outstanding at March 31, 2020 was $0 (2019 - $0) and the aggregate intrinsic value
of stock options exercisable at March 31, 2020 was $0 (2019 - $0). As of March 31, 2020, there was $96,061 in unrecognized compensation
expense that will be recognized over the next 2.43 years. No stock options granted under the Company’s equity plans have
been exercised during the nine months ended March 31, 2020. Upon the exercise of stock options new shares will be issued.
The
following table sets forth unvested stock options under all plans at March 31, 2020:
|
|
Number of
Options
|
|
|
Weighted
average
exercise
price
$
|
|
|
Weighted
average
grant date
fair value
$
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at June 30, 2019
|
|
|
84,990
|
|
|
|
11.35
|
|
|
|
5.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
491,817
|
|
|
|
0.61
|
|
|
|
0.40
|
|
Vested
|
|
|
(329,202
|
)
|
|
|
2.15
|
|
|
|
1.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at March 31, 2020
|
|
|
247,605
|
|
|
|
2.25
|
|
|
|
1.23
|
|
DelMar Pharmaceuticals, Inc.
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
March 31, 2020
(expressed in US dollars unless otherwise noted)
Warrants
The following table summarizes changes in the Company’s
outstanding warrants as of March 31, 2020:
Description
|
|
Number
|
|
|
|
|
|
Balance – June 30, 2019
|
|
|
1,543,596
|
|
|
|
|
|
|
2020 Investor Warrants issued in underwritten offering
|
|
|
7,762,500
|
|
PFW issued in underwritten offering
|
|
|
2,655,000
|
|
2020 Underwriter Warrants
|
|
|
377,500
|
|
Exercise of PFW
|
|
|
(2,655,000
|
)
|
Warrants issued for services (1)
|
|
|
530,000
|
|
Expiry of warrants for services (2)
|
|
|
(4,140
|
)
|
|
|
|
|
|
Balance - March 31, 2020
|
|
|
10,209,456
|
|
(1)
|
The
Company issued 530,000 warrants for services during the nine months ended March 31, 2020. 280,000 warrants are exercisable
at $0.75 per share until November 18, 2023 and they vest pro rata monthly commencing December 18, 2019. 250,000 warrants are
exercisable at $0.64 per share until January 20, 2024 and they vest pro rata monthly commencing February 20, 2020. The total
fair value of the warrants issued was $233,176 with $133,297 being recognized during the nine months ended March 31, 2020.
|
(2)
|
On
February 27, 2020, 4,140 warrants at an exercise price of $59.30 expired.
|
The
following table summarizes the Company’s outstanding warrants as of March 31, 2020:
Description of warrants
|
|
Number
|
|
|
Exercise
price $
|
|
|
Expiry date
|
|
|
|
|
|
|
|
|
|
2020 Investor warrants
|
|
|
7,762,500
|
|
|
|
1.00
|
|
|
August 16, 2024
|
2019 Investor warrants
|
|
|
760,500
|
|
|
|
3.10
|
|
|
June 5, 2024
|
2018 Investor warrants
|
|
|
280,000
|
|
|
|
12.50
|
|
|
September 22, 2022
|
2017 Investor warrants
|
|
|
207,721
|
|
|
|
35.00
|
|
|
April 19, 2022
|
2015 Investor warrants
|
|
|
97,905
|
|
|
|
30.00
|
|
|
July 31, 2020
|
Warrants issued for services
|
|
|
250,000
|
|
|
|
0.64
|
|
|
January 20, 2024
|
Warrants issued for services
|
|
|
280,000
|
|
|
|
0.75
|
|
|
November 18, 2023
|
Warrants issued for services
|
|
|
26,500
|
|
|
|
30.00
|
|
|
July 1, 2020 to February 1, 2021
|
Warrants issued for services
|
|
|
6,000
|
|
|
|
17.80
|
|
|
January 25, 2023
|
Warrants issued for services
|
|
|
33,600
|
|
|
|
11.70
|
|
|
February 27, 2023
|
Warrants issued for services
|
|
|
12,000
|
|
|
|
9.00
|
|
|
September 15, 2023
|
Warrants issued for services
|
|
|
2,000
|
|
|
|
9.00
|
|
|
October 11, 2021
|
2020 Underwriter Warrants
|
|
|
377,500
|
|
|
|
1.15
|
|
|
August 14, 2022
|
2019 Agent warrants
|
|
|
46,800
|
|
|
|
3.875
|
|
|
June 3, 2024
|
2018 Agent warrants
|
|
|
40,000
|
|
|
|
12.50
|
|
|
September 20, 2022
|
2017 Agent warrants
|
|
|
13,848
|
|
|
|
40.60
|
|
|
April 12, 2022
|
2016 Agent warrants
|
|
|
10,402
|
|
|
|
40.00
|
|
|
May 12, 2021
|
2015 Agent warrants
|
|
|
2,180
|
|
|
|
30.00
|
|
|
July 15, 2020
|
|
|
|
10,209,456
|
|
|
|
|
|
|
|
DelMar Pharmaceuticals, Inc.
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
March 31, 2020
(expressed in US dollars unless otherwise noted)
The
Company has financial instruments that are measured at fair value. To determine the fair value, the Company uses the fair value
hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable
inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would
use to value an asset or liability and are developed based on market data obtained from independent sources. Unobservable inputs
are inputs based on assumptions about the factors market participants would use to value an asset or liability. The three levels
of inputs that may be used to measure fair value are as follows:
|
●
|
Level
one - inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities;
|
|
●
|
Level
two - inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability,
either directly or indirectly such as interest rates, foreign exchange rates, and yield curves that are observable at commonly
quoted intervals; and
|
|
●
|
Level
three - unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and
reflect those assumptions that a market participant would use.
|
Assets
and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. Changes
in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value
hierarchy.
The
Company’s financial instruments consist of cash and cash equivalents, other receivables, accounts payable, related party
payables and derivative liability. The carrying values of cash and cash equivalents, other receivables, accounts payable and related
party payables approximate their fair values due to the immediate or short-term maturity of these financial instruments.
Derivative
liability
The
Company accounts for certain warrants under the authoritative guidance on accounting for derivative financial instruments indexed
to, and potentially settled in, a company’s own stock, on the understanding that in compliance with applicable securities
laws, the warrants require the issuance of securities upon exercise and do not sufficiently preclude an implied right to net cash
settlement. The Company classifies these warrants on its balance sheet as a derivative liability which is fair valued at each
reporting period subsequent to the initial issuance. The Company has used a Black-Scholes Option Pricing Model (based on a closed-form
model that uses a fixed equation) to estimate the fair value of the warrants which is equivalent to the fair value of the warrants
calculated using the Binomial-Lattice Pricing Model. Determining the appropriate fair-value model and calculating the fair value
of warrants requires considerable judgment. Any change in the estimates (specifically probabilities and volatility) used may cause
the value to be higher or lower than that reported. The estimated volatility of the Company’s common stock at the date of
issuance, and at each subsequent reporting period, is based on the historical volatility of the Company. The risk-free interest
rate is based on rates published by the government for bonds with a maturity similar to the expected remaining life of the warrants
at the valuation date. The expected life of the warrants is assumed to be equivalent to their remaining contractual term.
DelMar Pharmaceuticals, Inc.
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
March 31, 2020
(expressed in US dollars unless otherwise noted)
|
a)
|
Fair
value of derivative liability
|
The
derivative is not traded in an active market and the fair value is determined using valuation techniques. The Company uses judgment
to select a variety of methods to make assumptions that are based on specific management plans and market conditions at the end
of each reporting period. The Company uses a fair value estimate to determine the fair value of the derivative liability. The
carrying value of the derivative liability would be higher, or lower, as management estimates around specific probabilities change.
The estimates may be significantly different from those amounts ultimately recorded in the consolidated financial statements because
of the use of judgment and the inherent uncertainty in estimating the fair value of these instruments that are not quoted in an
active market. All changes in the fair value are recorded in the consolidated statement of operations and comprehensive loss each
reporting period. This is considered to be a Level 3 financial instrument as volatility is considered a Level 3 input.
