Filing summary
Entity note: The request identifies Tuhura Biosciences, Inc., but the supplied Form 10-K is for DelMar Pharmaceuticals, Inc. This summary covers DelMar’s filing, not a Tuhura filing.
Business context and reporting period
DelMar is a clinical-stage oncology drug developer focused primarily on VAL-083, an investigational DNA-targeting chemotherapy. The fiscal year ended June 30, 2018; the filing was signed September 21, 2018. The company reported no revenue and was dependent on external financing. VAL-083 was being studied in two Phase 2 trials for MGMT-unmethylated glioblastoma (GBM); its China partner held certain commercial rights where the drug was approved for chronic myelogenous leukemia and lung cancer.
Financial results and liquidity
| Metric (US$) | FY2018 / June 30, 2018 | FY2017 / June 30, 2017 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $7.13 million | $5.00 million |
| General and administrative expense | $4.04 million | $3.32 million |
| Net loss | $11.14 million | $8.08 million |
| Basic loss per share | $0.54 | $0.74 |
| Cash used in operating activities | $9.85 million | $8.02 million |
| Cash and cash equivalents | $5.97 million | $6.59 million |
| Working capital | $5.41 million | $6.57 million |
| Total assets | $7.07 million | $7.91 million |
| Total liabilities | $1.64 million | $1.33 million |
| Stockholders’ equity | $5.44 million | $6.58 million |
Operating margins are not meaningful because the company had no revenue. No conventional interest-bearing debt is identified in the supplied financial statements; liabilities primarily comprise accounts payable, related-party payables, and a small derivative liability. Operating cash outflow rose 23%. Financing provided $9.25 million, including $8.95 million net proceeds from a September 2017 registered offering of shares and warrants. The company stated cash was expected to fund operations into mid-2019.
Material changes and operating developments
- R&D expense increased 43%, mainly reflecting greater clinical-development, manufacturing, personnel, and preclinical costs. G&A increased 22%, including higher professional and personnel costs.
- Net loss widened by $3.06 million. The lower warrant and stock-option revaluation gain versus the prior year also affected the comparison; these fair-value changes can make reported results volatile.
- Common shares issued rose from 14.51 million at June 30, 2017 to 22.97 million at June 30, 2018. The September 2017 offering included 8.0 million shares and 8.0 million five-year warrants, creating dilution and potential future dilution.
- After the reporting date, management said 40 of 48 planned patients had enrolled in the recurrent GBM Phase 2 study at MD Anderson, and 9 of up to 30 in the newly diagnosed GBM study in China. These are subsequent-date enrollment updates, not June 30 figures.
Outlook, risks, and unusual items
- Going concern: The auditor’s report highlights substantial doubt about the company’s ability to continue as a going concern. Management planned to seek equity financing and/or strategic partnerships; success was not assured, and development plans could be reduced if funding proved insufficient.
- Clinical programs: The STAR-3 Phase 3 GBM trial was discontinued except for support of its one remaining patient, following low enrollment and concerns about recruitment. The ovarian cancer program was being reassessed, including possible combinations with PARP inhibitors.
- Development risk: VAL-083 remained investigational in the company’s principal markets. Trial results, safety, enrollment, regulatory approval, manufacturing, and commercial uptake were uncertain. Myelosuppression, particularly low platelet counts, was identified as the main dose-limiting toxicity in prior studies.
- Strategic review: In September 2018, DelMar engaged Oppenheimer & Co. to evaluate alternatives including financing, licensing, acquisition, merger, or another strategic transaction. No outcome was assured.
- Nasdaq listing: The company received a minimum-bid-price deficiency notice on June 28, 2018 and had until December 26, 2018 to regain compliance, subject to Nasdaq rules.
- Controls: Management concluded disclosure controls and internal control over financial reporting were ineffective at June 30, 2018 because of material weaknesses, including inadequate segregation of duties. External consultants were assisting with remediation.
- Other items: A $311,683 expense was recognized in connection with a settlement involving the former president and COO. The company disclosed $654,829 of clinical/manufacturing commitments relating to the parked Phase 3 trial, alongside $921,027 in deposits available against certain CRO invoices.
The filing provides no revenue guidance or profitability forecast. Management’s outlook centered on securing additional funding and advancing selected clinical programs.
Most important facts for investors to verify
- Confirm the issuer and filing match the intended company: the supplied filing names DelMar Pharmaceuticals, Inc., not Tuhura Biosciences, Inc.
- Check subsequent filings for financing, cash runway, and any change to the going-concern assessment.
- Verify whether DelMar regained Nasdaq bid-price compliance by the stated deadline and whether its strategic review produced a transaction.
- Review subsequent clinical-trial disclosures for enrollment, safety, efficacy, and the revised dosing protocol in the GBM studies.
- Assess potential dilution from outstanding warrants, options, preferred stock, and equity awards, and monitor remediation of the reported control weaknesses.