# TuHURA Biosciences, Inc.: Form 10-Q for the period ended Dec 31, 2023

- Company: [TuHURA Biosciences, Inc.](/companies/hura.md) (CIK 1498382)
- Form: 10-Q
- Filed: 2024-02-14
- Accepted by EDGAR: Feb 14, 2024, 21:05 ET
- Period: 2023-12-31
- Accession: 0000950170-24-015204
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1498382/000095017024015204/ktra-20231231.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1498382/000095017024015204/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-12-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Research and development | 3 months, 2023-10-01 to 2023-12-31 | $111.0k | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2023-07-01 to 2023-12-31 | $2.0m | us-gaap:ResearchAndDevelopmentExpense |
| Net income | 3 months, 2023-10-01 to 2023-12-31 | −$1.0m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2023-07-01 to 2023-12-31 | −$4.0m | us-gaap:NetIncomeLoss |
| Basic EPS | 3 months, 2023-10-01 to 2023-12-31 | −$0.24 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2023-07-01 to 2023-12-31 | −$1.37 | us-gaap:EarningsPerShareBasic |
| Operating cash flow | 6 months, 2023-07-01 to 2023-12-31 | −$3.4m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2023-12-31 | $658.0k | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-12-31 | $1.2m | us-gaap:AssetsCurrent |
| Total assets | at 2023-12-31 | $1.9m | us-gaap:Assets |
| Current liabilities | at 2023-12-31 | $1.9m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-12-31 | $2.0m | us-gaap:Liabilities |
| Shareholders' equity | at 2023-12-31 | −$164.0k | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 39,167 characters.

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 our Annual Report on Form 10-K for the year ended June 30, 2023, and in our other filings with the Securities and Exchange Commission (the “SEC”), available at www.sec.gov. Actual results may differ materially from any forward-looking statement.

All amounts are expressed in US dollars and in thousands, except par value and per share amounts, unless otherwise noted.

### Background

Kintara Therapeutics, Inc. is a clinical stage, biopharmaceutical company focused on the development and commercialization of new cancer therapies.

We are the parent company of Del Mar (BC), a British Columbia, Canada corporation, and Adgero Biopharmaceuticals Holdings, Inc., a Delaware Corporation (“Adgero”). We are also the parent company to 0959454 B.C. Ltd. (“Callco”) and 0959456 B.C. Ltd. (“Exchangeco”), which are British Columbia, Canada corporations. Callco and Exchangeco were formed to facilitate the Reverse Acquisition that occurred in 2013.

References to “we,” “us,” and “our,” refer to Kintara and our wholly-owned subsidiaries, Del Mar Pharmaceuticals (BC) Ltd. (“Del Mar (BC)”), Adgero, Adgero Biopharmaceuticals, Inc. (“Adgero Bio”), Callco, and Exchangeco.

We are dedicated to the development of novel cancer therapies for patients with unmet medical needs. Our mission is to benefit patients by developing and commercializing anti-cancer therapies for patients whose solid tumors exhibit features that make them resistant to, or unlikely to respond to, currently available therapies, with particular focus on orphan cancer indications.

Our lead candidate is REM-001, a late-stage photodynamic therapy (“PDT”) for the treatment of cutaneous metastatic breast cancer (“CMBC”). PDT is a treatment that uses light sensitive compounds, or photosensitizers, that, when exposed to specific wavelengths of light, act as a catalyst to produce a form of reactive oxygen that induces local tumor cell death.

