# ProMIS Neurosciences Inc.: Form 10-Q for the period ended Mar 31, 2024

- Company: [ProMIS Neurosciences Inc.](/companies/pmn.md) (CIK 1374339)
- Form: 10-Q
- Filed: 2024-05-14
- Accepted by EDGAR: May 14, 2024, 16:31 ET
- Period: 2024-03-31
- Accession: 0001558370-24-008145
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1374339/000155837024008145/pmn-20240331x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1374339/000155837024008145/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Research and development | 3 months, 2024-01-01 to 2024-03-31 | $2.1m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2024-01-01 to 2024-03-31 | −$3.7m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-01-01 to 2024-03-31 | $76.8k | us-gaap:InterestExpense |
| Net income | 3 months, 2024-01-01 to 2024-03-31 | −$3.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-01-01 to 2024-03-31 | −$0.19 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-01-01 to 2024-03-31 | −$0.19 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-01-01 to 2024-03-31 | 19,533,976 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-01-01 to 2024-03-31 | −$10.3m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2024-03-31 | $2.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-03-31 | $3.5m | us-gaap:AssetsCurrent |
| Total assets | at 2024-03-31 | $3.5m | us-gaap:Assets |
| Current liabilities | at 2024-03-31 | $2.6m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-03-31 | $3.5m | us-gaap:Liabilities |
| Shareholders' equity | at 2024-03-31 | $77.1k | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 30,357 characters.

*All references in this management’s discussion and analysis of financial condition and results of operations, or MD&A, to the “Company”, “ProMIS”, “we”, “us”, or “our” refer to ProMIS Neurosciences Inc., unless otherwise indicated or the context requires otherwise. The following MD&A is prepared as of May 14, 2024 for the three months ended March 31, 2024 and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2023 and 2022 included in the Company’s Annual Report on Form 10-K and the unaudited condensed consolidated interim financial statements for the three months ended March 31, 2024 and 2023 included in this Quarterly Report on Form 10-Q (collectively, the “****Financial Statements”****), which have been prepared by management in accordance with GAAP as issued by the FASB. All dollar amounts refer to United States dollars, except as stated otherwise.*

### Overview

We are applying our patented technology platform to build a portfolio of antibody therapies and therapeutic vaccines in neurodegenerative diseases and other protein-misfolding diseases, with a focus on Alzheimer’s disease (AD), multiple system atrophy (MSA), and amyotrophic lateral sclerosis (ALS). We believe these diseases share a common biologic cause — misfolded versions of proteins, that otherwise perform a normal function, becoming toxic and killing neurons, resulting in disease. ProMIS’ technology platform enables drug discovery through a combination of protein biology, physics and supercomputing. We believe this platform provides a potential advantage in selectively targeting the toxic misfolded proteins with therapeutics or detecting them with diagnostics.

We are developing a pipeline of antibodies aimed at selectively targeting misfolded toxic forms of proteins that drive neurodegenerative diseases without interfering with the essential functions of the same properly folded proteins. Our product candidates are PMN310, PMN267, and PMN442. Our lead product candidate is PMN310, a monoclonal antibody designed to treat AD by selectively targeting toxic, misfolded oligomers of amyloid-beta. PMN267 is our second lead product candidate targeting ALS. It has been shown in preclinical studies to selectively recognize misfolded, cytoplasmic TDP-43 aggregates without interacting with normal TDP-43. Misfolded TDP-43 is believed to play an important role in the development of ALS. In light of research suggesting that misfolded toxic a-syn is a primary driver of disease in synucleinopathies such as MSA and Parkinson’s disease, our third lead product candidate, PMN442 has shown robust binding to pathogenic a-syn oligomers and seeding fibrils in preclinical studies, with negligible binding to a-syn monomers and physiologic tetramers which are required for normal neuronal function. We also have earlier stage preclinical programs and a project to refine our discovery algorithm using machine learning as highlighted in the “Other Key Projects” section below.

