Bulletin
Investor Alert

Sept. 28, 2021, 4:12 p.m. EDT

10-K: KINTARA THERAPEUTICS, INC.

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

or Cancel Already have a watchlist? Log In

(EDGAR Online via COMTEX) -- Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

This Management's Discussion and Analysis ("MD&A") contains "forward-looking statements", within the meaning of the Private Securities Litigation Reform Act of 1995, which represent our projections, estimates, expectations, or beliefs concerning, among other things, financial items that relate to management's future plans or objectives or to our future economic and financial performance. In some cases, you can identify these statements by terminology such as "may", "should", "plans", "believe", "will", "anticipate", "estimate", "expect" "project", or "intend", including their opposites or similar phrases or expressions. You should be aware that these statements are projections or estimates as to future events and are subject to a number of factors that may tend to influence the accuracy of the statements. These forward-looking statements should not be regarded as a representation by us or any other person that our events or plans will be achieved. You should not unduly rely on these forward-looking statements, which speak only as of the date of this report. Except as may be required under applicable securities laws, we undertake no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this report or to reflect the occurrence of unanticipated events.

You should review the factors and risks we describe under "Risk Factors" in this report on Form 10-K for the year ended June 30, 2021 and in our other filings with the Securities and Exchange Commission, available at www.sec.gov . Actual results may differ materially from any forward-looking statement.

Impact of Coronavirus ("COVID-19") on our Operations, Financial Condition, Liquidity and Results of Operations

In December 2019, a novel strain of coronavirus, COVID-19, was reported to have surfaced in Wuhan, China and on March 11, 2020 it was declared a pandemic by the World Health Organization. The ultimate impact of the COVID-19 pandemic on our operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the duration and severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or us, may determine are needed.

The COVID-19 pandemic did not cause significant disruption to our Phase 2 clinical studies. Each of our now-completed Phase 2 clinical studies was conducted at respective single sites which reduced the risk of study disruption. Any disruptions to patient treatments for our Phase 2 studies were within allowances under each study protocol. Access to the sites by our clinical monitors was limited during the COVID-19 pandemic but the recording of study data in both studies and patient treatments at both study sites was conducted per protocol.

Regarding the VAL-083 study arm of the GCAR registrational Phase 2/3 clinical trial that is currently being conducted at multiple sites in the United States, we have not experienced any significant impacts on patient enrollment or treatment. With respect to the REM-001 drug supply, we are currently experiencing some delays in contract manufacturing schedules and supplies which we attribute to COVID-19. The current delays could have an impact on our REM-001 program timeline.

Including net proceeds of approximately $13.6 million received from a registered direct financing completed subsequent to June 30, 2021, we estimate that we have cash available to fund planned operations for less than one year from the date of issuance of our June 30, 2021 consolidated financial statements but cash is expected to fund planned operations through stage 1 of the GBM AGILE study, which could result in graduation to the final confirmatory stage, the potentially NDA enabling portion of the study. However, the COVID-19 pandemic has created significant economic uncertainty and volatility in the credit and capital markets. The ultimate impact of the COVID-19 pandemic on our ability to raise additional capital is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak and new information which may emerge concerning the severity of the COVID-19 pandemic. We may not be able to raise sufficient additional capital and may tailor our drug candidate development programs based on the amount of funding we are able to raise in the future. Nevertheless, there is no assurance that these initiatives will be successful.

Corporate History

We are a Nevada corporation formed on June 24, 2009 under the name Berry Only, Inc. On January 25, 2013, we entered into and closed an exchange agreement (the "Exchange Agreement"), with Del Mar Pharmaceuticals (BC) Ltd. ("Del Mar (BC)"), 0959454 B.C. Ltd. ("Callco"), and 0959456 B.C. Ltd. ("Exchangeco") and the security holders of Del Mar (BC). Upon completion of the Exchange Agreement, Del Mar (BC) became our wholly-owned subsidiary (the "Reverse Acquisition").