The
fair value of derivative liabilities at March 31, 2020 and June 30, 2019 was $0.
7
|
Supplementary
statement of cash flows information
|
|
|
Nine months ended
|
|
|
|
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
Series B Preferred share common stock dividend (note 5)
|
|
|
6,071
|
|
|
|
75,477
|
|
Income taxes paid
|
|
|
-
|
|
|
|
-
|
|
Interest paid
|
|
|
-
|
|
|
|
-
|
|
The
Company has evaluated its subsequent events from March 31, 2020 through the date these condensed consolidated financial statements
were issued and has determined that there are no subsequent events requiring disclosure in these condensed consolidated financial
statements other than the items noted below.
Subsequent to March 31, 2020, the Company issued 2,096 shares
of common stock for services.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
This Management’s Discussion and Analysis (“MD&A”)
contains “forward-looking statements”, within the meaning of the Private Securities Litigation Reform Act of 1995,
which represent our projections, estimates, expectations, or beliefs concerning, among other things, financial items that relate
to management’s future plans or objectives or to our future economic and financial performance. In some cases, you can identify
these statements by terminology such as “may”, “should”, “plans”, “believe”, “will”,
“anticipate”, “estimate”, “expect” “project”, or “intend”, including
their opposites or similar phrases or expressions. You should be aware that these statements are projections or estimates as to
future events and are subject to a number of factors that may tend to influence the accuracy of the statements. These forward-looking
statements should not be regarded as a representation by us or any other person that our events or plans will be achieved. You
should not unduly rely on these forward-looking statements, which speak only as of the date of this report. Except as may be required
under applicable securities laws, we undertake no obligation to publicly revise any forward-looking statement to reflect circumstances
or events after the date of this report or to reflect the occurrence of unanticipated events.
You should review the factors and risks we describe under “Risk
Factors” in our report on Form 10-K for the year ended June 30, 2019 and in our other filings with the Securities and Exchange
Commission, available at www.sec.gov. Actual results may differ materially from any forward-looking statement.
References to “we”, “us”, and “our”,
refer to DelMar Pharmaceuticals, Inc. and our wholly-owned subsidiaries, Del Mar (BC), Callco and Exchangeco.
Impact of Coronavirus (“COVID-19”)
on our Operations, Financial Condition, Liquidity and Results of Operations
In December 2019, a novel strain of
coronavirus, COVID-19, was reported to have surfaced in Wuhan, China and on March 11, 2020 was declared a pandemic by the
World Health Organization. The ultimate impact of the COVID-19 pandemic on our operations is unknown and will depend on
future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the
COVID-19 outbreak, new information which may emerge concerning the duration and severity of the COVID-19 pandemic, and any
additional preventative and protective actions that governments, or us, may determine are needed.
To date, the
COVID-19 pandemic has not caused significant disruption to our clinical studies. Each of our ongoing Phase 2 clinical studies
is being conducted at a single site which has reduced the risk of disruption. Patient visits are currently taking place on
schedule for both the MD Anderson Cancer Center (“MDACC”) study being conducted in Houston, Texas and the Sun
Yat-sen University Cancer Center (“SYSUCC”) study being conducted in China. In addition, thus far, any
disruptions to patient treatments have been within allowances under each study protocol. Access to the sites by our clinical
monitors has been limited during the COVID-19 pandemic but the recording of study data in both studies and patient treatments
at both study sites are being conducted per protocol at this time.
We have cash available to fund planned operations into the fourth
quarter of calendar 2020. Consequently, management is pursuing various financing alternatives
to fund our operations so we can continue as a going concern. However, the COVID-19 pandemic has created significant economic uncertainty
and volatility in the credit and capital markets. Management plans to secure the necessary financing through the issue of new equity
and/or the entering into of strategic partnership arrangements but the ultimate impact of the COVID-19 pandemic on our ability
to raise additional capital is unknown and will depend on future developments, which are highly uncertain and cannot be predicted
with confidence, including the duration of the COVID-19 outbreak and new information which may emerge concerning the severity of
the COVID-19 pandemic. We may not be able to raise sufficient additional capital and may
tailor our drug candidate development program based on the amount of funding we are able to raise in the future. Nevertheless,
there is no assurance that these initiatives will be successful.
Recent Highlights
●
|
On
May 5, 2020 we announced enrollment of our 22nd patient (study
over 90% enrolled) in the adjuvant arm of our ongoing Phase 2 clinical study investigating adjuvant treatment (pre-temozolomide
-- or TMZ – maintenance therapy) of MGMT-unmethylated glioblastoma multiforme (“GBM”) with VAL-083. The
adjuvant arm of the Phase 2 study of VAL-083 being conducted at the MDACC is designed to enroll up to 24 newly-diagnosed patients
who have undergone surgery and chemoradiation with TMZ but will now receive VAL-083 in place of standard of care TMZ for adjuvant
therapy. Additionally, in the recurrent arm of the study, which is also being conducted at MDACC, 72 patients out of a planned
83 patients have been enrolled as of May 5, 2020.
|
●
|
On March 26, 2020 we received a listing extension from the Staff of the Listing Qualifications Department of The Nasdaq Capital Market LLC (“Nasdaq”). The extension granted us until September 21, 2020 to regain compliance with the $1.00 Minimum Bid Price requirement for continued listing on Nasdaq. On April 20, 2020, we received a second notification letter from Nasdaq stating that in response to the current extraordinary market conditions, Nasdaq had filed a rule change with the Securities and Exchange Commission to suspend the compliance period for the minimum closing bid price requirement from April 16, 2020 through June 30, 2020. As a result, we have until December 7, 2020 to regain compliance. We can regain compliance if at any time during the suspension or during the remaining compliance period resuming after the suspension the closing bid price of our common stock is at least $1.00 per share for a minimum of ten consecutive business days.
|
●
|
On February 19, 2020 we announced we had enrolled the final patient
in our ongoing Phase 2 clinical study investigating the first-line treatment of VAL-083 with radiation therapy in newly-diagnosed,
MGMT-unmethylated GBM being conducted at SYSUCC.
|
●
|
On January 29, 2020 we announced the publication of previously released interim clinical data in the February 2020 issue of peer-reviewed journal, Glioma. The article highlights results from the first 22 patients of our ongoing Phase 2 clinical study investigating the first-line treatment of VAL-083 with radiation therapy in newly-diagnosed, MGMT-unmethylated GBM being conducted at SYSUCC.
|
VAL-083 Clinical Studies
We are currently developing VAL-083, a novel DNA-targeting agent
for the treatment of GBM and potentially other solid tumors, including ovarian cancer. Our recent research has highlighted the
opportunities afforded by VAL-083’s unique mechanism of action and its potential to address unmet medical needs by focusing
our development efforts on patients whose tumors exhibit biological features that make them resistant to, or unlikely to respond
to, currently available therapies. For example, our research demonstrating VAL-083’s activity in GBM is independent of the
MGMT methylation status allows us to focus patient selection based on this important biomarker.
The evaluation of MGMT promoter methylation status has increasingly
become common practice in the diagnostic assessment of GBM. In September 2017, the National Comprehensive Cancer Network (“NCCN”)
updated its guidelines for the standard treatment of GBM based on MGMT methylation status. We believe these guidelines provide
for enhanced opportunities for us to capitalize on VAL-083’s unique mechanism of action by utilizing MGMT methylation as
a biomarker to optimize patient selection for our novel DNA-targeting agent to focus on the majority of GBM patients who are diagnosed
with MGMT-unmethylated tumors.