We were incorporated on January 23, 2004 under the Canada Business Corporations Act (CBCA). On July 13, 2023, we continued our existence from a corporation incorporated under the CBCA into the Province of Ontario under the Business Corporations Act (Ontario) (the OBCA) (the Continuance). The Continuance was approved by our shareholders at the our 2023 Annual Meeting of Shareholders held on June 29, 2023. We have a wholly-owned U.S. subsidiary, ProMIS USA, which was incorporated in January 2016 in the State of Delaware. ProMIS USA has had no material activity and has no material financial impact on our Financial Statements. Since our inception, we have devoted substantially all of our resources to developing our platform technologies and the resultant antibody product candidates, building our intellectual property portfolio, business planning, raising capital and providing general and administrative support for these operations. We have principally financed our operations through public and private placements of Common Shares and warrants and convertible debt.

We have incurred significant operating losses since inception. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual licensing and/or commercialization of our product candidates and any future product candidates. Our net losses were $3.6 million and $5.0 million for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, we had an accumulated deficit of $97.1 million. We expect to continue to incur net losses for the foreseeable future and, if able to raise additional funding, would expect our research and development expenses, general and administrative expenses and capital expenditures to increase. In particular, if we are able to raise additional funding, we expect our expenses to increase as we continue our development of, and seek regulatory approvals for, our product candidates, as well as initiate clinical trials, hire additional personnel, pay fees to outside consultants, lawyers and accountants, and incur other increased costs associated with being a clinical-stage public company. In addition, if we obtain marketing approval for any product candidates, we may incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution. We may also incur expenses should we in-license or acquire additional product candidates.

As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through the sale of equity, including our at-the-market offering agreement we entered into in January 2024 to sell up to $25.0 million of Common Shares, debt financings, or other capital sources, which may include collaborations with other companies or other strategic transactions. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, reduce or eliminate the development and commercialization of one or more of our product candidates or delay our pursuit of potential in-licenses or acquisitions.

Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

We expect that our cash of $2.5 million as of March 31, 2024 will not be sufficient to fund the Company’s operating expenses for at least 12 months from the date these Financial Statements were issued. This raises substantial about regarding our ability to continue as a going concern. Refer to additional discussion related to going concern considerations in “*Liquidity and Capital Resources.”*

### Program Updates

### ProMIS lead program PMN310: Potential Next Generation Therapy for Alzheimer’s Disease

PMN310, a monoclonal antibody selective for toxic amyloid-beta oligomers in AD, is our lead product candidate. In the beginning of 2024, we made significant progress on the program elements.

A first-in-human Phase 1a clinical trial of PMN310 in normal human volunteers was initiated in November 2023. Topline data from the cohorts treated with single ascending doses of PMN310 are expected in mid-2024. A phase 1b proof of concept trial in Alzheimer’s disease patients is expected to initiate in 2H 2024, subject to availability of sufficient resources.

Expenditures for PMN310 in the three months ended March 31, 2024 were approximately $1.6 million, not including allocations of senior management time.

### ALS Portfolio, including TAR-DNA binding protein 43 (TDP-43) – PMN267

PMN267 has been humanized in a human IgG1 framework and is ready to progress to IND-enabling studies, subject to sufficient available resources, to support the systemic, extracellular administration form. Additionally, in conjunction with a partner having expertise with vectorization, the development of an intrabody form could progress.

### Multiple system atrophy (MSA) – PMN442

ProMIS has selected a novel monoclonal antibody (PMN442) as a lead candidate for MSA based on its selective binding and protective activity against pathogenic forms of alpha-synuclein. PMN442 has been humanized in a human IgG1 framework and is ready to progress to IND-enabling studies, subject to availability of sufficient resources.

### Other key projects

We continue to progress with other key projects, in addition to our top priorities PMN310, PMN267, and PMN442. With respect to the amyloid vaccine program, mouse studies have provided data guiding the development of an AD vaccine containing our oligomer peptide antigens conjugated to a carrier protein in formulation with an adjuvant. Mouse vaccination studies with a-syn vaccine candidates utilizing our peptide antigens to target pathogenic a-syn enabled the selection of our lead vaccine candidate, PMN400, against multiple synucleinopathies including MSA, Parkinson’s disease and Lewy body dementia.

Our proprietary technology employs algorithmic prediction of protein misfolding to identify disease-specific epitopes (DSEs) to which selective antibodies can be raised. An effort is underway to update the algorithms with machine learning capabilities to accelerate our ability to identify and patent DSEs and antibodies, across neurodegenerative diseases as well as other therapeutic areas.

