Psyence Biomedical Ltd. Form 20-F Summary
Business Context and Reporting Period
Psyence Biomedical Ltd., an Ontario, Canada corporation, filed a shell company report covering the January 25, 2024 business combination with Newcourt Acquisition Corp. The transaction separated Psyence’s therapeutic business from Psyence Group and resulted in Psyence Biomedical becoming Nasdaq-listed under PBM, with warrants under PBMWW.
The filing does not present a conventional annual reporting period. Historical financial information primarily covers the three and six months ended September 30, 2023 and comparable 2022 periods, with annual comparative information for the years ended March 31, 2023 and 2022. Psyence’s interim carve-out financial statements are prepared under IFRS and presented in Canadian dollars, while the MD&A discussion presents selected amounts translated into U.S. dollars.
The Company is developing natural psilocybin formulations and treatment protocols for adjustment disorder in patients with incurable cancer receiving palliative care. Its lead development plan is a Phase IIb clinical study in Australia involving more than 75 patients.
Key Financial Metrics and Capitalization
| Metric | Period or date | Amount |
|---|---|---|
| Revenue | Six months ended September 30, 2023 | No revenue; the Company has no sources of revenue |
| Net loss | Six months ended September 30, 2023 | CAD $2.156 million |
| Net loss | Six months ended September 30, 2022 | CAD $0.874 million |
| Operating cash used | Six months ended September 30, 2023 | CAD $2.140 million |
| Cash and cash equivalents | September 30, 2023 | CAD $0.819 million, plus CAD $0.040 million restricted cash |
| Total current liabilities | September 30, 2023 | CAD $2.234 million |
| Trade payables | September 30, 2023 | CAD $1.995 million |
| Loan payable | September 30, 2023 | CAD $0.996 million; repaid October 5, 2023 |
| Cash balance | September 30, 2023, MD&A presentation | US $0.605 million |
| Working capital | September 30, 2023, MD&A presentation | Negative US $0.983 million |
| Common shares outstanding | Closing Date | 13,390,659 |
| Warrants outstanding | Closing Date | 13,070,000 |
For the six months ended September 30, 2023, U.S.-dollar expense categories included research and development of approximately $0.791 million, general and administrative costs of $0.086 million, professional and consulting fees of $0.584 million, sales and marketing costs of $0.002 million, interest expense of $0.027 million and foreign-exchange losses of $0.115 million. The filing does not provide revenue, gross profit or meaningful margin figures because the Company is pre-commercial.
At closing, the Company issued senior secured convertible notes with aggregate principal of $3.125 million in exchange for $2.5 million of financing. The financing may comprise up to $12.5 million of principal in exchange for up to $10 million of subscription amounts across four tranches. The First Tranche Notes bear interest at 8% annually and have an initial conversion price of $10.00, subject to adjustments and potentially substantial conversion-price resets.
Material Changes Versus Comparable Periods
- Six-month net loss increased to CAD $2.156 million from CAD $0.874 million, primarily reflecting higher clinical development and professional costs.
- Research and development expense increased to approximately US $0.791 million from $0.161 million, reflecting commencement and higher costs of the Phase IIb study compared with the earlier Phase IIa work.
- Professional and consulting fees increased to approximately US $0.584 million from $0.342 million, largely due to business combination-related legal and advisory activity.
- General and administrative costs declined to approximately US $0.086 million from $0.173 million, mainly because of lower payroll-related costs.
- Cash and cash equivalents declined from CAD $1.806 million at March 31, 2023 to CAD $0.819 million at September 30, 2023, while current liabilities remained above current assets.
- The Company’s Australian R&D loan was repaid on October 5, 2023 using a 43.5% Australian tax incentive refund of AUD $1.337 million.
- On January 25, 2024, the business combination closed after the parties waived the minimum cash condition, PIPE investment condition and certain closing deliverables. Psyence Group received 5,000,000 shares and relinquished full control of the therapeutic business.
Guidance, Outlook, Risks and Unusual Items
Management intends to use available financing to advance the Phase IIb palliative-care clinical study in Australia and, if successful, pursue a multinational Phase III registrational study. No revenue, earnings or cash-flow guidance is provided.
- The Company has incurred significant losses since inception, has no approved products and expects additional losses for the foreseeable future.
- Management concluded that a material uncertainty existed as of September 30, 2023 that cast significant doubt on the Company’s ability to continue as a going concern. Continued operations depend on obtaining additional financing.
- The Company faces clinical, regulatory, commercialization, intellectual-property, licensing, competitive, foreign-exchange and litigation risks. A 10% adverse foreign-exchange movement was estimated to produce an approximately US $110,468 loss as of September 30, 2023.
- The senior secured convertible notes are guaranteed by Psyence II and secured by substantially all collateral of Psyence Biomedical and Psyence II, subject to specified exceptions. The financing may create substantial dilution because conversion prices can reset downward.
- The remaining Second Tranche Financing is subject to registration effectiveness, Nasdaq compliance and trading-volume conditions. Third and Fourth Tranche financing is solely at the investors’ discretion.
- The Company agreed to deliver up to 3,000,000 structuring shares to financing investors; 1,300,000 were delivered at the initial closing and the remaining 1,700,000 are subject to call-option arrangements.
- Warrants have an exercise price of $11.50 per share, become exercisable 30 days after the business combination and expire five years after completion, unless earlier redeemed or otherwise terminated.
- The Company and certain shareholders have lock-up and registration obligations. Failure to satisfy specified registration obligations could trigger penalties, including a potential $5.568 million cash obligation to Cantor.
- Nasdaq previously issued a market-value deficiency notice to Newcourt; compliance was regained in November 2023. Continued Nasdaq listing is not assured.
- Foreign private issuer and emerging growth company status reduces certain reporting and internal-control requirements and may limit comparability with other public companies.
Most Important Facts for Investors to Verify
- Current cash, operating burn rate and whether the Company has sufficient funding to complete the Phase IIb study.
- Status and conditions of the Second, Third and Fourth Tranche financings, including actual proceeds received and remaining secured debt.
- Conversion-price resets, potential share issuance and dilution under the senior secured convertible notes and structuring-share arrangements.
- Clinical-trial enrollment, regulatory approvals, study milestones and probability of advancing to Phase III.
- Effectiveness of resale registration statements and compliance with related registration deadlines and penalty provisions.
- Current Nasdaq listing status and any subsequent deficiency notices.
- Current accounts payable, clinical-trial commitments and any developments affecting the going-concern uncertainty disclosed as of September 30, 2023.
- The filing’s historical figures are carve-out and interim amounts, reported in different currencies and accounting bases; investors should reconcile them to the Company’s post-combination consolidated financial statements.