Our current priority is to leverage this research, and VAL-083’s
unique mechanism of action, to efficiently advance VAL-083 for the most promising indications, including:
|
●
|
MGMT-unmethylated GBM, currently comprising two ongoing separate Phase 2 clinical studies for:
|
|
○
|
GBM patients in two study arms at MDACC:
|
|
■
|
as adjuvant therapy immediately following chemoradiation; and
|
|
■
|
in Avastin®-naïve recurrent GBM patients;
|
|
○
|
Newly diagnosed GBM patients (ongoing study at SYSUCC); and
|
|
●
|
Potential future indications including ovarian cancer, non-small cell lung cancer (“NSCLC”), and other solid tumor indications.
|
Phase 2 Study in Newly-Diagnosed MGMT-unmethylated
GBM
In September 2017, we initiated a single arm, biomarker driven,
open-label Phase 2 study in newly-diagnosed MGMT-unmethylated GBM patients at SYSUCC in Guangzhou, China. The study is being conducted
under our collaboration agreement with Guangxi Wuzhou Pharmaceutical Company.
In this Phase 2 study, VAL-083 is being combined with radiotherapy
as a potential replacement for standard-of-care chemoradiation with temozolomide in patients with MGMT-unmethylated GBM. The goals
of the study are to confirm the safety of the three-day VAL-083 dosing regimen in combination with radiotherapy and to investigate
efficacy outcomes of the combination of VAL-083 and radiotherapy in MGMT-unmethylated GBM patients.
We have completed enrollment of this study with a total of 29
newly-diagnosed, MGMT-unmethylated GBM patients. The efficacy endpoints of the study include tumor response, as assessed by the
Response Assessment in NeuroOncology (“RANO”), and progression-free survival (“PFS”), progression-free
survival at six months (“PFS6”), and overall survival (“OS”), compared to historical results in the target
population. The study is being conducted in two parts: (1) Dose-confirmation: VAL-083 in cohorts (20, 30 and 40 mg/m2/day
IV daily x 3 every 21 days) to assess safety and activity when administered concurrently with x-ray therapy (“XRT”)
to confirm the maximum tolerated dose (“MTD”), and (2) Expansion: VAL-083 will be studied in up to 20 additional patients
at the target dose, as determined by the dose-confirmation part of the study, administered concurrently with XRT. Assessments of
safety and tolerability will be used to support further clinical development of VAL-083 in combination with radiotherapy. Pharmacokinetic
assessments of VAL-083 in plasma and cerebral spinal fluid (“CSF”) will be used to correlate drug exposure in the central
nervous system with patient outcomes.
Dose-confirming cohorts studying 20, 30, and 40 mg/m2/day
x three every 21 days have been completed. Based on the dose confirmation phase of the study, we have selected 30 mg/m2/day
for combination with irradiation for the treatment of newly-diagnosed MGMT-unmethylated GBM patients.
This study is fully enrolled at 29 patients. We previously released
data with 23 patients enrolled as of the data cut-off date of November 2, 2019. For the 22 patients who had completed at least
one cycle of treatment as of that date, median PFS with VAL-083 was 9.9 months (CI 7.3-12.0 months). For the 18 patients
initially receiving the intended treatment dose (30 mg/m2/day on days 1, 2 and 3 of a 21-day cycle) median PFS was 10.4
months (CI 6.0-12.0 months). While this is not a head-to-head study, historically, temozolomide (“TMZ”) has been demonstrated
to have 6.9 months PFS in unmethylated GBM patients. Other doses were also examined as part of the dose escalation aspect of the
study, and all but the 20 mg/m2/day dose also demonstrated superior PFS to the historical comparator. A median of eight
cycles of treatment has been received by all patients who had either completed treatment, or remain in active treatment.
Nine patients have received ten or more cycles.
Through our research, and that of the NCI, we have previously
demonstrated that VAL-083 crosses the blood brain barrier. Preliminary data from the SYSUCC study indicate that the concentration
of VAL-083 is generally as high in CSF as in plasma at two hours post-infusion.
Concentration of VAL-083 — Two
Hours Post Dose
|
|
|
|
Mean Concentrations (ng/mL)
|
|
Conc. Ratio @ 2 hours
|
Dose (mg/m2)
|
|
n
|
|
Plasma (2 hours post dose)
|
|
CSF (2 hours post dose)
|
|
CSF/Plasma
|
20
|
|
1
|
|
110
|
|
154
|
|
1.40
|
30
|
|
3
|
|
97
|
|
134
|
|
1.41
|
40
|
|
3
|
|
170
|
|
190
|
|
1.13
|
By comparison, temozolomide is typically 80% lower in the CSF
than the plasma (Schreck et al. 2018, Oncology (Williston Park)). The accumulation of VAL-083 in the CSF further validates that
VAL-083 crosses the blood-brain-barrier and demonstrates that therapeutic drug concentrations in the CSF are achievable for extended
periods of time.
Phase 2 Study in MGMT-unmethylated GBM in Collaboration
with University of Texas MD Anderson Cancer Center
In February 2017, we initiated a biomarker driven, open-label,
single-arm Phase 2 study in collaboration with MDACC. This biomarker-driven study (testing for MGMT methylation status) has been
amended to enroll up to 83 patients (35 with a starting dose of 40 mg/m2/day and 48 with a starting dose of 30 mg/m2/day)
to determine the potential of VAL-083 treatment to improve overall survival in GBM patients whose tumors have recurred following
treatment with temozolomide. These patients will not have been treated previously with Avastin®. In addition, this
study has been amended to add a new adjuvant patient arm. This arm will include 24 patients previously treated with TMZ in combination
with radiation who, rather than being treated with additional cycles of TMZ, will begin treatment with VAL-083.
Recurrent Study Arm
The patients in the recurrent study arm are receiving second-line
therapy with VAL-083 following TMZ failure. As of May 5, 2020, 72 patients (out of a planned 83) have been enrolled in the
recurrent arm of this study.
Previously we released data when we had enrolled 62 patients.
Of the 62 patients enrolled as of November 15, 2019, 35 patients (with no additional patients planned) had received an initial
dose of 40 mg/m2/day and 27 (out of a planned 48) had received an initial dose of 30 mg/m2/day (on days 1,
2 and 3 of a 21-day cycle). mOS for the 60 patients who had completed at least one cycle of treatment was 7.5 months (CI 6.0-11.5
months). For the 25 of those patients who initially received the intended treatment dose of 30 mg/m2/day, mOS was 10.6
months (CI 5.8-10.6 months). While this is not a head-to-head study, historically lomustine, which is the most commonly used chemotherapy
for these recurrent patients, has demonstrated a mOS of 7.2 months (EORTC 26101, MGMT-unmethylated lomustine arm).
The safety profile has been well within the existing safety
monitoring guidelines described in the present study protocol. However, in consultation with the principal investigator at MDACC,
we have amended the protocol for this clinical study to modify the starting dose of VAL-083 to 30 mg/m2/day on days
1, 2 and 3, of a 21-day cycle. This modification may improve tolerance in this patient population and thereby potentially increase
overall exposure to VAL-083 by increasing the number of cycles of drug patients may be able to receive. We have modified the patient
screening platelet count, from 100,000/µL to 125,000/µL, for the same reasons. Safety data from this study will become
part of the overall safety dossier to support future filings with the FDA and other regulatory agencies.
It is important for this GBM patient population, which has been
heavily pre-treated with temozolomide, to be able to be treated with multiple cycles of VAL-083 without significant hematological
toxicities. We believe the modified dose of VAL-083, in addition to the change in patient eligibility platelet counts, should help
provide for enhanced patient safety. We believe a positive outcome from this study can establish a position for VAL-083 in the
treatment of MGMT-unmethylated recurrent GBM.
A detailed description of this study can be found at clinicatrials.gov,
Identifier Number: NCT02717962.
Adjuvant Study Arm
On July 24, 2019, we announced the enrollment of the first patient
in the adjuvant arm of the Phase 2 study being conducted at MDACC. The adjuvant arm will include up to 24 patients. These patients
will have had initial cycles of temozolomide concomitant with radiation but will not have yet started subsequent cycles of TMZ
(i.e. maintenance stage TMZ patients). Published data from Tanguturi et al (2017 Nero-Oncology) indicates that MGMT-unmethylated
patients receiving current standard of care have a median progression-free survival of 6.9 months. As of May 5, 2020, 22 patients
(out of a planned 24) have been enrolled and all patients remain alive on continued therapy.
