Filing summary
Entity and period: The supplied filing is for DelMar Pharmaceuticals, Inc. (Nasdaq: DMPI), not Tuhura Biosciences, Inc. It is a Form 10-Q for the quarter ended September 30, 2019—the first quarter of DelMar’s fiscal 2020. The interim financial statements are unaudited.
Business context
DelMar is a clinical-stage drug developer with no revenue to date. Its lead candidate, VAL-083, is being studied in Phase 2 trials for glioblastoma multiforme (GBM), including recurrent and newly diagnosed MGMT-unmethylated disease. The filing describes ovarian cancer and other solid tumors as potential future opportunities; the ovarian program was being reassessed.
Financial position and results
| Metric | Quarter ended Sep. 30, 2019 | Comparable 2018 period or prior balance-sheet date |
|---|---|---|
| Revenue | None to date | None to date |
| Research and development expense | $721,475 | $1,019,120 |
| General and administrative expense | $913,628 | $986,470 |
| Net loss | $1,605,871 | $1,991,804 |
| Loss per share | $0.21 | $0.88 |
| Cash used in operating activities | $2,266,146 | $2,084,923 |
| Cash and cash equivalents | $8,060,039 | $3,718,758 at June 30, 2019 |
| Working capital | $7,015,653 | $1,955,468 at June 30, 2019 |
| Total assets | $8,363,757 | $4,037,255 at June 30, 2019 |
| Stockholders’ equity | $7,024,914 | $1,967,530 at June 30, 2019 |
Expenses and losses are presented; revenue and profit margins are not meaningful because the company has not commercialized a product. The filing reports no material debt balance; reported liabilities are current, including $1,338,843 in accounts payable, accrued liabilities, and related-party payables at quarter-end.
Changes, funding and dilution
- On August 16, 2019, DelMar completed an underwritten offering of common shares and warrants, raising net proceeds of $6,582,966. It also received $26,550 from pre-funded warrant exercises. Financing cash flow was $6,607,427 for the quarter.
- The offering materially increased cash and equity but also expanded potential dilution. At September 30, 2019, 11,406,233 common shares were issued and 9,683,596 warrants were outstanding. The new investor warrants covered 7,762,500 shares at $1.00 per share, expiring August 2024.
- Quarterly net loss fell by about 19% year over year, mainly as R&D and G&A expenses declined. Operating cash use nevertheless increased by about 9%, in part reflecting reductions in accounts payable and related-party payables.
- The company granted 1,041,016 options to officers and directors during the quarter; 549,199 were subject to shareholder approval of an increase in the plan’s share reserve. The filing also reports a subsequent grant of 250,000 options to the Chief Scientific Officer, subject to approval.
Outlook, risks and unusual items
- Going concern: Management stated that additional funding would be required and that substantial doubt existed about the company’s ability to continue as a going concern within one year from the filing date. It planned to seek equity financing and/or strategic partnerships; success was not assured. Management said the August financing was expected to fund enrollment in all three patient groups of the two ongoing Phase 2 studies through expected full enrollment by Q4 2020, a forward-looking estimate rather than a guarantee.
- Clinical updates: In the SYSUCC newly diagnosed GBM study, management reported that 17 of the first 20 patients had an assessment: nine had investigator-assessed complete responses, seven stable disease, and one progression. Sixteen of the 20 patients were alive at the reported data cutoff. These are preliminary, single-arm results and should not be treated as established efficacy. In the MD Anderson recurrent GBM study, 56 patients had been enrolled as of July 24, 2019; the filing also describes dose and eligibility changes intended to address myelosuppression.
- Key risks: Clinical and regulatory outcomes are uncertain; VAL-083’s principal reported dose-limiting toxicity is myelosuppression, particularly thrombocytopenia. DelMar had no product revenue and depended on future financing. Nasdaq notified the company that it did not meet the $1.00 minimum bid-price requirement, with a deadline of March 24, 2020 to regain compliance. Failure to comply could lead to delisting and impair access to capital.
- Controls and governance: Management concluded disclosure controls were ineffective at quarter-end because of a material weakness previously identified in the fiscal 2019 Form 10-K. The filing reports no material change in internal control during the quarter.
- Other: The filing reports no legal proceedings and no off-balance-sheet arrangements. It says the prior strategic-advisor agreement was terminated October 19, 2019, with no termination fee.
Important facts for investors to verify
- Confirm the issuer and reporting period: the supplied filing identifies DelMar Pharmaceuticals and a quarter ended September 30, 2019, despite the request metadata naming Tuhura Biosciences and “2019 Q1.”
- Review subsequent cash use, financing availability, and management’s going-concern disclosures; the quarter-end cash balance does not remove the stated need for future funding.
- Check current trial enrollment, follow-up, safety, and independently assessable efficacy data; the response figures cited are preliminary investigator assessments.
- Assess potential dilution from outstanding warrants, preferred shares, and stock options, including approvals and exercises after quarter-end.
- Verify Nasdaq listing compliance and remediation status, and whether the previously disclosed material weakness has been addressed.
- Note that the MD&A’s R&D discussion gives the prior-year amount as $1,109,120 in one passage, while the financial statements and comparison table report $1,019,120; the filing text does not resolve this apparent inconsistency.