### Recent Events

- Effective July 1, 2023, we were awarded a $2.0 million grant from the National Institutes of Health (“NIH”) to be received over a two-year period as expenses are incurred. The grant from the NIH will fund the majority of expenses related to the REM-001 CMBC 15-patient clinical study.
- On September 20, 2023, the Nasdaq Staff notified us that we did not comply with the Stockholders’ Equity Requirement (the “Notice”). Pursuant to the Notice, we submitted a plan to regain compliance and received an extension of 180 calendar days from the date of the Notice, or March 18, 2024, to evidence compliance and to maintain compliance through December 31, 2024. The Notice has no immediate effect on the listing of our common stock and our common stock continues to trade on The Nasdaq Capital Market under the symbol “KTRA,” subject to our compliance with the other continued listing requirements.
- On October 31, 2023, we announced preliminary topline results for VAL-083, a DNA-targeting agent intended to treat drug-resistant solid tumors such as glioblastoma (“GBM”) and potentially other smaller tumors, from the Glioblastoma Adaptive Global Innovative Learning Environment (“GBM AGILE”) study. VAL-083 did not perform better than the current standards of care in glioblastoma and the preliminary safety data was similar to that of the current standards of care used to treat glioblastoma. As a result, we terminated the development of VAL-083 and have turned our focus to our REM-001 program.
- On December 13, 2023, the Nasdaq staff notified us that we did not comply with the Minimum Bid Price Requirement (the “Bid Price Notice”). Pursuant to the Bid Price Notice, we have 180 calendar days from the date of the Bid Price Notice, or June 10, 2024, to regain compliance for a minimum of ten consecutive business days.
- In December 2023, we announced that our Board of Directors has initiated a process to explore and review a range of strategic alternatives focused on maximizing stockholder value.
- On February 12, 2024, we announced the initiation of an open label 15-patient study in CMBC patients which is evaluating REM-001 (the “REM-001 Study”), a second-generation PDT photosensitizer agent, and is designed to test the 0.8 mg dose as well as optimize the study design in advance of a Phase 3 trial initiation. The primary endpoint in the study is Best Overall Objective Response Rate (“bORR”) (complete response or partial response) of the target treatment fields at any time from treatment up to, and including, week 24. The majority of the costs to run this study will be covered by the $2.0 million Small Business Innovation Research grant Kintara was awarded from the NIH.

### Upcoming Clinical Milestones

As a result of receiving the NIH grant, we re-initiated our REM-001 program and we expect to start enrolling patients in the REM-001 Study in the first quarter of calendar year 2024.

### REM-001

### Background

Through REM-001, we are developing our photodynamic therapy (“PDT”) for the treatment of rare, unmet medical needs. PDT is a treatment that uses light sensitive compounds, or photosensitizers, that, when exposed to specific wavelengths of light, act as catalysts to produce a form of oxygen that induces local tumor cell death. REM-001 consists of three parts: the laser light source, the light delivery device, and the REM-001 drug product (collectively, the “REM-001 Therapy”). REM-001 consists of an active pharmaceutical ingredient (“API”) in a lipid formulation. The REM-001 API is SnET2 (“tin ethyl etiopurpurin”) which is a second-generation PDT photosensitizer agent. We believe REM-001 possesses multiple advantages over earlier generation PDT compounds.

Our lead indication for REM-001 is CMBC which is a disease that may strike individuals with advanced breast cancer and for which effective treatment options are limited. In four Phase 2 and/or Phase 3 clinical studies in CMBC patients, primarily targeting patients who had previously received chemotherapy and failed radiation therapy, REM-001 Therapy was able to reduce, or eliminate, a substantial number of the treated CMBC tumors. Specifically, our analysis of the data collected from these studies indicates that in approximately 80% of evaluable tumor sites treated with REM-001 Therapy, there was a complete response; meaning that follow-up clinical assessments indicated no visible evidence of the tumor remaining. We believe clinical data indicates that REM-001 Therapy holds promise as a treatment to locally eliminate, or slow the growth of, treated cutaneous cancerous tumors in this difficult-to-treat patient population.

Numerous approaches have been utilized to treat CMBC patients, including various forms of chemotherapy, radiation therapy, surgical excision, hyperthermia, cryotherapy, electro-chemotherapy, topical drugs, and intra-lesional chemotherapy injections. However, for the most part, we believe that these therapies are often inadequate given the limited efficacy, toxicities and/or side effects of each. We believe our REM-001 Therapy has several advantages for this indication: it can be highly directed to the tumor site, has minimal systemic effects or normal tissue toxicities, can be used in conjunction with other therapies, and can be periodically repeated.

Our REM-001 Therapy product consists of three parts: the DD series laser light source (or equivalent), the ML2-0400 light delivery device (or equivalent) and the drug REM-001. In use, REM-001 is first administered by intravenous infusion and allowed to distribute within the body and be taken up by the tumors. Tumors are then illuminated with light using the light delivery device, which is attached to the laser light source, so that the accumulated REM-001 can be activated for the desired clinical effect.

