Business context and reporting period
BriaCell Therapeutics Corp. is a clinical-stage immuno-oncology biotechnology company focused on cancer immunotherapies. This Form 10-Q covers the fiscal quarter and nine months ended April 30, 2023; amounts are in U.S. dollars. The company reported no revenue and is devoting substantially all resources to research and development. The cover page marks the company as a shell company.
Financial results and liquidity
| Metric | Three months ended Apr. 30, 2023 | Nine months ended Apr. 30, 2023 |
|---|---|---|
| Revenue | None reported | None reported |
| Research and development expense | $3.86 million | $10.17 million |
| General and administrative expense | $1.82 million | $5.40 million |
| Operating loss | $5.68 million | $15.57 million |
| Net loss | $4.90 million | $17.88 million |
| Loss per share, basic and diluted | $0.32 | $1.15 |
| Operating cash used | Not presented for quarter | $12.83 million |
For the nine months, cash and cash equivalents fell to $28.17 million from $41.04 million at July 31, 2022. Total assets were $29.72 million; current liabilities were $1.38 million. The balance sheet implies working capital of $28.12 million, but one MD&A passage gives $29.12 million; another gives $28.12 million. This inconsistency should be checked against the filed statements. The company reported no interest-bearing debt. Its $34.23 million warrant liability is non-current and fair-value-based; shareholders’ equity was a deficit of $5.89 million. Margins are not meaningful because the company reported no revenue.
Changes versus prior comparable periods
Quarterly R&D expense rose 70% year over year, primarily with expanded Bria-IMT clinical activity, higher clinical and investigational-drug costs, and increased staffing and preclinical work. Nine-month R&D expense more than doubled to $10.17 million. Quarterly G&A was broadly flat; nine-month G&A increased modestly. Nine-month operating cash use increased from $9.16 million to $12.83 million.
Net losses were lower than the prior-year comparisons, chiefly because warrant-liability remeasurement was less unfavorable: the nine-month warrant fair-value loss was $2.97 million versus $16.38 million in 2022. The quarter included a $0.54 million warrant fair-value gain versus a $5.93 million loss in the prior-year quarter. These valuation changes are not operating cash flows.
Outlook, risks and notable items
- Management expects continuing operating losses and says existing capital resources should meet expected liquidity needs for at least 12 months from issuance of the statements. It also expects to evaluate and may need additional capital; there is no assurance financing will be available or sufficient.
- After quarter-end, BriaCell received $4.0 million gross from issuing 463,408 shares to Prevail Partners on May 12, 2023.
- On May 24, 2023, the company agreed to pay $230,000 to settle an investor dispute. The settlement was paid after the reporting date.
- A proposed spinout of certain preclinical assets into BriaPro was subject to shareholder, court, and exchange approvals, with completion then anticipated by August 2023. BriaCell proposed initially retaining 66.67% of SpinCo.
- The company reported positive preliminary clinical observations in small groups of heavily pretreated advanced breast cancer patients receiving Bria-IMT with retifanlimab. These are company-reported results, not evidence of established efficacy; the filing describes an ongoing study. BriaCell said the FDA had agreed on key elements of a planned pivotal study. It expected to initiate a Bria-OTS study under an IND in the second half of 2023.
- COVID-19 had delayed clinical and research programs by at least one quarter, according to management; further delays could not be ruled out. Foreign-exchange exposure exists, and the company does not use derivatives to hedge it.
- Management concluded disclosure controls were not effective at April 30, 2023, due to material weaknesses in internal control over financial reporting, and described ongoing remediation.
Important facts for investors to verify
- Reconcile the MD&A working-capital figure with the balance-sheet calculation; the filing gives inconsistent amounts.
- Assess cash runway against the reported $12.83 million nine-month operating cash use, planned clinical spending, and any future financing needs.
- Review the warrant terms, valuation sensitivity, and potential dilution; 8.12 million purchase warrants were outstanding at April 30, 2023.
- Track clinical-trial enrollment, full data and safety disclosures, and actual progress toward FDA-agreed pivotal-study plans and the Bria-OTS IND timeline.
- Confirm whether the proposed BriaPro arrangement received the required approvals and closed, and review the consequences for shareholders and warrant holders.
- Monitor remediation of the disclosed material weaknesses and any subsequent updates to internal controls.