### Recent Corporate Highlights

- In January 2024, we entered an At-the-Market Offering Agreement to sell up to $25.0 million Common Shares.
- In January 2024, we announced the selection of a lead vaccine candidate, PMN400, against multiple synucleinopathies including Multiple System Atrophy (MSA), Parkinson’s disease and Lewy Body Dementia.
- In March 2024, we announced the addition of key U.S. and international patent allowances to the PMN310 global intellectual property portfolio.
- In April 2024, we announced the publication of a manuscript titled “Tryptophan residues in TDP-43 and SOD1 modulate the cross-seeding and toxicity of SOD1” in the Journal of Biological Chemistry supporting the interaction between pathogenic TDP-43 and SOD1 as a therapeutic target for ALS.
- In April 2024, the abstract titled “Novel approach to optimization of Alzheimer’s vaccine configuration for maximal targeting of toxic amyloid-beta oligomers” was accepted for poster presentation at AAIC 2024.
- In April 2024, the platform presentation titled “PMN310: A monoclonal antibody that selectively targets toxic Ab oligomers” was delivered by Dr. Neil Cashman at the Alzheimer’s & Parkinson’s drug development summit in Boston, MA
- In April 2024, the manuscript titled “Relationship between therapeutic activity and preferential targeting of toxic soluble aggregates by amyloid-beta-directed antibodies” was published in the online journal bioRxiv.

### Components of Operating Results

### Revenue

We have not generated any revenue since our inception and do not expect to generate any revenue from the sale of our products in the near future, if at all. If our product candidates are successful and result in marketing approval or if we enter into collaboration or license agreements with third parties, we may generate revenue in the future from a combination of product sales or payments from such collaboration or license agreements.

### Operating Expenses

#### Research and Development Expenses

Research and development expenses consist primarily of costs incurred in connection with the development and research of our platform technologies, as well as unrelated discovery program expenses. We expense research and development costs in the periods in which they are incurred. These expenses include:

- employee-related expenses, including salaries, related benefits and share-based compensation expense, for employees engaged in research and development activities;
- external research and development expenses incurred under arrangements with third parties, such as contract research organizations or contract research organizations (“**CROs”**), and consultants;
- the cost of acquiring, developing, and manufacturing clinical study materials; and
- costs associated with preclinical and clinical activities and regulatory operations.

We enter into consulting, research, and other agreements with commercial entities, researchers, universities, and others for the provision of goods and services. Such arrangements are generally cancelable upon reasonable notice and payment of costs incurred. Costs are considered incurred based on an evaluation of the progress to completion of specific tasks under each contract using information and data provided by the respective vendors, including our clinical sites. These costs consist of direct and indirect costs associated with our platform technologies, as well as fees paid to various entities that perform certain research on our behalf. Depending upon the timing of payments to the service providers, we recognize prepaid expenses or accrued expenses related to these costs. These accrued or prepaid expenses are based on management’s estimates of the work performed under service agreements, milestones achieved, and experience with similar contracts. We monitor each of these factors and adjust estimates accordingly.

Research and development activities account for a significant portion of our operating expenses. If we are able to obtain additional funding, we expect our research and development expenses to increase substantially for the foreseeable future as we continue to implement our business strategy, which includes advancing our platform technologies through clinical development as well as other product candidates into clinical development, expanding our research and development efforts, including hiring additional personnel to support our research efforts, our clinical and product development efforts, and seeking regulatory approvals for our product candidates that successfully complete clinical trials.

We use our personnel and infrastructure resources across multiple research and development programs directed toward identifying and developing product candidates. Our direct research and development expenses consist primarily of external costs, including fees paid to consultants, contractors and CROs in connection with our development activities and the cost of acquiring, developing, and manufacturing clinical study materials.

#### General and Administrative Expenses

General and administrative expenses consist primarily of personnel costs including salary, bonus, employee-benefits and share-based compensation, costs incurred in development and protection of intellectual property, professional service fees, and other general overhead and facility costs, (including rent) depreciation and amortization. If we are able to obtain additional funding, we expect our general and administrative expenses to increase substantially for the foreseeable future as we increase our administrative function to support the growth of the business and its continued research and development activities.

#### Other (Expense) Income

Other (expense) income consists primarily of interest expense on deferred accounts payable with a vendor, changes in the fair value of our financial instruments and interest income.