As a result of our review of the historical data, we submitted questions to the U.S. Food and Drug Administration (“FDA”) under a Type C format to review the technology and results and determine the anticipated requirements for regulatory approval. On March 3, 2017, we received the FDA’s written response to these questions. Based on that response, we have successfully manufactured REM-001 and developed light delivery devices for our planned 15-patient Phase 2 study. We received a Study May Proceed letter from the FDA for our 15-patient study on August 9, 2022.

On October 19, 2022, we announced that the REM-001 program in CMBC was paused to conserve cash which will be used to support the funding of the GBM AGILE Study. Effective July 1, 2023, the Company was awarded a two-year $2,000 Small Business Innovation Research grant from the National Institutes of Health to support the clinical development of REM-001 for the treatment of CMBC. The grant will be received in tranches of approximately $1,250 for the period July 1, 2023, to June 30, 2024, and approximately $750 for the period July 1, 2024, to June 30, 2025. As a result of receiving the grant, we have re-initiated the REM-001 program and we expect to start enrolling patients in the REM-001 Study in the first quarter of calendar year 2024.

### REM-001 Regulatory Filings

On August 9, 2022, we announced that we received a Study May Proceed letter from the FDA to begin our 15-patient study evaluating REM-001 PDT for the treatment of CMBC. The FDA has granted us Fast Track Designation (“FTD”) for REM-001 in CMBC.

### VAL-083

On October 31, 2023, we announced preliminary topline results for VAL-083 from the GBM AGILE study. VAL-083 did not perform better than the current standards of care in glioblastoma and the preliminary safety data was similar to that of the current standards of care used to treat glioblastoma. As a result, we terminated the development of VAL-083. On February 13, 2024, we sent an Opt-Out Notice to Valent under the Valent Assignment Agreement whereby we assigned all rights, title, and interest in and to the patents for VAL-083 to Valent. As a result, we granted Valent a non-exclusive, fully-paid, royalty-free, perpetual, worldwide and non-transferable license, subject to limited exceptions. We are entitled to receive royalties from Valent’s subsequent commercialization of VAL-083 equal to 5% of Valent Net Sales (as defined in the Valent Assignment Agreement).

### 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 (BC), Callco, and Exchangeco and the security holders of Del Mar (BC). Upon completion of the Exchange Agreement, Del Mar (BC) became a wholly-owned subsidiary of ours (the “Reverse Acquisition”).

On August 19, 2020, we acquired Adgero and changed our name from DelMar Pharmaceuticals, Inc. to Kintara Therapeutics, Inc. We are the parent company to the following entities:

 Del Mar (BC), a British Columbia, Canada corporation incorporated on April 6, 2010, which is a clinical stage company with a focus on the development of drugs for the treatment of cancer;

 Adgero, a Delaware corporation incorporated on October 26, 2015, which is a clinical stage company with a focus on the development of photodynamic therapy for the treatment of rare, unmet medical needs, specifically orphan cancer indications;

 Adgero Biopharmaceuticals, Inc. a Delaware corporation incorporated on November 16, 2007; and

 Callco and Exchangeco which are British Columbia, Canada corporations. Callco and Exchangeco were formed to facilitate the Reverse Acquisition.

### Outstanding Securities

As of February 12, 2024, we had 39,038 shares of common stock issued and outstanding, outstanding warrants to purchase 700 shares of common stock, warrants to purchase 2,444 shares of our Series C Preferred Stock that upon exercise are convertible into 42 shares of common stock, outstanding stock options to purchase 237 shares of common stock, 66 restricted stock units, and 13,668 outstanding shares Series C Preferred Stock that are convertible into 235 shares of common stock. All common stock warrants, stock options, and restricted stock units 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 $58.00 per share (Series C-1), $60.70 per share (Series C-2) or $57.50 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.

### Selected Quarterly Information

The financial information reported herein has been prepared in accordance with accounting principles generally accepted in the United States. Our functional currency at December 31, 2023, and June 30, 2023, is the US$. The following tables represent selected financial information for us for the periods presented. All amounts in the remainder of this MD&A are expressed in thousands, except par value and per share amounts, unless otherwise noted.