As noted above, patients in the recurrent arm of the MDACC clinical
study have been heavily pre-treated with temozolomide. Based on published data from our MDACC and SYSUCC clinical studies, we believe
there is a significant opportunity to treat GBM patients in the pre-temozolomide maintenance stage (i.e., adjuvant). At the AACR’s
annual meeting in April 2019, we reported that myelosuppression (thrombocytopenia and neutropenia) is the most common adverse event
associated with VAL-083. The higher potential for myelosuppression with the 40 mg/m2/day of VAL-083 in this study appears
to be correlated with the number of cycles of prior TMZ maintenance therapy (> 5 cycles).
Safety Across Studies
Four subjects have experienced a serious adverse event (“SAE”)
possibly related to VAL-083 in the newly-diagnosed group as of the cut-off date of November 2, 2019. In addition, eleven subjects
have experienced a possibly drug-related SAE in the recurrent group, and no patients have experienced a possibly drug-related SAE
in the adjuvant group as of the relevant data cut-off date of November 15, 2019.
Fast Track Designation
The FDA has granted us Fast Track designation for VAL-083 in
recurrent GBM.
Fast Track designation is designed to expedite the review of
drugs that show promise in treating life-threatening diseases and address unmet medical needs, with the goal of getting new treatments
to patients earlier. Fast Track designation provides sponsors with an opportunity for increased frequency for communication with
the FDA to ensure an optimal development plan and to collect appropriate data needed to support drug approval. Additional benefits
of the Fast Track designation may include an Accelerated Approval, a Priority Review, and a Rolling Review. Accelerated Approval
is granted to drugs that demonstrate an effect on a surrogate, or intermediate endpoints, reasonably likely to predict clinical
benefit. Priority Review shortens the FDA review process for a new drug from ten months to six months and is appropriate for drugs
that demonstrate significant improvements in both safety and efficacy of an existing therapy. Rolling Review provides a drug company
the opportunity to submit completed sections of its New Drug Application (“NDA”) for review by the FDA. Typically,
NDA reviews do not commence until the drug company has submitted the entire application to the FDA. Through the Fast Track designation,
the FDA attempts to ensure that questions raised during the drug development process are resolved quickly, often leading to earlier
approval and increased access for patients.
MGMT-unmethylated GBM
GBM is the most common and the most lethal form of glioma. According
to the Central Brain Tumor Registry of the United States, GBM occurs with an incidence of 3.20 per 100,000 person-years. Approximately
13,000 new cases of GBM were diagnosed in the United States and 16,000 in Europe during 2017. Within the GBM patient population,
approximately two-thirds of patients are unmethylated with respect to their MGMT status.
Measurement of MGMT (O6-methyl guanine methyltransferase) methylation
status has become routine in clinical practice as a biomarker that correlates with resistance to the standard-of-care chemotherapy
with TMZ (Temodar®), and patient outcomes in GBM. Approximately two-thirds of GBM patients’ tumors are characterized
as “MGMT-unmethylated” and exhibit a high expression of MGMT, a naturally occurring DNA-repair enzyme, the activity
of which nullifies the chemotherapeutic activity of TMZ. The lack of specific therapies for MGMT-unmethylated GBM is a significant
unmet medical need. Importantly, the 2017 update to the NCCN guidelines states that the treatment benefit of TMZ is likely to be
lower in GBM patients with an unmethylated MGMT promoter.
We have demonstrated that VAL-083’s anti-tumor mechanism
is active independent from the MGMT status in vitro. We believe this suggests the potential of VAL-083 as a replacement
for the current standard-of-care chemotherapy, temozolomide, in MGMT-unmethylated GBM. We are therefore utilizing MGMT-methylation
status to identify GBM patients who are unlikely to respond to temozolomide and including only MGMT-unmethylated patients in our
current clinical studies of VAL-083.
We believe that our research, in the context of the 2017 update
to the NCCN guidelines, highlights this unmet need and the opportunity for VAL-083 as a potential new standard-of-care in the treatment
of MGMT-unmethylated GBM.
Current Treatments for Gliomas and Glioblastoma
Multiforme
Gliomas are a type of Central Nervous System (“CNS”)
tumor that arises from glial cells in the brain or spine. Glial cells are the cells surrounding nerves. Their primary function
is to provide support and protection for neurons in the CNS.
GBM is the most common and the most lethal form of glioma. According
to the Central Brain Tumor Registry of The United States, GBM occurs with an incidence of 3.20 per 100,000 person-years. Approximately
13,000 new cases of GBM were diagnosed in the United States and 16,000 in Europe during 2017.
Common symptoms of GBM include headaches, seizures, nausea,
weakness, paralysis and personality or cognitive changes such as loss of speech or difficulty in thinking clearly. GBM progresses
quickly and patients’ conditions deteriorate rapidly progressing to death. The outlook for GBM patients is generally poor.
The overall median survival in newly diagnosed GBM patients with best available treatments is less than 15 months, and two-year
and five-year survival rates are approximately 30% and 10%, respectively. Median overall survival in newly-diagnosed, unmethylated
GBM patients is 12.2 months.
In September 2017, the NCCN updated treatment guidelines for
GBM. The recommended treatment regimen for GBM includes surgical resection to remove as much of the tumor as possible (“debulking”)
followed by radiotherapy with concomitant and adjuvant chemotherapy with temozolomide with or without tumor treating fields (“TTF”).
GBM patients whose tumors exhibit an unmethylated promoter for the gene encoding the DNA repair enzyme MGMT, a biomarker correlated
with resistance to temozolomide, may be treated with radiation alone following surgery.
Patients with an unmethylated MGMT promoter have high levels
of MGMT, a naturally-occurring DNA repair enzyme that repairs tumor-fighting lesions induced by TMZ thus allowing a patient’s
tumor to continue to grow despite treatment, which leads to poor outcomes. Measurement of MGMT methylation status has become routine
in clinical practice as biomarker that correlates with response to TMZ and patient outcomes in GBM.
Probability of GBM Patient Survival Correlated
to Expression of MGMT Enzyme
(Unmethylated promoter = High MGMT Expression and Significantly Shorter Survival)
TTF (Optune®) is a non-invasive technique for
adults with GBM. TTF uses alternating electrical fields to disrupt tumor cell division, or cause cell death, thereby preventing
the tumor from growing or spreading as quickly. A clinical study reported that GBM patients treated with TTF combined with TMZ
experienced longer survival than those treated with TMZ alone.
The majority of GBM patients’ tumors recur within 6 –
12 months of initial treatment. Experimental therapy through clinical studies is recommended under NCCN guidelines for eligible
patients. NCCN guidelines also recommend treatment with systemic chemotherapy, such as lomustine (“CCNU”). For patients
who are eligible for additional surgical debulking, local chemotherapy with carmustine (“BCNU”) wafers may be employed.
CCNU and BCNU target the same DNA-site as TMZ and are also subject to MGMT-related resistance.
Avastin (Avastin®, an anti-VEGF antibody) recently
received full approval in the US, Canada, Australia, and Japan as a single agent for patients with recurrent GBM following prior
therapy. Avastin carries an FDA “black-box warning” related to severe, sometimes fatal, side effects such as gastrointestinal
perforations, wound healing complications and hemorrhage. There are no data demonstrating an improvement in disease-related symptoms
or increased survival for GBM patients treated with Avastin.
Recurrent GBM patients, especially those whose tumors progress
following treatment with Avastin, have limited or no treatment options and a very poor prognosis. According to published literature,
the median survival for GBM patients whose tumors progress following Avastin is less than five months.
VAL-083 Mechanism of Action
Chemotherapy forms the basis of treatment in nearly all cancers.
We believe that VAL-083 may be effective in treating tumors exhibiting biological features that cause resistance to currently available
chemotherapy, particularly for patients who have failed, or become resistant to, other treatment regimens.
