BriaCell Therapeutics Corp. — Form 10-Q Summary
Reporting period: Fiscal second quarter and six months ended January 31, 2023. The filing was signed March 15, 2023. Financial statements are unaudited, prepared under U.S. GAAP, and reported in U.S. dollars. BriaCell is a clinical-stage immuno-oncology biotechnology company; it reported no revenue.
Financial performance and liquidity
| Metric | Three months ended Jan. 31, 2023 | Six months ended Jan. 31, 2023 | Comparable 2022 period |
|---|---|---|---|
| Revenue | None reported | None reported | None reported |
| Research and development expense | $3.05 million | $6.31 million | $1.71 million; $2.58 million |
| General and administrative expense | $1.43 million | $3.58 million | $1.94 million; $3.35 million |
| Total operating expenses / operating loss | $4.49 million | $9.89 million | $3.65 million; $5.93 million |
| Net income (loss) | $(11.88) million | $(12.99) million | $11.16 million income; $(16.37) million loss |
| Basic EPS | $(0.77) | $(0.84) | $0.71; $(1.05) |
| Net cash used in operating activities | Not presented for quarter | $7.49 million | $4.33 million |
For the six months, cash and cash equivalents declined from $41.04 million to $33.50 million. Financing activities used $47,294, and the reported total decrease in cash was $7.54 million. At January 31, current assets were $33.94 million and current liabilities were $670,413; working capital was $33.27 million. Total assets were $34.16 million. There was no interest-bearing debt reported, but the company carried a $34.77 million warrant liability. The balance sheet showed a $1.28 million shareholders’ deficit, largely reflecting the warrant liability. With no revenue, operating margins are not meaningful.
Changes and notable items
- Six-month R&D expense increased 144% year over year, chiefly due to expanded clinical-trial activity, staffing, manufacturing and preclinical programs. G&A expense rose modestly for the six-month period, while it declined in the quarter.
- The quarter shifted from income in the prior-year period to a loss. The principal driver was a $7.63 million loss from the change in warrant fair value, versus a $14.80 million gain in the comparable quarter. For the six-month period, net loss narrowed from $16.37 million to $12.99 million; warrant fair-value expense also decreased year over year. These fair-value movements are noncash accounting items.
- Share count remained 15,518,018 during the six-month period; no shares were issued. Share-based compensation expense was $1.38 million for the period.
Business, outlook and risks
- BriaCell is advancing Bria-IMT, a whole-cell immunotherapy, in combination with checkpoint inhibitors for advanced metastatic breast cancer, alongside BriaDx and preclinical programs including Bria-OTS+, Bria-PROS and licensed sCD80 technology.
- Management reported positive initial results in a small cohort of heavily pretreated patients receiving Bria-IMT with retifanlimab. The filing describes disease-control or progression-free-survival benefits, but these are preliminary clinical findings, not established efficacy. An update disclosed after quarter-end reported 9 of 11 patients alive and median PFS of 3.5 months; the regimen was reported as well tolerated with no dose-limiting toxicities.
- Following an End-of-Phase-II meeting in January 2023, the company said it and the FDA agreed on the primary endpoint, essential study-design elements and patient type for a planned pivotal study. The filing says success could support a BLA submission; it does not provide a financial forecast. BriaCell expected to initiate a Bria-OTS study under an IND in the first half of 2023, subject to required cell-bank work.
- Management said existing capital resources should meet expected liquidity needs for at least 12 months from issuance of the financial statements, while also stating that longer-term plans depend on raising additional capital. The company continues to incur losses and expects them to continue. COVID-19 was said to have delayed clinical and research programs by at least one quarter.
- A New York lawsuit with Alpha Capital concerns a disputed loan and warrants. The court allowed BriaCell to pursue substantive counterclaims; the parties could not estimate damages. The company said, based on counsel’s advice, it believed it more likely than not it would not have to pay Alpha, while acknowledging the outcome was uncertain.
- Management concluded disclosure controls were not effective as of January 31, 2023 because of material weaknesses in internal control over financial reporting. Remediation efforts included additional personnel, segregation of duties and documentation of reviews.
Important facts for investors to verify
- Whether the company raises additional capital and how clinical-trial spending affects cash runway.
- Progress, enrollment, safety and efficacy results in the Bria-IMT/retifanlimab study, and the timing and design of the planned pivotal study and Bria-OTS trial.
- The warrant liability’s valuation and its potential future noncash effect on reported earnings and shareholders’ equity.
- The Alpha Capital litigation status and any resulting financial exposure.
- Remediation of the disclosed material weaknesses. Also verify the filing’s inconsistent working-capital figure: $33.27 million in the balance sheet/MD&A discussion versus $33.37 million in one market-risk passage.
- The cover page marks the company as a shell company, despite the filing’s description of active biotechnology and clinical-development operations; verify this classification.