#### Selected Balance Sheet Data

*(in thousands)*

|  | December 31, 2023 $ | June 30, 2023 $ |
| --- | ---: | ---: |
| Cash and cash equivalents | 658 | 1,535 |
| Working capital | (684) | 188 |
| Total assets | 1,885 | 3,979 |
| Total stockholders’ equity | (164) | 731 |

#### Selected Statement of Operations Data

### For the three months ended

*(in thousands, except per share data)*

| Expenses | December 31, 2023 $$ | December 31, 2022 |
| --- | ---: | ---: |
| Research and development | 111 | 2,059 |
| General and administrative | 908 | 1,440 |
|  | (1,019) | (3,499) |
| **Other income (loss)** |  |  |
| Foreign exchange | (6) | — |
| Interest, net | 2 | 45 |
|  | (4) | 45 |
| **Net loss for the period** | (1,023) | (3,454) |
| Series A Preferred cash dividend | (2) | (2) |
| Series C Preferred stock dividend | — | — |
| **Net loss for the period attributable to common stockholders** | (1,025) | (3,456) |
| **Basic and fully diluted weighted average number of shares** | 4,337 | 1,643 |
| **Basic and fully diluted loss per share** | (0.24) | (2.10) |

### For the six months ended

*(in thousands, except per share data)*

| Expenses | December 31, 2023 $$ | December 31, 2022 |
| --- | ---: | ---: |
| Research and development | 1,970 | 5,230 |
| General and administrative | 2,011 | 2,915 |
|  | (3,981) | (8,145) |
| **Other income** |  |  |
| Foreign exchange | (8) | 11 |
| Interest, net | 4 | 84 |
|  | (4) | 95 |
| **Net loss for the period** | (3,985) | (8,050) |
| Series A Preferred cash dividend | (4) | (4) |
| Series C Preferred stock dividend | (173) | (362) |
| **Net loss for the period attributable to common stockholders** | (4,162) | (8,416) |
| **Basic and fully diluted weighted average number of shares** | 3,027 | 1,554 |
| **Basic and fully diluted loss per share** | (1.37) | (5.42) |

21

### 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 three months ended

*(in thousands)*

|  | December 31, 2023 $$ | December 31, 2022 |
| --- | ---: | ---: |
| Research and development – GAAP | 111 | 2,059 |
| Less: non-cash, share-based compensation expense | (23) | (134) |
| Research and development net of non-cash, share-based, compensation expense – Non-GAAP | 88 | 1,925 |
| General and administrative – GAAP | 908 | 1,440 |
| Less: non-cash, share-based compensation expense | (180) | (302) |
| General and administrative net of non-cash, share-based, compensation expense – Non-GAAP | 728 | 1,138 |

### For the six months ended

*(in thousands)*

|  | December 31, 2023 $$ | December 31, 2022 |
| --- | ---: | ---: |
| Research and development – GAAP | 1,970 | 5,230 |
| Less: non-cash, share-based compensation expense | (109) | (274) |
| Research and development net of non-cash, share-based, compensation expense – Non-GAAP | 1,861 | 4,956 |
| General and administrative – GAAP | 2,011 | 2,915 |
| Less: non-cash, share-based compensation expense | (301) | (680) |
| General and administrative net of non-cash, share-based, compensation expense – Non-GAAP | 1,710 | 2,235 |

### Results of Operations

### Comparison of the three months ended December 31, 2023, and December 31, 2022

*(in thousands)*

| Expenses | Three months ended December 31, 2023 $ | December 31, 2022 $ | Change $ | Change % |
| --- | ---: | ---: | ---: | ---: |
| Research and development | 111 | 2,059 | (1,948) | (95) |
| General and administrative | 908 | 1,440 | (532) | (37) |
|  | (1,019) | (3,499) | 2,480 |  |
| **Other income (loss)** |  |  |  |  |
| Foreign exchange | (6) | — | (6) | — |
| Interest, net | 2 | 45 | (43) | (96) |
|  | (4) | 45 | (49) |  |
| **Net loss** | (1,023) | (3,454) | 2,431 |  |

22

#### Research and Development

Research and development expenses decreased to $111 for the three months ended December 31, 2023, from $2,059 for the three months ended December 31, 2022. The decrease was largely attributable to lower clinical development costs and lower non-cash, share-based compensation expenses incurred during the three months ended December 31, 2023, compared to the three months ended December 31, 2022.