Based on published research and our own data, the cytotoxic
functional groups, and the mechanism of action of VAL-083 are functionally different from alkylating agents commonly used in the
treatment of cancer. VAL-083 has previously demonstrated activity in cell-lines that are resistant to other types of chemotherapy.
No evidence of cross-resistance has been reported in published clinical studies.
Our research suggests that VAL-083 attacks cancer cells via
a unique mechanism of action which is distinct from other chemotherapies used in the treatment of cancer. Our data indicate that
VAL-083 forms inter-strand crosslinks at the N7 position of guanine on the DNA of cancer cells. Our data also indicate
that this crosslink forms rapidly and is not easily repaired by the cancer cell resulting in cell-cycle arrest and lethal double-strand
DNA breaks in cancer cells. VAL-083 readily crosses the blood brain barrier. Published preclinical and clinical research demonstrate
that VAL-083 is absorbed more readily in tumor cells than in normal cells.
In vitro, our data also demonstrate that VAL-083’s
distinct mechanism may be able to overcome drug resistance against a range of cancers. For example, VAL-083 is active against MGMT-unmethylated
GBM cells which are resistant to treatment with temozolomide and nitrosoureas. VAL-083 also retains a high level of activity in
p53 mutated non-small cell lung cancer (“NSCLC”), ovarian cancer and medulloblastoma cell lines that are resistant
to platinum-based chemotherapy.
Importantly, clinical activity against each of the tumors mentioned
above was established in prior NCI-sponsored Phase 2 clinical studies. We believe that these historical clinical data and our own
research support the development of VAL-083 as a potential new treatment for multiple types of cancer.
The main dose-limiting toxicity (“DLT”) related
to the administration of VAL-083 in previous NCI-sponsored clinical studies and our own clinical studies is myelosuppression, particularly
thrombocytopenia. Myelosuppression, including thrombocytopenia, is a common side effect of chemotherapy. Myelosuppression is the
decrease in cells responsible for providing immunity, carrying oxygen, and causing normal blood clotting. Thrombocytopenia is a
reduction in platelet counts which assist in blood clotting. Modern medicine allows for better management of myelosuppressive side
effects. We believe this offers the potential opportunity to improve upon the drug’s already established efficacy profile
by substantially increasing the dose of VAL-083 that can be safely administered to cancer patients.
There is no evidence of lung, liver, or kidney toxicity even
with prolonged treatment by VAL-083. Data from the Chinese market where the drug has been approved for more than 15 years supports
the safety findings of the NCI studies.
Other Indications for VAL-083 — Potential Future Opportunities
Ovarian Cancer
Ovarian cancer is the fifth most common cancer in women and
is the leading cause of death among women diagnosed with gynecological malignancies. In 2016, approximately 22,300 women in the
US were diagnosed with ovarian cancer and 14,300 died from their disease.
VAL-083’s activity against ovarian epithelial adenocarcinoma
(“OEA”) and squamous cell carcinoma of the cervix (“SCC”) was reported in prior NCI-sponsored clinical
studies. Importantly, NCI-researchers recommended VAL-083 for further advanced studies in the treatment of ovarian cancer.
We have presented data demonstrating that VAL-083’s distinct
mechanism of action allows activity in tumors that are resistant to other therapies. We have shown that cytotoxicity of VAL-083
against ovarian cancer is independent of sensitivity to cisplatin or p53 status in vitro. We have demonstrated that VAL-083
is active in Pt-resistant ovarian cells harboring a range of p53-mutations.
In April 2016, the FDA granted orphan drug designation for the
use of VAL-083 in the treatment of ovarian cancer.
In September 2017, we filed an IND for the use of VAL-083 in
ovarian cancer, along with a protocol for a Phase 1/2, open-label, multicenter, study of VAL-083 in patients with Recurrent
Platinum Resistant Ovarian Cancer (the REPROVe study).
The FDA has allowed this study to begin enrolling patients,
but based on ongoing evaluation and input from our ovarian clinical advisory board, we are reassessing the ovarian cancer program.
We are in the process of evaluating the best path forward in ovarian cancer and are looking at various strategic options including
combination with PARP inhibitors. As a result, we have inactivated the IND while we explore alternative study designs.
Lung Cancer
Lung cancer is a leading cause of cancer death around the world
and effective treatment for lung cancer remains a significant global unmet need despite advances in therapy. Incidence of lung
cancer in the United States is approximately 47 per 100,000 with the majority (85%) being NSCLC, the most common type of lung cancer.
Globally, the market for lung cancer treatment may exceed $24 billion by 2033 according to a report published by Evaluate Pharma.
The activity of VAL-083 against solid tumors, including lung
cancer, has been established in both preclinical and human clinical studies conducted by the NCI. DelMar has developed new nonclinical
data to support the utility of VAL-083 in the modern treatment of lung cancer. In an established murine xenograft model of NSCLC,
the activity of VAL-083 was compared to standard platinum-based therapy with cisplatin against human NSCLC cell lines A549 (TKI-sensitive)
and H1975 (TKI-resistant). In the study, VAL-083 demonstrated superior efficacy and safety in the treatment of TKI-susceptible
(A549) tumors and in TKI-resistant (H1975) tumors.
Central Nervous System Metastases of Solid Tumors
The successful management of systemic tumors by modern targeted
therapies has led to increased incidence of mortality due to CNS metastases of lung cancer and other solid tumors. In June 2013,
we split our Phase 1/2 clinical study protocol into two separate studies: one focusing solely on refractory GBM and the other focusing
on secondary brain cancers caused by other tumors that have spread to the brain.
Based on historical clinical activity and our own research,
we believe that VAL-083 may be suitable for the treatment of patients with central nervous system metastases who currently have
limited treatment options. Subject to the availability of financial and operating resources, we may develop a separate protocol
for the continued exploration of VAL-083 in patients with secondary brain cancer caused by a solid tumor spreading to the brain.
Pediatric Brain Tumors
Tumors of the brain and spine make up approximately 20% of all
childhood cancers and they are the second most common form of childhood cancer after leukemia.
The activity of VAL-083 against childhood and adolescent brain
tumors has been established in both preclinical and human clinical studies conducted by the NCI. We have presented data indicating
that VAL-083 offers potential therapeutic alternatives for the treatment of pediatric brain tumors including SHH-p53 mutated medulloblastoma.
In March 2016, the FDA granted orphan drug designation for the use of VAL-083 in the treatment of medulloblastoma. Subject to the
availability of resources, we intend to collaborate with leading academic researchers for the continued exploration of VAL-083
as a potential treatment of childhood brain tumors.
Corporate History
We are a Nevada corporation formed on June 24, 2009 under the
name Berry Only, Inc. (“Berry’). Prior to a reverse acquisition undertaken on January 25, 2013 Berry did not have any
significant assets or operations. We are the parent company of Del Mar Pharmaceuticals (BC) Ltd. (“Del Mar (BC)”),
a British Columbia, Canada corporation incorporated on April 6, 2010, that is focused on the development of drugs for the treatment
of cancer. We are also the parent company to 0959454 B.C. Ltd., a British Columbia corporation (“Callco”), and 0959456
B.C. Ltd., a British Columbia, Canada corporation (“Exchangeco”). Callco and Exchangeco were formed to facilitate the
reverse acquisition.
Outstanding Securities
As of May 12 2020, we had 11,429,228 shares of common stock
issued and outstanding, outstanding warrants to purchase 10,209,456 shares of common stock, 648,613 outstanding shares of
Series B Preferred Stock that are convertible into 162,177 shares of common stock, and outstanding stock options to purchase
1,577,949 shares of common stock (of which 799,199 options are subject to stockholder approval of the increase in the number
of shares authorized for issuance under the 2017 Plan at the next annual meeting of stockholders). All warrants, and stock
options are convertible, or exercisable into, one share of common stock. Each Series B convertible preferred share is
convertible into 0.25 shares of common stock.