On June 10, 2020, we entered into an Agreement and Plan of Merger and Reorganization (the "Merger Agreement"), dated as of June 9, 2020, by and among Adgero Acquisition Corp., our wholly-owned subsidiary incorporated in the State of Delaware ("Merger Sub"), and Adgero. On August 19, 2020, upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub merged with and into Adgero (the "Merger"), the separate corporate existence of Merger Sub ceased and Adgero continued its existence under Delaware law as the surviving corporation in the Merger and became our direct, wholly-owned subsidiary. As a result of the Merger, each issued and outstanding share of Adgero common stock, par value $0.0001 per share (the "Adgero Common Stock") (other than treasury shares held by Adgero), was converted automatically into the right to receive 1.5740 shares (the "Exchange Ratio") of our common stock, and cash in lieu of any fractional shares. Also, each outstanding warrant to purchase Adgero Common Stock was converted into a warrant exercisable for that number of shares of our common stock equal to the product of (x) the aggregate number of shares of Adgero Common Stock for which such warrant was exercisable and (y) the Exchange Ratio.

Following the completion of the Merger, we changed our name from DelMar Pharmaceuticals, Inc. to Kintara Therapeutics, Inc. In conjunction with the closing of the Merger, and through a series of three private placement closings, we issued a total of 25,028 shares of Series C Convertible Preferred Stock (the "Series C Stock") at a purchase price of $1,000 per share for total aggregate gross proceeds of $25 million, or net proceeds of approximately $21.7 million.

The Series C Stock was issued in three series at conversion prices equal to $1.16, $1.214 and $1.15, respectively. As a result, we issued a total of 25,028 shares of Series C Stock, which are convertible into an aggregate 21,516,484 shares of common stock. As part of the private placement, we issued warrants to purchase 2,504 shares of Series C Stock to the placement agent (the "Placement Agent Warrants"). The Placement Agent Warrants have an exercise price of $1,000 per share, provide for a cashless exercise feature and are exercisable for a period of four years from the date of the initial closing of the private placement. The Series C Stock and the shares of Series C Stock issuable upon exercise of the Placement Agent Warrants will be entitled to receive dividends, payable in shares of our common stock, at a rate of 10%, 15%, 20%, and 25%, of the number of shares of common stock issuable upon conversion of the Series C Stock, on the 12th, 24th, 36th and 48th month anniversary of the initial closing of the private placement, which occurred on August 19, 2020, provided that the holder of such shares has not converted the shares of Series C Stock prior to the applicable dividend rate.

Outstanding Securities

As of September 28, 2021, we had 43,174,989 shares of common stock issued and outstanding, outstanding warrants to purchase 23,951,752 shares of common stock, warrants to purchase 2,443 shares of our Series C Preferred Stock that upon exercise are convertible into 2,100,302 shares of common stock, outstanding stock options to purchase 6,809,125 shares of common stock, 18,382 outstanding shares of Series C Preferred Stock that are convertible into 15,827,521 shares of common stock. All common stock warrants and stock options are convertible, or exercisable into, one share of common stock. The Series C Preferred Stock (issued in three series) is convertible into shares of common stock at $1.16 per share (Series C-1), $1.214 per share (Series C-2) or $1.15 per share (Series C-3), respectively. The Series C Preferred stock purchase warrants are convertible into Series C Preferred Stock at $1,000 per share for either Series C-1, Series C-2, or Series C-3 Preferred Stock, as applicable.

On June 25, 2021, we amended our articles of incorporation, as amended, to increase the number of authorized shares of common stock from 95,000,000 to 175,000,000 shares.

Related Parties

We acquired our initial patents and technology rights from Valent, an entity owned by Dr. Dennis Brown, our Chief Scientific Officer. As a result, Valent is a related party to us.

Selected Annual Information

The financial information reported herein has been prepared in accordance with accounting principles generally accepted in the United States. Our functional currency at June 30, 2021 and June 30, 2020 is the US$. The following tables represent selected financial information for us for the periods presented.