Clinical development costs have decreased in the current quarter compared to the same quarter in the prior fiscal year in part due to costs related to the GBM AGILE Study being lower in the three months ended December 31, 2023, compared to the three months ended December 31, 2022. In addition, on October 19, 2022, we announced that we had paused the REM-001 program in order to preserve cash for the development of VAL-083. On June 28, 2023, we announced the restart of the REM-001 program as a result of the awarding of a $2 million grant, however, REM-001 costs to restart the program are not expected to ramp up until the first calendar quarter of 2024. In addition, during the three months ended December 31, 2023, we received $198 (2022 - nil) in grant proceeds. Non-cash, share-based compensation expense decreased to $23 for the three months ended December 31, 2023, from $134 for the three months ended December 31, 2022.

#### General and Administrative

General and administrative expenses were $908 for the three months ended December 31, 2023, compared to $1,440 for the three months ended December 31, 2022. A significant portion of the decrease was a result of lower non-cash, share-based compensation expenses and a reduction in professional fees and personnel costs in the current three months compared to the same period in the prior fiscal year. Non-cash, share-based compensation expense decreased to $180 for the three months ended December 31, 2023, from $302 for the six months ended December 31, 2022, due to the recognition of higher compensation expense recognized during the three months ended December 31, 2022, for stock options granted in September 2021. Professional fees have decreased in the current quarter compared to the same quarter in the prior fiscal year largely due to a reduction in corporate activity. Personnel costs have decreased in the current quarter compared to the same quarter in the prior fiscal year largely due to a reduction in staff.

#### Preferred Share Dividends

For each of the three months ended December 31, 2023, and 2022, we recorded $2 related to the cash dividend payable to Valent on the Series A Preferred Stock. The dividend has been recorded as a direct increase in accumulated deficit for both periods.

### Comparison of the six months ended December 31, 2023, and December 31, 2022

*(in thousands)*

| Expenses | Six months ended December 31, 2023 $ | December 31, 2022 $ | Change $ | Change % |
| --- | ---: | ---: | ---: | ---: |
| Research and development | 1,970 | 5,230 | (3,260) | (62) |
| General and administrative | 2,011 | 2,915 | (904) | (31) |
|  | (3,981) | (8,145) | 4,164 |  |
| **Other income (loss)** |  |  |  |  |
| Foreign exchange | (8) | 11 | (19) | (173) |
| Interest, net | 4 | 84 | (80) | (95) |
|  | (4) | 95 | (99) |  |
| **Net loss** | (3,985) | (8,050) | 4,065 |  |

#### Research and Development

Research and development expenses decreased to $1,970 for the six months ended December 31, 2023, from $5,230 for the six months ended December 31, 2022. The decrease was largely attributable to lower clinical development costs and lower non-cash, share-based compensation expenses incurred during the six months ended December 31, 2023, compared to the six months ended December 31, 2022.

Clinical development costs have decreased in the current quarter compared to the same quarter in the prior fiscal year in part due to costs related to the GBM AGILE Study being lower in the six months ended December 31, 2023, compared to the six months ended December 31, 2022. In addition, on October 19, 2022, we announced that we had paused the REM-001 program in order to preserve cash for the development of VAL-083. On June 28, 2023, we announced the restart of the REM-001 program as a result of the awarding of a $2 million grant, however, REM-001 costs to restart the program are not expected to ramp up until the first calendar quarter of 2024. In addition, during the six months ended December 31, 2023, we received $210 (2022 - nil) in grant proceeds. Non-cash, share-based compensation expense decreased to $109 for the six months ended December 31, 2023, from $274 for the six months ended December 31, 2022.

#### General and Administrative

General and administrative expenses were $2,011 for the six months ended December 31, 2023, compared to $2,915 for the six months ended December 31, 2022. A significant portion of the decrease was a result of lower non-cash, share-based compensation expenses and a reduction in personnel costs in the current six months compared to the same period in the prior fiscal year. Non-cash, share-based compensation expense decreased to $301 for the six months ended December 31, 2023, from $680 for the six months ended December 31, 2022, due to the recognition of higher compensation expense recognized during the six months ended December 31, 2022, for stock options granted in September 2021. Personnel costs have decreased in the current quarter compared to the same quarter in the prior fiscal year largely due to a reduction in staff.