On May 8, 2019, we effected a one-for-ten reverse stock split
(the “Reverse Stock Split”) of our issued and outstanding and authorized common stock. All per share amounts and number
of shares of common stock in the MD&A and condensed consolidated interim financial statements reflect the Reverse Stock Split.
The Reverse Stock Split does not affect the our authorized preferred stock of 5,000,000 shares; except that, pursuant to the terms
of the Certificate of Designations of Series B Convertible Preferred Stock for the issued and outstanding shares of our Series
B Convertible Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”), the conversion price
at which shares of Series B Preferred Stock may be converted into shares of common stock will be proportionately adjusted to reflect
the Reverse Stock Split.
On June 26, 2019, we amended our articles of incorporation,
as amended, to increase the number of authorized shares of common stock from 7,000,000 to 95,000,000 shares.
Related Parties
We acquired our initial patents and technology rights from Valent,
an entity owned by Dr. Dennis Brown, our Chief Scientific Officer. As a result, Valent is a related party to us.
Selected Quarterly Information
The financial information reported herein
has been prepared in accordance with accounting principles generally accepted in the United States. Our functional currency at
March 31, 2020 and June 30, 2019 is the US$. The following tables represent selected financial information for us for the periods
presented.
Selected Balance Sheet Data
|
|
March 31,
2020
$
|
|
|
June 30,
2019
$
|
|
Cash and cash equivalents
|
|
|
4,973,378
|
|
|
|
3,718,758
|
|
Working capital
|
|
|
3,716,827
|
|
|
|
1,955,468
|
|
Total assets
|
|
|
5,102,241
|
|
|
|
4,037,255
|
|
Total stockholders’ equity
|
|
|
3,720,486
|
|
|
|
1,967,530
|
|
Selected Statement of Operations Data
Impact of COVID-19
The ultimate impact of the COVID-19 pandemic
on our operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence,
including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic,
and any additional preventative and protective actions that governments, or us, may determine are required.
To date, the COVID-19
pandemic has not caused significant disruption to our clinical studies. Each of our ongoing Phase 2 clinical studies is being conducted
at a single site which has reduced the risk of disruption. Patient visits are currently taking place on schedule for both the MDACC
study being conducted in Houston, Texas and the SYSUCC study being conducted in China. In addition, thus far, any disruptions to
patient treatments have been within allowances under each study protocol. Access to the sites by our clinical monitors has been
limited during the COVID-19 pandemic but the recording of study data in both studies and patient treatments at both study sites
are being conducted per protocol at this time.
For the three months ended:
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
$
|
|
|
$
|
|
Expenses
|
|
|
|
|
|
|
Research and development
|
|
|
898,720
|
|
|
|
735,844
|
|
General and administrative
|
|
|
1,077,642
|
|
|
|
935,530
|
|
|
|
|
1,976,362
|
|
|
|
1,671,374
|
|
Other (income) loss
|
|
|
|
|
|
|
|
|
Change in fair value of derivative liability
|
|
|
-
|
|
|
|
189
|
|
Foreign exchange (gain) loss
|
|
|
(2,416
|
)
|
|
|
5,819
|
|
Interest income
|
|
|
(16,964
|
)
|
|
|
(13,397
|
)
|
|
|
|
(19,380
|
)
|
|
|
(7,389
|
)
|
Net loss for the period
|
|
|
1,956,982
|
|
|
|
1,663,985
|
|
Series B preferred stock dividend
|
|
|
1,473
|
|
|
|
23,202
|
|
Net loss attributable to common stockholders
|
|
|
1,958,455
|
|
|
|
1,687,187
|
|
Basic and fully diluted number of shares
|
|
|
11,417,456
|
|
|
|
2,518,452
|
|
Basic and fully diluted loss per share
|
|
|
0.17
|
|
|
|
0.67
|
|
For the nine months ended:
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
$
|
|
|
$
|
|
Expenses
|
|
|
|
|
|
|
Research and development
|
|
|
2,332,388
|
|
|
|
2,702,213
|
|
General and administrative
|
|
|
3,045,017
|
|
|
|
2,796,884
|
|
|
|
|
5,377,405
|
|
|
|
5,499,097
|
|
Other (income) loss
|
|
|
|
|
|
|
|
|
Change in fair value of derivative liability
|
|
|
-
|
|
|
|
(852
|
)
|
Foreign exchange (gain) loss
|
|
|
(536
|
)
|
|
|
16,754
|
|
Interest income
|
|
|
(73,965
|
)
|
|
|
(49,513
|
)
|
|
|
|
(74,501
|
)
|
|
|
(33,611
|
)
|
Net loss for the period
|
|
|
5,302,904
|
|
|
|
5,465,486
|
|
Series B Preferred stock dividend
|
|
|
6,071
|
|
|
|
75,477
|
|
Net loss attributable to common stockholders
|
|
|
5,308,975
|
|
|
|
5,540,963
|
|
Basic and fully diluted number of shares
|
|
|
10,116,541
|
|
|
|
2,444,065
|
|
Basic and fully diluted loss per share
|
|
|
0.52
|
|
|
|
2.27
|
|
Expenses net of non-cash, share-based
compensation expense – non-GAAP
The following table discloses research
and development, and general and administrative expenses net of non-cash, share-based compensation payment expense. The disclosure
has been provided to reconcile the total operational expenses on a GAAP basis and the non-GAAP operational expenses net of non-cash,
stock-based compensation in order to provide an estimate of cash used in research and development, and general and administrative
expense. Management uses the cash basis of expenses for forecasting and budget purposes to determine the allocation of resources
and to plan for future financing opportunities.
For the three months ended:
|
|
March 31,
2020
$
|
|
|
March 31,
2019
$
|
|
|
|
|
|
|
|
|
Research and development - GAAP
|
|
898,720
|
|
|
735,844
|
|
Less: non-cash, share-based compensation expense
|
|
|
(26,853
|
)
|
|
|
(16,401
|
|
Research and development net of non-cash, share-based, compensation expense – Non-GAAP
|
|
|
871,867
|
|
|
|
719,443
|
|
|
|
|
|
|
|
|
|
|
General and administrative - GAAP
|
|
|
1,077,642
|
|
|
|
935,530
|
|
Less: non-cash, share-based compensation expense
|
|
|
(172,062
|
)
|
|
|
(155,756
|
|
General and administrative net of non-cash, share-based, compensation expense – Non-GAAP
|
|
|
905,580
|
|
|
|
779,774
|
|
For the nine months ended:
|
|
March 31,
2020
$
|
|
|
March 31,
2019
$
|
|
|
|
|
|
|
|
|
Research and development - GAAP
|
|
|
2,332,388
|
|
|
|
2,702,213
|
|
Less: non-cash, share-based compensation expense
|
|
|
(67,344
|
)
|
|
|
(74,735
|
)
|
Research and development net of non-cash, share-based, compensation expense – Non-GAAP
|
|
|
2,265,044
|
|
|
|
2,627,478
|
|
|
|
|
|
|
|
|
|
|
General and administrative - GAAP
|
|
|
3,045,017
|
|
|
|
2,796,884
|
|
Less: non-cash, share-based compensation expense
|
|
|
(385,267
|
)
|
|
|
(510,661
|
)
|
General and administrative net of non-cash, share-based, compensation expense – Non-GAAP
|
|
|
2,659,750
|
|
|
|
2,286,223
|
|
Results of Operations
Comparison of the three months ended
March 31, 2020 and March 31, 2019
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
March 31,
2020
$
|
|
|
March 31,
2019
$
|
|
|
Change
$
|
|
|
Change
%
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
898,720
|
|
|
|
735,844
|
|
|
|
162,876
|
|
|
|
22
|
|
General and administrative
|
|
|
1,077,642
|
|
|
|
935,530
|
|
|
|
142,112
|
|
|
|
15
|
|
|
|
|
1,976,362
|
|
|
|
1,671,374
|
|
|
|
304,988
|
|
|
|
|
|
Other (income) loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of derivative liability
|
|
|
-
|
|
|
|
189
|
|
|
|
(189
|
)
|
|
|
(100
|
)
|
Foreign exchange (gain) loss
|
|
|
(2,416
|
)
|
|
|
5,819
|
|
|
|
(8,235
|
)
|
|
|
(142
|
)
|
Interest income
|
|
|
(16,964
|
)
|
|
|
(13,397
|
)
|
|
|
(3,567
|
)
|
|
|
27
|
|
|
|
|
(19,380
|
|
|
|
(7,389
|
)
|
|
|
(11,991
|
)
|
|
|
|
|
Net loss for the period
|
|
|
1,956,982
|
|
|
|
1,663,985
|
|
|
|
292,997
|
|
|
|
|
|
Research and Development
Research and development expenses increased to $898,720 for
the three months ended March 31, 2020 from $735,844 for the three months ended March 31, 2019. The increase was primarily attributable
to an increase in clinical development costs partially offset by lower preclinical research expenses.