        Selected Balance Sheet data (in thousands)
                                     June 30,       June 30,
                                       2021           2020
                                         $             $
        Cash and cash equivalents       10,537          2,392
        Working capital                  9,013            176
        Total assets                    13,543          2,938
        Total stockholders' equity      10,581            263
        








        Selected Statement of Operations data (in thousands, except per share data)
        For the years ended
                                                                    June 30,      June 30,
                                                                      2021          2020
                                                                        $             $
        Expenses
        Research and development                                       11,815         3,630
        General and administrative                                      9,757         4,514
        Merger costs                                                      500         1,054
        In-process research and development                            16,094             -
                                                                      (38,166 )      (9,198 )
        Other income (loss)
        Foreign exchange                                                  (12 )          (3 )
        Amortization of deferred loan costs                               (94 )           -
        Interest - net                                                    (26 )          75
                                                                         (132 )          72
        Net loss for the year                                         (38,298 )      (9,126 )
        Deemed dividend recognized on beneficial conversion
          features of Series C Preferred stock issuance                (3,181 )           -
        Series A Preferred cash dividend                                   (8 )          (8 )
        Series B Preferred stock dividend                                 (17 )          (9 )
        Net loss for the year attributable to common
          stockholders                                                (41,504 )      (9,143 )
        Basic and fully diluted weighted average number of shares      25,886        10,444
        Basic and fully diluted loss per share                          (1.60 )       (0.87 )
        


Expenses net of non-cash, share-based compensation expense - non-GAAP

The following table discloses research and development, and general and administrative expenses net of non-cash, share-based compensation payment expense. The disclosure has been provided to reconcile the total operational expenses on a GAAP basis and the non-GAAP operational expenses net of non-cash stock-based compensation in order to provide an estimate of cash used in research and development, and general and administrative expense. Management uses the cash basis of expenses for forecasting and budget purposes to determine the allocation of resources and to plan for future financing opportunities.

For the years ended (in thousands)







                                                                  June 30,       June 30,
                                                                    2021           2020
                                                                      $             $
        Research and development - GAAP                              11,815          3,630
        Less: non-cash share-based compensation expense              (1,478 )         (100 )
        Research and development net of non-cash share-based,
          compensation expense- Non-GAAP                             10,337          3,530
        General and administrative - GAAP                             9,757          4,514
        Less: non-cash share-based compensation expense              (4,367 )         (601 )
        General and administrative net of non-cash share-based,
          compensation expense - Non-GAAP                             5,390          3,913
        








        Comparison of the years ended June 30, 2021 and June 30, 2020
                                                    Years ended
                                              June 30,      June 30,
                                                2021          2020
                                                  $             $         Change $       Change %
                                                         (in thousands)
        Expenses
        Research and development                 11,815         3,630         8,185            225
        General and administrative                9,757         4,514         5,243            116
        Merger costs                                500         1,054          (554 )          (53 )
        In-process research and development      16,094             -        16,094              -
                                                (38,166 )      (9,198 )     (28,968 )
        Other income (loss)
        Foreign exchange                            (12 )          (3 )          (9 )          300
        Amortization of deferred loan costs         (94 )           -           (94 )            -
        Interest - net                              (26 )          75          (101 )         (135 )
                                                   (132 )          72          (204 )
        Net loss                                (38,298 )      (9,126 )     (29,172 )
        


Research and Development

Research and development expenses increased to $11,815 for the year ended June 30, 2021 from $3,630 for the year ended June 30, 2020. The increase was largely attributable to higher clinical development, non-cash, share-based compensation expenses, and personnel costs incurred during the year ended June 30, 2021 compared to the year ended June 30, 2020.

Clinical development costs increased in the current year compared to the prior year largely due to start-up and patient enrollment costs related to the GCAR GBM AGILE Study. Patient recruitment commenced in January 2021 and there were costs incurred in order to prepare the study for commencement as well as patient recruitment and enrollment. In addition, with the acquisition of the REM-001 technology as part of the acquisition of Adgero, costs relating to clinical development and drug manufacturing activity have been incurred during the year ended June 30, 2021 that were not incurred during the year ended June 30, 2020. We expect our research and development costs to be higher in fiscal year 2022 than fiscal year 2021 as our GCAR GBM AGILE Study continues and we incur costs related to the development of REM-001.

Non-cash, share-based compensation expense increased for the year ended June 30, 2021 compared to the year ended June 30, 2020, due to the recognition of compensation expense for stock options granted in September 2020. Personnel costs also increased in the current year compared to the prior year due to the addition of staff as a result of the acquisition of Adgero.