#### Preferred Share Dividends

For each of the six months ended December 31, 2023, and 2022, we recorded $4 related to the cash dividend payable to Valent on the Series A Preferred Stock. In addition, for the six months ended December 31, 2023, we recorded $173 (2022 - $362) related to the stock dividend payable to investors on the Series C Preferred Stock. The dividends have been recorded as a direct increase in accumulated deficit for both periods.

### Liquidity and Capital Resources

### Six months ended December 31, 2023, compared to the six months ended December 31, 2022

*(in thousands)*

|  | December 31, 2023 $ | December 31, 2022 $ | Change $ | Change % |
| --- | ---: | ---: | ---: | ---: |
| Cash flows from operating activities | (3,434) | (8,530) | 5,096 | (60) |
| Cash flows from investing activities | (20) | (232) | 212 | 100 |
| Cash flows from financing activities | 2,577 | 1,856 | 721 | 39 |

#### Operating Activities

Net cash used in operating activities was $3,434 for the six months ended December 31, 2023, compared to $8,530 for the six months ended December 31, 2022. During the six months ended December 31, 2023, and 2022, we reported net losses of $3,985 and $8,050, respectively. Adjustments to reconcile net loss to net cash used in operating activities for the six months ended December 31, 2023, included stock option expense of $325 being recognized during the current period compared to $954 in the same period in the prior fiscal year. In addition, during the six months ended December 31, 2023, non-cash expenses of $85 were incurred for restricted stock unit expense while no such items were incurred in the six months ended December 31, 2022. The most significant changes in working capital for the six months ended December 31, 2023, were related to the use of clinical trial deposit to settle clinical trial expenses of $961 and settlement of accounts payable and accrued liabilities of $1,062. The most significant changes in working capital for the six months ended December 31, 2022, was due to a payment of clinical trial deposit of $1,700 and settlement of accounts payable and accrued liabilities of $535.

#### Investing Activities

Net cash used in investing activities was $20 for the six months ended December 31, 2023, compared to $232 for the six months ended December 31, 2022, for the purchase of equipment.

#### Financing Activities

Net cash received from financing activities was $2,577 for the six months ended December 31, 2023, compared to $1,856 for the six months ended December 31, 2022. During the six months ended December 31, 2023, we received $2,476 in net proceeds from sales of shares under our ATM Facility (as defined herein) with A.G.P./Alliance Global Partners (“AGP”), $105 in net proceeds from the sale of shares under the stock purchase agreement, dated as of August 2, 2022, (the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which Lincoln Park committed to purchase up to a maximum of $20,000 of shares of the Company’s common stock, and $210 in clinical grant funding. During the six months ended December 31, 2022, we received $1,860 in net proceeds from the sale of shares under the Lincoln Park Purchase Agreement.

### Going Concern and Capital Expenditure Requirements

#### Going Concern and Management Plans

(See note 1 to the condensed consolidated interim financial statements)

The condensed 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 six months ended December 31, 2023, we reported a loss of $3,985 and a negative cash flow from operations of $3,434. We had an accumulated deficit of $155,537 and had cash and cash equivalents of $658 as of December 31, 2023. We are in the clinical stage and have not generated any revenues to date. We do not have the prospect of achieving revenues until such time that our product candidate is commercialized, or partnered, which may not ever occur. On August 2, 2022, we entered into the Purchase Agreement under which we received approximately $2,008 in net proceeds as of December 31, 2023, for the issuance of an aggregate of 662 shares of common stock under the Purchase Agreement. On October 9, 2023, we received stockholder approval to issue 20% or more of our outstanding shares as of the date we entered into the Purchase Agreement with Lincoln Park. In addition, on June 28, 2023, we announced that we had been awarded approximately $2.0 million in grant funding for our REM-001 project.

On September 19, 2023, we entered into a Sales Agreement, (the “Sales Agreement”) with AGP pursuant to which the Company may offer and sell, from time to time, through AGP, as sales agent and/or principal, shares of common stock having an aggregate offering price of up to $10.9 million (the “ATM Facility”). From October 31, 2023, until December 31, 2023, we raised $2,579 in net proceeds from the sale of 8,013 shares of our common stock under the ATM Facility. From January 1, 2024, to February 12, 2024, we raised an additional $6,108 in net proceeds from the sale of 28,870 shares of our common stock under the ATM Facility.