The increase in clinical development costs for the three months
ended March 31, 2020 compared to the three months ended March 31, 2019 was largely due to enrollment in our ongoing Phase 2 clinical
studies. During the current period, we announced we had exceeded 50% enrollment in the adjuvant arm of our Phase 2 study at MDACC.
This study began enrolling earlier this fiscal year and as result had no related expenses in the three months ended March 31, 2019.
Preclinical research decreased in the three months ended March 31, 2020 compared to the three months ended March 31, 2019 due in
part to us deferring certain studies as well as focusing our resources on our clinical studies in the current period.
General and Administrative
General and administrative expenses were $1,077,642 for the three
months ended March 31, 2020 compared to $935,530 for the three months ended March 31, 2019. The increase was primarily due to an
increase in professional fees with smaller increases due to higher office and sundry, as well as non-cash, share-based compensation
expenses.
Professional fees increased during the three months ended March
31, 2020 compared to the three months ended March 31, 2019 primarily due higher legal fees as well as increased investor relations
costs. Office and sundry increased in the current period compared to the prior period due to higher insurance costs. Non-cash,
share-based compensation expense increased during the three months ended March 31, 2020 compared to the three months ended March
31, 2019 largely due to higher expenses recognized for warrants issued for services partially offset by lower stock option expense.
Preferred Share Dividends
For each of the three months ended March
31, 2020 and 2019 we recorded $2,089 related to the dividend payable to Valent on the Series A preferred stock. The dividend has
been recorded as a direct increase in accumulated deficit for both periods.
We issued 3,700 (2019 – 4,735) shares
of common stock on March 31, 2020 as a dividend on the Series B Preferred stock and recognized $1,473 (2019 - $23,202) as a direct
increase in accumulated deficit.
Comparison of the nine months ended
March 31, 2020 and March 31, 2019
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
|
|
March 31,
2020
$
|
|
|
March 31,
2019
$
|
|
|
Change
$
|
|
|
Change
%
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
2,332,388
|
|
|
|
2,702,213
|
|
|
|
(369,825
|
)
|
|
|
(14
|
)
|
General and administrative
|
|
|
3,045,017
|
|
|
|
2,796,884
|
|
|
|
248,133
|
|
|
|
9
|
|
General and administrative
|
|
|
5,377,405
|
|
|
|
5,499,097
|
|
|
|
(121,692
|
)
|
|
|
|
|
Other (income) loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of derivative liability
|
|
|
-
|
|
|
|
(852
|
)
|
|
|
852
|
|
|
|
(100
|
)
|
Foreign exchange (gain) loss
|
|
|
(536
|
)
|
|
|
16,754
|
|
|
|
(17,290
|
)
|
|
|
(103
|
)
|
Interest income
|
|
|
(73,965
|
)
|
|
|
(49,513
|
)
|
|
|
(24,452
|
)
|
|
|
49
|
|
|
|
|
(74,501
|
)
|
|
|
(33,611
|
)
|
|
|
(40,890
|
)
|
|
|
|
|
Net loss for the period
|
|
|
5,302,904
|
|
|
|
5,465,486
|
|
|
|
(162,582
|
)
|
|
|
|
|
Research and Development
Research and development expenses decreased
to $2,332,388 for the nine months ended March 31, 2020 from $2,702,213 for the nine months ended March 31, 2019. The decrease was
largely attributable to lower preclinical research, personnel, and intellectual property expenses in the current period compared
to the prior period.
Preclinical research costs have decreased in the current period
due to the completion, or deferral, of studies that were ongoing in the prior period as well as us focusing our resources on our
clinical studies in the current period. Personnel costs have decreased in nine months ended March 31, 2020 compared to the nine
months ended March 31, 2019 due a reduction in full-time employee head count in the current period compared to the prior period.
Intellectual property costs decreased in the nine months ended March 31, 2020 compared to the nine months ended March 31, 2019
as we have refined our patent portfolio by focusing on our most important patent claims in the most strategic jurisdictions. Patent
costs can vary considerably depending on the filing of new patents, conversion of the provisional applications to PCT applications,
foreign office actions, and actual filing costs.
General and Administrative
General and administrative expenses were
$3,045,017 for the nine months ended March 31, 2020 compared to $2,796,884 for the nine months ended March 31, 2019.
A significant portion of the increase was due to higher professional
fees, office and sundry, and personnel expenses partially offset by lower non-cash, share-based compensation expense in the current
period compared to the prior period.
Professional fees increased due to a variety of factors including
accounting and legal fees and increased investor outreach expenses during the nine months ended March 31, 2020 compared to the
nine months ended March 31, 2019. Office and sundry has increased in the nine months ended March 31, 2020 compared to the nine
months ended March 31, 2019 due primarily to costs of higher directors’ and officers’ liability insurance.
In relation to general and administrative expenses during the
nine months ended March 31, 2020, we incurred non-cash, share-based compensation expense relating to warrants issued for services
and stock option expense while during the nine months ended March 31, 2019, we incurred non-cash, share-based compensation expense
relating to performance share units, warrants issued for services, and stock option expense. All performance share units were canceled
on April 30, 2019 so there was no related expense incurred during the nine months ended March 31, 2020.
Preferred Share Dividends
For each of the nine-month periods ended
March 31, 2020 and 2019 we recorded $6,267 related to the dividend payable to Valent on the Series A preferred stock. The dividend
has been recorded as a direct increase in accumulated deficit for both periods.
During the nine months ended March 31,
2020, we issued 11,100 (2019 – 14,430) shares of common stock as a dividend on the Series B Preferred stock and recognized
$6,071 (2019 - $75,477) as a direct increase in accumulated deficit.
Liquidity and Capital Resources
Nine months ended March 31, 2020 compared
to the nine months ended March 31, 2019
|
|
March 31,
2020
$
|
|
|
March 31,
2019
$
|
|
|
Change
$
|
|
|
Change
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
(5,348,629
|
)
|
|
|
(4,514,674
|
)
|
|
|
(833,955
|
)
|
|
|
18
|
|
Cash flows from financing activities
|
|
|
6,603,249
|
|
|
|
694,912
|
|
|
|
5,908,337
|
|
|
|
850
|
|
The COVID-19 pandemic has created significant
economic uncertainty and volatility in the credit and capital markets. We have cash available to fund planned operations into
the fourth quarter of calendar 2020. Consequently, management is pursuing various financing
alternatives to fund our operations so we can continue as a going concern. However, the COVID-19 pandemic has created significant
economic uncertainty and volatility in the credit and capital markets. Management plans to secure the necessary financing through
the issue of new equity and/or the entering into of strategic partnership arrangements but the ultimate impact of the COVID-19
pandemic on our ability to raise additional capital is unknown and will depend on future developments, which are highly uncertain
and cannot be predicted with confidence, including the duration of the COVID-19 outbreak and new information which may emerge
concerning the severity of the COVID-19 pandemic. We may not be able to raise sufficient
additional capital and may tailor our drug candidate development program based on the amount of funding we are able to raise in
the future. Nevertheless, there is no assurance that these initiatives will be successful.
