Filing summary
Entity and period: The request identifies Tuhura Biosciences, Inc., but the supplied filing is for DelMar Pharmaceuticals, Inc. It is a Form 10-Q for the three months ended September 30, 2018, DelMar’s fiscal first quarter of 2019. The interim financial statements are unaudited and reported in U.S. dollars.
Business context and financial results
DelMar is a clinical-stage cancer drug developer focused on VAL-083, including Phase 2 studies in glioblastoma multiforme (GBM). The company reported no revenue to date. It is developing VAL-083 for MGMT-unmethylated GBM and has certain commercial rights in China.
| Metric | Quarter ended September 30, 2018 | Comparable 2017 quarter / prior balance-sheet date |
|---|---|---|
| Revenue | None to date | None to date |
| Research and development expense | $1.019 million | $1.935 million |
| General and administrative expense | $986,470 | $744,621 |
| Net loss | $1.992 million | $2.666 million |
| Loss per share | $0.09 | $0.18 |
| Operating cash used | $2.085 million | $2.373 million |
| Cash and cash equivalents | $3.885 million | $5.972 million at June 30, 2018 |
| Working capital | $3.650 million | $5.408 million at June 30, 2018 |
| Total liabilities | $1.079 million | $1.640 million at June 30, 2018 |
| Total stockholders’ equity | $3.671 million | $5.435 million at June 30, 2018 |
Margins are not meaningful because the company had no revenue. The filing reports no conventional debt balance; liabilities chiefly comprise accounts payable and accrued liabilities, related-party payables, and a small warrant derivative liability.
Changes and operating cash flow
- Net loss narrowed by approximately $675,000 year over year. R&D expense fell 47%, mainly because the company discontinued its STAR-3 Phase 3 study; spending on the two ongoing Phase 2 GBM studies partly offset that reduction.
- G&A expense rose 32%, reflecting higher share-based compensation, professional fees and personnel costs, including the CEO appointment in May 2018. Excluding noncash share-based compensation, G&A increased to $790,000 from $676,000.
- Cash declined by $2.087 million during the quarter. Operating cash use was partly offset by working-capital movements; financing cash flow was a $2,089 outflow, with no equity offering proceeds in the quarter. The comparable 2017 quarter included $8.945 million in net offering proceeds.
- The company issued 49,602 common shares for Series B preferred dividends and 7,063 shares for services. Series B dividends are paid in common shares; the quarter’s recognized dividend was $36,085.
Outlook, risks and notable items
- Going concern: Management stated that substantial doubt exists about the company’s ability to continue as a going concern. It reported a $54.471 million accumulated deficit, quarterly operating cash use of $2.085 million and $3.885 million of cash, and said it will need additional funding in the near future. Management is pursuing equity financing and/or strategic partnerships, with no assurance of success. If funding is unavailable, trials or R&D may be delayed, reduced or discontinued.
- Clinical development: As of October 31, 2018, 44 of 48 planned patients were enrolled in the MD Anderson Phase 2 recurrent GBM study; management forecast full enrollment by December 2018. Ten patients were enrolled in the China Phase 2 newly diagnosed GBM study, planned for up to 30. These are management-reported enrollment updates, not trial outcomes.
- The recurrent GBM study amended its VAL-083 starting dose from 40 to 30 mg/m² and raised the minimum screening platelet count from 100,000 to 125,000/µL, aiming to improve tolerability in previously treated patients. Myelosuppression, particularly low platelet counts, is identified as a key toxicity.
- The ovarian cancer program was under reassessment, including possible combinations with PARP inhibitors. The company had engaged Oppenheimer & Co. as strategic advisor to evaluate strategic opportunities. No financial guidance was provided.
- Management and the CEO and CFO concluded disclosure controls were ineffective at quarter-end due to a material weakness previously discussed in the 2018 Form 10-K. No material changes to internal control over financial reporting were reported during the quarter.
- Subsequent events included 300,000 stock options granted to directors and management on November 8, 2018, and conversion of 40,000 Series B preferred shares into 100,000 common shares. The filing reports no legal proceedings.
Important facts for investors to verify
- Confirm the issuer: the supplied 10-Q is DelMar Pharmaceuticals, Inc., not Tuhura Biosciences, Inc.
- Check the company’s subsequent financing, cash runway, and any changes to its going-concern assessment; the filing gives no assured funding source or explicit runway estimate.
- Verify enrollment, safety, and outcome updates for both Phase 2 GBM studies, including whether the recurrent GBM study reached planned enrollment.
- Review the status and remediation of the disclosed material weakness in internal controls.
- Assess potential dilution from outstanding warrants, options, performance stock units, and convertible Series B preferred stock, as well as the financing and partnership terms ultimately pursued.