Even with the proceeds from the grant funding, the stock purchase financing, and the ATM sales, we will require significant 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 these condensed consolidated financial statements.

Consequently, management is pursuing various financing alternatives to fund our operations in the short and long term and so we can continue as a going concern. In addition, we have initiated a process to explore and review a range of strategic alternatives focused on maximizing shareholder value. Management plans to secure the necessary financing through potential additional proceeds from our Purchase Agreement with Lincoln Park, the ATM Facility, grant funding, and the issue of new equity and/or the entering into of strategic partnership arrangements. Our ability to raise additional capital is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence. 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 condensed 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, file for bankruptcy protection or pursue a dissolution of the Company and liquidation of all of our remaining assets. In such an event, the amount of cash available for distribution to our shareholders, if any, will depend heavily on the timing of such decision, as with the passage of time the amount of cash available for distribution will be reduced as we continue to fund our operations. We cannot provide assurance as to the amount of cash that will be available to distribute to shareholders, if any, after paying our debts and other obligations and setting aside funds for reserves, nor as to the timing of any such distribution, if any.

### Critical Accounting Policies and Estimates

The preparation of financial statements, in conformity with generally accepted accounting principles in the United States, requires companies to establish accounting policies and to make estimates that affect both the amount and timing of the recording of assets, liabilities, revenues and expenses. Some of these estimates require judgments about matters that are inherently uncertain and therefore actual results may differ from those estimates.

A detailed presentation of all of our significant accounting policies and the estimates derived therefrom is included in Note 2 to our consolidated financial statements for the year ended June 30, 2023, contained in our Annual Report on Form 10-K filed with the SEC on September 18, 2023. While all of the significant accounting policies are important to our consolidated financial statements, the following accounting policies and the estimates derived therefrom are critical:

 Fair value of financial instruments

 Accruals for research and development expenses and clinical trials

#### Fair value of financial instruments

We recognize compensation costs resulting from the issuance of stock-based awards to employees, non-employees and directors as an expense in the statement of operations over the service period based on a measurement of fair value for each stock-based award. Prior to our adoption of Accounting Standards Update 2018-07, *Compensation-Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting (“*ASU 2018-07”), stock options granted to non-employee consultants were revalued at the end of each reporting period until vested using the Black-Scholes option-pricing model and the changes in their fair value were recorded as adjustments to expense over the related vesting period. For the six months ended December 31, 2023, and 2022, the determination of grant-date fair value for stock option awards was estimated using the Black-Scholes model which includes variables such as the expected volatility of our share price, the anticipated exercise behavior of its grantee, interest rates, and dividend yields. For the six months ended December 31, 2023, and 2022, we utilized the plain vanilla method to determine the expected life of stock options. These variables are projected based on our historical data, experience, and other factors. Changes in any of these variables could result in material adjustments to the expense recognized for share-based payments. Such value is recognized as expense over the requisite service period, net of actual forfeitures, using the accelerated attribution method. We recognize forfeitures as they occur. The estimation of stock awards that will ultimately vest requires judgment, and to the extent actual results, or updated estimates, differ from current estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised.

For the six months ended December 31, 2023, and 2022, we issued stock options to our officers. The determination of grant-date fair value for options granted was estimated using the Black-Scholes model which includes variables such as the expected volatility of our share price, interest rates, dividend yields, and the term of the option.

#### Accruals for research and development expenses and clinical trials

As part of the process of preparing our financial statements, we are required to estimate our expenses resulting from our obligations under contracts with vendors, clinical research organizations and consultants, and under clinical site agreements in connection with conducting clinical trials. The financial terms of these contracts are subject to negotiations, which vary from contract to contract and may result in payment terms that do not match the periods over which materials or services are provided under such contracts. Our objective is to reflect the appropriate expenses in our financial statements by matching those expenses with the period in which services are performed and efforts are expended. We account for these expenses according to the timing of various aspects of the expenses. We determine accrual estimates by taking into account discussion with applicable personnel and outside service providers as to the progress of clinical trials, or the services completed. During the course of a clinical trial, we adjust our clinical expense recognition if actual results differ from our estimates. We make estimates of our accrued expenses as of each balance sheet date based on the facts and circumstances known to us at that time. Our clinical trial accruals are dependent upon the timely and accurate reporting of contract research organizations and other third-party vendors. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in us reporting amounts that are too high or too low for any particular period. For the six months ended December 31, 2023, and 2022, there were no material adjustments to our prior period estimates of accrued expenses for clinical trials.

### Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

## Controls and procedures

As filed, 1,716 characters.

*(a) Evaluation of Disclosure Controls and Procedures*. Our principal executive officer and principal financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Form 10-Q, has concluded that, based on such evaluation, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

*(b) Changes in Internal Controls.* There were no changes in our internal control over financial reporting, identified in connection with the evaluation of such internal control that occurred during the quarter ended December 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 4,413 characters.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended June 30, 2023 filed with the SEC on September 18, 2023 and our Quarterly Report on Form 10-Q filed with the SEC on November 13, 2023 (the “Prior 10-Q”), which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K may not be the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company’s business, financial condition and/or operating results.

There were no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K and in our Prior 10-Q except as noted below.

***We are not currently in compliance with the continued listing requirements for The Nasdaq Capital Market. If we do not regain compliance and continue to meet the continued listing requirements, our common stock may be delisted from The Nasdaq Capital Market, which could affect the market price and liquidity for our common stock and reduce our ability to raise additional capital.***

Our common stock is listed on The Nasdaq Capital Market. In order to maintain that listing, we must satisfy minimum financial and other requirements including, without limitation, the minimum stockholders’ equity and minimum bid price requirements for continued listing on The Nasdaq Capital Market. Nasdaq Listing Rule 5550(b)(1) requires companies listed on The Nasdaq Capital Market to maintain stockholders’ equity of at least $2,500,000 (the “Stockholders’ Equity Requirement”). Nasdaq Listing Rule 5550(a)(2) requires companies listed on The Nasdaq Capital Market to maintain a minimum bid price of $1 per share (the “Minimum Bid Price Requirement”).

On September 20, 2023, the Nasdaq Staff notified us that we did not comply with the Stockholders’ Equity Requirement (the “Notice”). Pursuant to the Notice, we submitted a plan to regain compliance on November 6, 2023, and received an extension of 180 calendar days from the date of the Notice, or March 18, 2024, to evidence compliance. The Notice has no immediate effect on the listing of our common stock and our common stock continues to trade on The Nasdaq Capital Market under the symbol “KTRA,” subject to our compliance with the other continued listing requirements.

On December 13, 2023, the Nasdaq staff notified us that we did not comply with the Minimum Bid Price Requirement (the “Bid Price Notice”). Pursuant to the Bid Price Notice, we have 180 calendar days from the date of the Bid Price Notice, or June 10, 2024, to regain compliance for a minimum of ten consecutive business days.

We will continue to monitor our stockholders’ equity and bid price and may, if appropriate, consider implementing available options to regain compliance with the Stockholders’ Equity Requirement and the Minimum Bid Price Requirement. There can be no assurance that we will be able to regain compliance with the Stockholders’ Equity Requirement or the Minimum Bid Price Requirement or maintain compliance even if we implement an option that regains our compliance.

If we fail to regain compliance with the Stockholders’ Equity Requirement or the Minimum Bid Price Requirement, or to meet the other applicable continued listing requirements for The Nasdaq Capital Market in the future, our common stock may be delisted and trade on the OTC Markets Group Inc. or other small trading markets, which could reduce the liquidity of our common stock materially and result in a corresponding material reduction in the price of our common stock as well as reduce our ability to raise additional capital. In addition, if our common stock is delisted from Nasdaq and the trading price remains below $5.00 per share, trading in our common stock might also become subject to the requirements of certain rules promulgated under the Exchange Act, which require additional disclosure by broker-dealers in connection with any trade involving a stock defined as a “penny stock” (generally, any equity security not listed on a national securities exchange or quoted on Nasdaq that has a market price of less than $5.00 per share, subject to certain exceptions).

Filed Feb 14, 2024.
Source: SEC EDGAR, the filing index for accession 0000950170-24-015204. Last ingested by Listed: Oct 24, 2026, 15:07 ET. No prices; not investment advice.