Operating Activities
Net cash used in operating activities increased to $5,348,629 for
the nine months ended March 31, 2020 from $4,514,674 for the nine months ended March 31, 2019. During the nine months ended March
31, 2020 and 2019 we reported net losses of $5,302,904 and $5,465,486, respectively. Non-cash items relating to amortization of
intangible assets, warrants and shares issued for services, performance stock unit expense (2019 only), and stock option expense
totaled $461,014 (2019 - $598,944) for the nine months ended March 31, 2020. The most significant changes in working capital for
the nine months ended March 31, 2020 were from a use of cash from a reduction in accounts payable and accrued liabilities of $658,946
and a source of cash from the reduction in prepaid expenses of $165,383. The most significant change in working capital for the
nine months ended March 31, 2019 was cash from a reduction in prepaid expenses and deposits of $794,859 largely due to a partial
refund of a clinical study deposit, and cash used in a decrease in accounts payable and accrued liabilities of $425,383.
Financing Activities
During the nine months ended March 31,
2020 we received $6,582,966 in net proceeds from the completion of an underwritten public offering by us of common stock, pre-funded
warrants, and common stock purchase warrants. Additionally, we received $26,550 pursuant to the exercise of warrants in the current
period. During the nine months ended March 31, 2019, we received $726,719 from the exercise of warrants.
Going Concern and Capital Expenditure
Requirements
Going Concern
(See
note 1 to the condensed consolidated interim financial statements)
The
condensed consolidated interim financial statements have been prepared on a going concern basis which assumes that we will continue
our operations for the foreseeable future and contemplates the realization of assets and the settlement of liabilities in the normal
course of business.
For the nine months ended March 31, 2020, we reported a loss of
$5,302,904 and negative cash flow from operations of $5,348,629. As of March 31, 2020, we had an accumulated deficit of $65,893,587
and cash and cash equivalents on hand of $4,973,378. We are in the development stage and have not generated any revenues to date.
We do not have the prospect of achieving revenues until such time that our product candidate is commercialized, or partnered, which
may not ever occur. In the near future, we will require additional funding to maintain our clinical trials, research and development
projects, and for general operations. These circumstances indicate substantial doubt exists about our ability to continue as a
going concern.
Consequently, management is
pursuing various financing alternatives to fund our operations so we can continue as a going concern. However, the COVID-19 pandemic
has created significant economic uncertainty and volatility in the credit and capital markets. Management plans to secure the necessary
financing through the issue of new equity and/or the entering into of strategic partnership arrangements but the ultimate
impact of the COVID-19 pandemic on our ability to raise additional capital is unknown and will depend on future developments, which
are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak and new information
which may emerge concerning the severity of the COVID-19 pandemic. We may not be able to
raise sufficient additional capital and may tailor our drug candidate development program based on the amount of funding we are
able to raise in the future. Nevertheless, there is no assurance that these initiatives will be successful.
The financial statements do not give effect to any adjustments
to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.
Such adjustments could be material.
Our future funding requirements will depend
on many factors, including but not limited to:
|
●
|
the rate of progress and cost of our clinical trials, preclinical studies and other discovery and research and development activities;
|
|
|
|
|
●
|
the costs associated with establishing manufacturing and commercialization capabilities;
|
|
|
|
|
●
|
the costs of acquiring or investing in businesses, product candidates and technologies;
|
|
|
|
|
●
|
the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;
|
|
|
|
|
●
|
the costs and timing of seeking and obtaining FDA and other regulatory approvals;
|
|
|
|
|
●
|
the effect of competing technological and market developments;
|
|
|
|
|
●
|
the economic and other terms and timing of any collaboration, licensing or other arrangements into which we may enter; and
|
|
|
|
|
●
|
the impact of us being a public entity.
|
Until we can generate a sufficient amount of product revenue
to finance our cash requirements, which we may never do, we expect to finance future cash needs primarily through public or private
equity offerings, or strategic collaborations. The sale of equity and convertible debt securities may result in dilution to our
stockholders and certain of those securities may have rights senior to those of our shares of capital stock. If we raise additional
funds through the issuance of preferred stock, convertible debt securities or other debt financing, these securities or other debt
could contain covenants that would restrict our operations. Any other third-party funding arrangement could require us to relinquish
valuable rights. Economic conditions may affect the availability of funds and activity in equity markets. We do not know whether
additional funding will be available on acceptable terms, or at all. If we are not able to secure additional funding when needed,
we may have to delay, reduce the scope of or eliminate one or more of our clinical trials or research and development programs
or make changes to our operating plan. In addition, we may have to seek a partner for one or more of our product candidate programs
at an earlier stage of development, which would lower the economic value of those programs to us.
Critical Accounting Policies
The preparation of financial statements, in conformity with
generally accepted accounting principles in the United States, requires companies to establish accounting policies and to make
estimates that affect both the amount and timing of the recording of assets, liabilities, revenues and expenses. Some of these
estimates require judgments about matters that are inherently uncertain and therefore actual results may differ from those estimates.
A detailed presentation of all of our significant accounting
policies and the estimates derived therefrom is included in Note 2 to our consolidated financial statements for the year ended
June 30, 2019 contained in our Form 10-K filed with the SEC on September 9, 2019. While all of the significant accounting policies
are important to our condensed consolidated financial statements, the following accounting policies and the estimates derived therefrom
are critical:
|
●
|
Warrants and shares issued for services
|
|
|
|
|
●
|
Stock options
|
|
|
|
|
●
|
Accruals for research and development expenses and clinical trials
|
Warrants and shares issued for services
We have issued equity instruments for services provided by employees
and nonemployees. The equity instruments are valued at the fair value of the instrument granted.
Stock options
We account for these awards under Accounting Standards Codification
(“ASC”) 718, “Compensation - Stock Compensation” (“ASC 718”). ASC 718 requires measurement
of compensation cost for all stock-based awards at fair value on the date of grant and recognition of compensation over the requisite
service period for awards expected to vest. Compensation expense for unvested options to non-employees is revalued at each period
end and is being amortized over the vesting period of the options. The determination of grant-date fair value for stock option
awards is estimated using the Black-Scholes model, which includes variables such as the expected volatility of our share price,
the anticipated exercise behavior of its grantee, interest rates, and dividend yields. These variables are projected based on our
historical data, experience, and other factors. Changes in any of these variables could result in material adjustments to the expense
recognized for share-based payments. Such value is recognized as expense over the requisite service period, net of actual forfeitures,
using the accelerated attribution method. We recognize forfeitures as they occur. The estimation of stock awards that will ultimately
vest requires judgment, and to the extent actual results, or updated estimates, differ from current estimates, such amounts are
recorded as a cumulative adjustment in the period estimates are revised.
Accruals for research and development
expenses and clinical trials
As part of the process of preparing our financial statements,
we are required to estimate our expenses resulting from our obligations under contracts with vendors, clinical research organizations
and consultants, and under clinical site agreements in connection with conducting clinical trials. The financial terms of these
contracts are subject to negotiations, which vary from contract to contract and may result in payment terms that do not match the
periods over which materials or services are provided under such contracts. Our objective is to reflect the appropriate expenses
in our financial statements by matching those expenses with the period in which services are performed and efforts are expended.
We account for these expenses according to the timing of various aspects of the expenses. We determine accrual estimates by taking
into account discussion with applicable personnel and outside service providers as to the progress of clinical trials, or the services
completed. During the course of a clinical trial, we adjust our clinical expense recognition if actual results differ from our
estimates. We make estimates of our accrued expenses as of each balance sheet date based on the facts and circumstances known to
us at that time. Our clinical trial accruals are dependent upon the timely and accurate reporting of contract research organizations
and other third-party vendors. Although we do not expect our estimates to be materially different from amounts actually incurred,
our understanding of the status and timing of services performed relative to the actual status and timing of services performed
may vary and may result in us reporting amounts that are too high or too low for any particular period. For the three and nine
months ended March 31, 2020 and 2019, there were no material adjustments to our prior period estimates of accrued expenses for
clinical trials.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.