General and Administrative

General and administrative expenses were $9,757 for the year ended June 30, 2021 compared to $4,514 for the year ended June 30, 2020. A significant portion of the increase was due to higher non-cash, share-based compensation expense, professional fees, office and sundry expenses and personnel incurred in the current year compared to the prior year.

Non-cash, share-based compensation expense increased for the year ended June 30, 2021 compared to the year ended June 30, 2020, due to the recognition of compensation expense for stock options granted in September 2020 as well as due to the acceleration of vesting of certain stock options granted in a prior period. In addition, non-cash, share-based compensation expense increased due to the issuance of warrants for professional services.

Professional fees increased during the year ended June 30, 2021 compared to the year ended June 30, 2020 primarily due to higher legal and accounting fees in the current year while office and sundry increased due primarily to costs of higher directors' and officers' liability insurance. Personnel costs also increased in the current year compared to the prior year due to the addition of staff from the Adgero acquisition.

Merger Costs

We incurred costs related to the acquisition of Adgero of $500 and $1,054 respectively, for the years ended June 30, 2021 and 2020. All of these costs have been expensed.

Acquired In-Process Research and Development Expense

We acquired in-process research and development assets in connection with our merger with Adgero. As the acquired in-process research and development assets were deemed to have no current or alternative future use, an expense of $16,094 was recognized in the consolidated statements of operations for the year ended June 30, 2021.

Preferred Stock Dividends

For each of the years ended June 30, 2021 and 2020, we recorded $8 related to the dividend payable to Valent on the Series A Preferred Stock. The dividend has been recorded as a direct increase in accumulated deficit for both years.

During the year ended June 30, 2021, we issued 11 (2020 - 15) shares of common stock as a dividend on the Series B Preferred stock and recognized $17 (2020 - $9) as a direct increase in accumulated deficit.

Liquidity and Capital Resources







        Comparison of the years ended June 30, 2021 and June 30, 2020
                                               June 30,      June 30,
                                                 2021          2020         Change        Change
                                                   $             $             $            %
        Cash flows from operating activities     (18,860 )      (7,928 )     (10,932 )        138
        Cash flows from investing activities         964             -           964            -
        Cash flows from financing activities      26,041         6,601        19,440          295
        


Operating Activities

Net cash used in operating activities increased to $18,860 for the year ended June 30, 2021 from $7,928 for the year ended June 30, 2020. During the years ended June 30, 2021 and 2020, we reported net losses of $38,298 and $9,126, respectively. Partially offsetting the higher loss in the current year compared to the prior year was the recognition of $16,094 of acquired in-process research and development expense related to the acquisition of Adgero. Additional changes in adjustments to reconcile net loss to net cash used in operating activities for the year ended June 30, 2021 included stock option expense of $5,276 being recognized during the current year compared to $495 in the prior year. The most significant change in working capital for the year ended June 30, 2021 was from a use of cash due to an increase in prepaid expenses and deposits related primarily to the remaining balance of $2,100 of the payment to GCAR for study initiation and patient recruitment. The most significant change in working capital for the year ended June 30, 2020 was cash from an increase in related party payables and accrued liabilities of $339.

Investing Activities

As part of the acquisition of Adgero that closed on August 19, 2020, we acquired $969 in cash. There were no investing activities during the year ended June 30, 2020.

Financing Activities

During the year ended June 30, 2021, we received $21,598 in net proceeds from the completion of a private placement of Series C Preferred stock and $4,404 from the cash exercise of stock purchase warrants. Also, during the year ended June 30, 2021, we received proceeds from the NBTS Loan of $500. The NBTS Loan was repaid in June 2021.

During the year ended June 30, 2020, we received $6,583 in net proceeds from the completion of an underwritten public offering by us of common stock, pre-funded warrants, and common stock purchase warrants. Additionally, we received $51 pursuant to the exercise of warrants.

Going Concern and Capital Expenditure Requirements

Going Concern and Management Plans

(See note 1 to the consolidated financial statements)

The consolidated financial statements have been prepared on a going concern basis, which assumes that we will continue our operations for the foreseeable future and contemplates the realization of assets and the settlement of liabilities in the normal course of business.

