Filing summary
Entity and period: The supplied metadata identifies Tuhura Biosciences, Inc., but the filing text is for DelMar Pharmaceuticals, Inc. This is an unaudited Form 10-Q for the three and six months ended December 31, 2017; the six-month period is compared with the six months ended December 31, 2016. The filing therefore does not appear to match the company named in the request.
Business: DelMar is a clinical-stage cancer drug developer focused on VAL-083, including trials in glioblastoma (GBM), with development also planned for platinum-resistant ovarian cancer. The company reported no revenue and said it did not expect revenue in the near future.
Financial results and liquidity
| Metric | Three months ended Dec. 31, 2017 | Six months ended Dec. 31, 2017 | Comparable 2016 period |
|---|---|---|---|
| Revenue | None reported | None reported | None reported |
| Research and development expense | $2.14 million | $4.08 million | $1.12 million and $1.85 million, respectively |
| General and administrative expense | $1.01 million | $1.76 million | $0.57 million and $1.89 million, respectively |
| Net loss | $3.16 million | $5.83 million | $1.32 million and $3.61 million, respectively |
| Loss per share | $0.14 | $0.31 | $0.13 and $0.36, respectively |
| Cash used in operating activities | Not separately presented for the quarter | $4.51 million | $3.06 million for six months |
- Six-month net loss increased about 61% year over year, mainly alongside substantially higher R&D expense. Quarterly net loss increased about 139% year over year.
- At December 31, 2017, cash was $11.02 million, current assets were $12.19 million, current liabilities were $2.23 million, and working capital was $9.96 million. Total assets were $12.22 million; total liabilities were $2.23 million, including a $5,549 derivative liability. No conventional borrowings are reported in the presented balance sheet.
- Cash increased by $4.44 million during the six months, primarily because of $8.95 million in net proceeds from a registered direct offering, partly offset by operating cash use and preferred dividends.
- No revenue or gross profit was reported, so gross margin is not applicable. The filing does not provide a clear standalone operating-margin measure.
- Common shares outstanding were 22.61 million at December 31, 2017, versus 14.51 million at June 30, 2017. The offering issued 8.0 million shares and warrants for another 8.0 million shares at $1.25 each; it raised $10.0 million gross and $8.95 million net. The filing also reports 15.03 million warrants and 2.20 million shares issuable on conversion of Series B preferred stock at December 31.
Material changes, outlook and risks
- R&D spending rose as trials and related manufacturing, site-startup, enrollment, personnel, and preclinical research costs increased. G&A increased year over year for the quarter, while six-month G&A declined 7%; the filing attributes period comparisons in part to differing noncash compensation and professional-fee items.
- Management said cash was expected to fund operations beyond 12 months; its updated strategy separately estimated funding into the second quarter of calendar 2019. These are estimates, not assurances. The company expects to need additional funding over the medium to longer term and may reduce or delay programs or seek partners if financing is unavailable on acceptable terms.
- Following FDA approval of Avastin for recurrent GBM, DelMar suspended further recruitment in its STAR-3 Phase 3 trial for up to 12 months while assessing enrollment prospects, trial design, data from other studies, and potential partnering. Four sites were active and one patient had enrolled by December 31.
- At that date, 17 patients were enrolled in the MD Anderson Phase 2 trial for MGMT-unmethylated recurrent GBM; one patient was enrolled in the newly diagnosed GBM Phase 2 trial in China. Management anticipated trial updates during 2018 and expected to initiate the ovarian-cancer REPROVe study in the first half of calendar 2018, subject to agreements and approvals.
- The FDA granted Fast Track designation for VAL-083 in recurrent GBM, and allowed an IND for a Phase 1/2 ovarian-cancer study. These designations and plans do not establish efficacy or approval.
- Management identified myelosuppression, particularly thrombocytopenia, as a key VAL-083 toxicity. Clinical-trial enrollment, outcomes, recruitment after Avastin’s approval, costs, and financing availability remain material uncertainties.
- Disclosure controls and procedures were reported as ineffective at period end because of a previously disclosed material weakness in internal control over financial reporting. Management reported no material change in internal controls during the quarter. The filing states there were no legal proceedings.
- Other notable items include $311,683 recognized in connection with a settlement involving the former President and COO, and a subsequent-event disclosure of 250,000 warrants exercised after period end for $312,500 gross proceeds.
Important facts for investors to verify
- Confirm the issuer identity: the filing is for DelMar Pharmaceuticals, Inc., not Tuhura Biosciences, Inc.
- Review the STAR-3 pause and management’s next decision on the trial, including the effects of Avastin’s approval on recruitment and strategy.
- Track enrollment, safety, and efficacy disclosures for the GBM trials and the timing and funding of the planned ovarian-cancer study.
- Assess cash burn, the stated runway assumptions, future financing needs, and potential dilution from outstanding warrants, preferred shares, options, and equity-plan awards.
- Review the previously disclosed material weakness and any subsequent remediation updates.