Business context and reporting period
The supplied filing is DelMar Pharmaceuticals, Inc.’s unaudited Form 10-Q for the quarter and nine months ended March 31, 2018 (fiscal 2018 Q3), not a filing identified as Tuhura Biosciences, Inc. The filing describes DelMar as a clinical-stage cancer drug developer focused on VAL-083. Amounts below are in U.S. dollars.
Financial results and liquidity
- Revenue and margins: No revenue was reported; management said revenue was not expected in the near future. Accordingly, operating margins are not meaningful.
- Net loss: $2.93 million for the quarter, versus $1.87 million a year earlier; $8.76 million for the nine months, versus $5.48 million. Nine-month loss available to common shareholders was $8.90 million, or $0.44 per share, versus $6.16 million, or $0.54 per share.
- Expenses: Nine-month research and development expense rose 99% to $5.86 million; general and administrative expense rose 13% to $2.91 million.
- Cash flow: Nine-month cash used in operations was $7.32 million, compared with $4.57 million. Investing used $12,649. Financing provided $9.25 million, principally from the registered offering.
- Cash and liquidity: Cash and cash equivalents were $8.51 million at March 31, 2018, versus $6.59 million at June 30, 2017. Working capital was $7.63 million. Management estimated funding would cover operations beyond 12 months; elsewhere it projected runway into calendar Q3 2019 under its current strategy.
- Liabilities and equity: Current liabilities were $2.01 million, including $1.89 million in accounts payable and accrued liabilities. Derivative liability was $3,389. The filing reports no debt borrowing. Accumulated deficit was $50.03 million.
Material changes versus the prior comparable period
- Nine-month net loss increased by $3.28 million, with higher clinical development costs the primary driver. R&D also included GMP drug manufacturing, ongoing Phase 2 trial costs, and costs related to pausing the STAR-3 trial.
- Operating cash use increased by $2.75 million. Cash rose overall after the company received $8.95 million net from a registered direct offering and $312,500 from warrant exercises.
- The offering issued 8.0 million common shares and warrants to purchase 8.0 million shares for $10.0 million gross proceeds. Common shares issued rose from 14.51 million at June 30, 2017 to 22.91 million at March 31, 2018.
- Loss per share improved to $0.44 from $0.54 for the nine months, while weighted-average shares increased to 20.18 million from 11.43 million.
Outlook, developments, and risks
- VAL-083 is being studied in two Phase 2 trials for MGMT-unmethylated glioblastoma. At March 31, 22 patients were enrolled in the recurrent-GBM trial; seven had stable disease as their best response. Four patients were enrolled in the newly diagnosed trial, with no dose-limiting toxicities reported in the completed 20 and 30 mg/m²/day dose cohorts. These are interim, non-controlled observations, not evidence of established efficacy.
- The Phase 3 STAR-3 trial in Avastin-refractory GBM was paused for up to 12 months while the company assessed enrollment, Avastin’s market impact, possible protocol changes, trial data, and potential partners. Ovarian-cancer development was also under reassessment.
- In December 2017, the FDA granted VAL-083 Fast Track designation for recurrent GBM. In April 2018, after quarter-end, shareholders approved the 2017 equity plan and an increase in authorized common shares to 70 million; subsequent Series B conversions and equity awards are also disclosed.
- Funding remains a key risk: the company expects no near-term revenue and will need additional capital to sustain development and operations. Financing may be unavailable or dilutive, and programs could be delayed, reduced, or discontinued.
- Disclosure controls were reported 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 reports no legal proceedings.
- Other risks include uncertain clinical outcomes, trial costs and timing, potential adverse effects (including myelosuppression and thrombocytopenia), foreign-exchange movements, and fair-value volatility in warrant liabilities.
Important facts for investors to verify
- Confirm the intended issuer and period: the source is DelMar Pharmaceuticals’ 10-Q for the nine months ended March 31, 2018, despite the request metadata naming Tuhura Biosciences and “2017 Q3.”
- Check subsequent cash use and financing needs against management’s runway estimates, and whether additional funding was obtained on acceptable terms.
- Review updated enrollment, safety, and outcome data for both Phase 2 GBM trials, and the company’s decision on STAR-3 and ovarian-cancer development.
- Assess dilution from warrants, preferred-stock conversions, options, and performance stock units, including the post-quarter increase in authorized common shares.
- Follow remediation of the material weakness in disclosure controls and the effectiveness of internal controls in later filings.