For the year ended June 30, 2021, we reported a loss of $39,298 and a negative cash flow from operations of $18,860. We had an accumulated deficit of $111,225 and had cash and cash equivalents of $10,537 as of June 30, 2021. We are in the clinical development stage and have not generated any revenues to-date. We do not have the prospect of achieving revenues until such time that our product candidates are commercialized, or partnered, which may not ever occur. In the near future, we will require additional funding to maintain our clinical trials, research and development projects, and for general operations. These circumstances indicate substantial doubt exists about our ability to continue as a going concern within one year from the date of filing of the consolidated financial statements. On September 23, 2021, we entered into securities purchase agreements with certain institutional investors pursuant to which, on September 28, 2021, we issued an aggregate of 7,200,000 shares of common stock, pre-funded warrants to purchase 4,800,000 shares of common stock with an exercise price of $0.001 per share and warrants to purchase 12,000,000 shares of common stock with an exercise price of $1.25 per share for approximately $15 million in gross proceeds, before placement agent fees and other offering expenses payable by us. Our existing cash and cash equivalents as of June 30, 2021, as well as the net proceeds of approximately $13.6 million we received from the registered direct financing subsequent to June 30, 2021, are estimated to fund planned operations for less than one year from the date of issuance of our June 30, 2021 consolidated financial statements.

Consequently, management is pursuing various financing alternatives to fund our operations so we can continue as a going concern. However, the COVID-19 pandemic has created significant economic uncertainty and volatility in the credit and capital markets. Management plans to secure the necessary financing through the issue of new equity and/or the entering into of strategic partnership arrangements but the ultimate impact of the COVID-19 pandemic on our ability to raise additional capital is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak and any new information which may emerge concerning the severity of the COVID-19 pandemic. We may not be able to raise sufficient additional capital and may tailor our drug candidate development program based on the amount of funding we are able to raise in the future. Nevertheless, there is no assurance that these initiatives will be successful.

The consolidated financial statements do not give effect to any adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern. Such adjustments could be material.

Our future funding requirements will depend on many factors, including but not limited to:

the rate of progress and cost of our clinical studies, preclinical studies and other discovery and research and development activities;

the costs associated with establishing manufacturing and commercialization capabilities;

the costs of acquiring or investing in businesses, product candidates and technologies;

the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;

the costs and timing of seeking and obtaining FDA and other regulatory approvals;

the effect of competing technological and market developments;

the economic and other terms and timing of any collaboration, licensing or other arrangements into which we may enter; and

the impact of us being a public entity.

Until we can generate a sufficient amount of product revenue to finance our cash requirements, which we may never do, we expect to finance future cash needs primarily through public or private equity offerings, or strategic collaborations. The sale of equity and convertible debt securities may result in dilution to our stockholders and certain of those securities may have rights senior to those of our shares of capital stock. If we raise additional funds through the issuance of preferred stock, convertible debt securities or other debt financing, these securities or other debt could contain covenants that would restrict our operations. Any other third-party funding arrangement could require us to relinquish valuable rights. Economic conditions may affect the availability of funds and activity in equity markets. We do not know whether additional funding will be available on acceptable terms, or at all. If we are not able to secure additional funding when needed, we may have to delay, reduce the scope of or eliminate one or more of our clinical trials or research and development programs or make changes to our operating plan. In addition, we may have to seek a partner for one or more of our product candidates at an earlier stage of development, which would lower the economic value of those programs to us.

Critical Accounting Policies

The preparation of financial statements, in conformity with generally accepted . . .

Sep 28, 2021

COMTEX_394189418/2041/2021-09-28T16:12:01

Is there a problem with this press release? Contact the source provider Comtex at editorial@comtex.com. You can also contact MarketWatch Customer Service via our Customer Center.

(c) 1995-2021 Cybernet Data Systems, Inc. All Rights Reserved

This Story has 0 Comments
Be the first to comment

Story Conversation

Commenting FAQs »

Partner Center

Link to MarketWatch's Slice.