Business context and reporting period
This summary reflects the supplied Form 10-Q, which identifies the registrant as DelMar Pharmaceuticals, Inc.—not Tuhura Biosciences, Inc. The report covers the unaudited quarter ended September 30, 2017, DelMar’s first fiscal quarter for the year ending June 30, 2018. The filing was signed November 9, 2017.
DelMar is a clinical-stage cancer drug developer focused on VAL-083. Its principal U.S. programs target glioblastoma multiforme (GBM); VAL-083 is also approved in China for chronic myelogenous leukemia and lung cancer. The company reported no near-term revenue prospects.
Financial performance and position
| Metric | Quarter ended September 30, 2017 | Comparable period |
|---|---|---|
| Revenue | No revenue reported | No revenue reported |
| Research and development expense | $1.935 million | $0.733 million |
| General and administrative expense | $0.745 million | $1.317 million |
| Net loss | $2.666 million | $2.290 million |
| Basic and diluted loss per share | $0.18 | $0.23 |
| Cash used in operating activities | $2.373 million | $1.613 million |
Margins are not meaningful because the company reported no revenue. Cash was $13.156 million at September 30, up from $6.586 million at June 30, 2017. Working capital was $12.888 million; total assets were $14.448 million and total liabilities were approximately $1.529 million. The filing reports no borrowings; liabilities consisted principally of payables and a small derivative liability.
Financing activities provided $8.943 million net cash, primarily from a September registered direct offering. The offering issued 8.0 million common shares and warrants for another 8.0 million shares at $1.25 per share; gross proceeds were $10.0 million and net proceeds were $8.945 million. Common shares outstanding were 22.559 million at quarter-end. Cash, cash equivalents, and short-term investments are not separately stated; the filing reports cash.
Material changes versus the prior comparable period
- R&D expense increased 164%, chiefly due to clinical development, including manufacturing and start-up costs for the pivotal STAR-3 trial and ongoing MD Anderson work.
- G&A expense fell 43%, largely because the prior-year quarter included higher non-cash costs; G&A excluding share-based items also declined modestly.
- Net loss increased by $0.376 million, although loss per share improved from $0.23 to $0.18 as the weighted-average share count rose.
- Operating cash use increased by $0.760 million. The quarter-end cash increase was driven by the equity offering, alongside continued operating cash burn.
- A fair-value gain on warrant and option liabilities of $56,568 contrasted with a $225,688 loss in the prior-year quarter; these non-cash revaluations can make reported losses volatile.
Outlook, commentary, risks, and unusual items
- Management estimated existing cash would fund operations beyond the next 12 months, but said additional financing would be needed over the medium to longer term. Funding availability and terms are uncertain; the company may delay, reduce, or eliminate programs if financing is unavailable.
- DelMar initiated enrollment in STAR-3, a planned 180-patient pivotal Phase 3 trial of VAL-083 for refractory GBM, and began patient recruitment for a Phase 2 study in newly diagnosed MGMT-unmethylated GBM, supported by a China collaboration.
- The FDA issued a notice of allowance for the REPROVe Phase 1/2 VAL-083 trial in platinum-resistant ovarian cancer. Initiation remained subject to acceptable investigator agreements and budgets and institutional review board approvals.
- The principal disclosed treatment risk is myelosuppression, especially thrombocytopenia. Efficacy claims rely in part on historical, preclinical, or small, uncontrolled studies; pivotal trial results were not yet available.
- Disclosure controls and procedures were deemed ineffective at quarter-end due to a material weakness in internal control over financial reporting previously reported in the 2017 Form 10-K. No material control changes during the quarter were reported.
- Potential dilution is substantial: 15.029 million warrants were outstanding at quarter-end, in addition to 2.203 million shares issuable on Series B preferred conversion and stock options. The Series B shares also carry a low-single-digit royalty on qualifying product sales.
- The company appointed Saiid Zarrabian interim CEO; Jeffrey Bacha remained president and became COO. After quarter-end, 120,000 options were granted to an officer and director.
Important facts for investors to verify
- Confirm the issuer and period: the supplied filing is DelMar Pharmaceuticals’ September 30, 2017 Form 10-Q, not a filing identified as Tuhura Biosciences.
- Check the status, enrollment, funding, and timelines of STAR-3, both MGMT-unmethylated GBM trials, and REPROVe.
- Assess cash runway against quarterly operating cash burn and the company’s stated need for future financing.
- Review potential dilution from warrants, preferred-stock conversion, options, and the equity incentive plan.
- Review the previously disclosed material weakness and any subsequent remediation or control updates.