Tuhura Biosciences, Inc. quarterly report, Q3 FY2019

Filing identity and reporting period

The supplied filing is DelMar Pharmaceuticals, Inc.’s unaudited Form 10-Q for the quarter and nine months ended March 31, 2019, filed May 14, 2019. This does not match the request metadata naming Tuhura Biosciences, Inc. and 2018 Q3; the summary below reflects the filing text provided.

Business context and financial results

DelMar is a clinical-stage oncology company developing VAL-083, principally for glioblastoma. It reported no revenue to date and is funding research and clinical development.

No revenue or operating margin was reported. At March 31, 2019, cash and cash equivalents were $2,152,233; total assets were $2,457,126; working capital was $1,244,563; current liabilities were $1,197,700; and stockholders’ equity was $1,259,161. Accumulated deficit was $57,988,567. The filing reports no conventional debt balance; principal liabilities shown were payables and accrued liabilities, related-party payables, and a small derivative liability.

Material changes versus comparable periods

• Quarterly net loss declined from $2,933,057 to $1,663,985; nine-month net loss declined from $8,761,061 to $5,465,486.
• R&D expense fell 59% for the quarter and 54% for the nine months, mainly reflecting lower clinical-development spending, including costs associated with the parked STAR-3 Phase 3 study, as well as lower personnel, preclinical, and intellectual-property costs.
• Quarterly G&A expense fell 19%; nine-month G&A fell 4%. Lower professional fees and travel were partly offset by higher personnel and share-based compensation costs.
• Nine-month operating cash use improved from $7,318,012 to $4,514,674. Cash nevertheless declined by $3,819,762 over the nine months, compared with an increase of $1,920,908 in the prior-year period. Current-period financing cash flow was $694,912, primarily from warrant exercises; the prior period included $8,945,336 net proceeds from an equity offering.
• Cash fell from $5,971,995 at June 30, 2018 to $2,152,233 at March 31, 2019. The company issued 296,667 common shares through warrant exercises and exchanges during the nine months.

Outlook, developments, and risks

• Going concern: Management states that substantial doubt exists about the company’s ability to continue as a going concern. It needs additional funding to sustain clinical trials, R&D, and operations; equity financing or strategic partnerships are proposed, with no assurance of success. Programs may be adjusted to available funding.
• Financing: A rights offering registered after quarter-end sought up to $8 million gross, with closing expected in the first week of June 2019. The offering was not assured to close. Management expected proceeds to help address Nasdaq stockholders’ equity requirements.
• Clinical program: As of March 2019, 47 of 48 planned patients were enrolled in the MD Anderson recurrent GBM Phase 2 study; management forecast full enrollment in Q2 2019. The dose was reduced from 40 to 30 mg/m² to seek better tolerance. The MD Anderson IRB approved adding up to 35 patients at the lower dose and up to 24 patients in a potential pre-temozolomide maintenance study, subject to financing and regulatory approvals.
• In the China Phase 2 study for newly diagnosed MGMT-unmethylated GBM, 15 of up to 30 patients were enrolled as of February 15, 2019. Company-reported interim results included five complete responses and six stable-disease assessments among 11 patients with initial post-cycle-3 assessments; these are preliminary, company-reported findings.
• Myelosuppression, particularly thrombocytopenia, is the principal reported safety concern. The ovarian-cancer program was under reassessment; strategic options included potential combination with PARP inhibitors.
• Nasdaq: The company received an extension through June 25, 2019 to regain minimum-bid-price compliance, requiring a closing bid of at least $1 for ten consecutive business days. A 1-for-10 reverse stock split became effective May 8, 2019. The filing also says stockholders’ equity requirements were not met as of March 31, 2019; delisting remained a risk.
• Controls: Management concluded disclosure controls and procedures were not effective at quarter-end because of a material weakness previously described in its 2018 Form 10-K. No material changes in internal control were reported during the quarter.
• After quarter-end, the board cancelled all 120,000 outstanding performance stock units and temporarily reduced the 2017 Plan share reserve. The company reported no legal proceedings and no off-balance-sheet arrangements.

Key investor verification points

• Confirm the issuer and period: the supplied text is DelMar Pharmaceuticals’ 2019 Q3 filing, not a Tuhura Biosciences 2018 Q3 filing.
• Check whether the rights offering closed, how much capital it raised, and whether proceeds addressed Nasdaq equity and liquidity needs.
• Verify Nasdaq bid-price and stockholders’ equity compliance after the reverse split and the status of any delisting risk.
• Review current cash runway, planned spending, and whether financing or partnerships are sufficient to continue the clinical programs.
• Assess the design, enrollment, safety, and independently reported results of VAL-083 trials; do not treat the interim response assessments as established efficacy.
• Review remediation of the disclosed material weakness and potential dilution from warrants, preferred shares, equity plans, and future fundraising.