### Three Months Ended March 31, 2024 and 2023

### Results of Operations

The following table summarizes our results of operations for the periods presented:

| ​ ​ ​ Operating expenses | ​ ​ | ​ ​ Three Months Ended March 31, 2024 ​ | ​ | ​ ​ 2023 ​ | ​ ​ | ​ ​ ​ ​ Change ​ |
| --- | --- | ---: | --- | ---: | --- | ---: |
| Research and development | ​ | $2,123,778 | ​ | $3,510,252 | ​ | $(1,386,474) |
| General and administrative | ​ | 1,552,873 | ​ | 1,460,419 | ​ | 92,454 |
| Total operating expenses | ​ | 3,676,651 | ​ | 4,970,671 | ​ | (1,294,020) |
| Loss from operations | ​ | (3,676,651) | ​ | (4,970,671) | ​ | 1,294,020 |
| Other income/(expense) | ​ | 41,563 | ​ | 11,240 | ​ | (30,323) |
| Net loss | ​ | $(3,635,088) | ​ | $(4,959,431) | ​ | $1,324,343 |

### Research and Development Expenses

The following table summarizes the period-over-period changes in research and development expenses for the periods presented:

| ​ ​ ​ Direct research and development expenses by program | ​ ​ | ​ ​ Three Months Ended March 31, 2024 ​ | ​ | ​ ​ 2023 ​ | ​ ​ | ​ ​ ​ ​ Change ​ |
| --- | --- | ---: | --- | ---: | --- | ---: |
| PMN310 | ​ | $1,549,310 | ​ | $2,384,631 | ​ | $(835,321) |
| Platform and other programs | ​ | 195,862 | ​ | 150,153 | ​ | 45,709 |
| Indirect research and development expenses: | ​ |  | ​ |  | ​ | ​ |
| Employee salaries and benefits | ​ | 346,304 | ​ | 369,838 | ​ | (23,534) |
| Share-based compensation | ​ | ​ 3,812 | ​ | ​ 38,909 | ​ | ​ (35,097) |
| Consulting expense | ​ | 13,325 | ​ | 542,693 | ​ | (529,368) |
| Other operating costs | ​ | 15,165 | ​ | 24,028 | ​ | (8,863) |
| Total research and development expenses | ​ | $2,123,778 | ​ | $3,510,252 | ​ | $(1,386,474) |

22

Research and development expenses decreased by $1.4 million, or 39%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. This decrease is attributable to a $0.8 million decrease in direct research and development expenses and a decrease of $0.5 million in consulting expenses, both related to higher expenses in 2023 in preparation of the submission of the PMN310 IND application in April 2023 and the completion of the initial PMN310 drug product manufacturing. PMN310 expenses of $1.5 million during the three months ended March 31, 2024 were primarily related to our phase 1a clinical trial. Employee salaries and share-based compensation also decreased by $0.1 million.

### General and Administrative Expenses

The following table summarizes the period-over-period changes in general and administrative expenses for the periods presented:

| ​ ​ ​ | ​ ​ | ​ ​ Three Months Ended March 31, 2024 | ​ | ​ ​ 2023 | ​ ​ | ​ ​ ​ ​ Change |
| --- | --- | ---: | --- | ---: | --- | ---: |
| Employee salaries and benefits | ​ | $171,122 | ​ | $199,110 | ​ | $(27,988) |
| Share-based compensation | ​ | ​ 59,772 | ​ | ​ 93,601 | ​ | ​ (33,829) |
| Professional and consulting fees | ​ | 1,252,486 | ​ | 943,682 | ​ | 308,804 |
| Patent expense | ​ | 57,662 | ​ | 97,924 | ​ | (40,262) |
| Facility-related and other | ​ | 11,832 | ​ | 126,102 | ​ | (114,270) |
| Total general and administrative expenses | ​ | $1,552,874 | ​ | $1,460,419 | ​ | $92,455 |

General and administrative expenses decreased by $0.1 million, or 6%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. Employee salaries and share-based compensation decreased by $0.1 million. Professional and consulting fees increased by $0.4 million, primarily driven by an increase of $0.4 million in legal fees, $0.1 million in audit and tax fees, and $0.1 million in investor and shareholder relations costs, offset by a decrease of $0.1 million in insurance costs and $0.1 million in other consulting fees. Facility-related and other costs decreased by $0.1 million due to realized foreign currency exchange gains.

### Other Income (Expense)

Other income was unchanged for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. A $0.1 million increase in interest expense was offset by an increase of $0.1 million in interest income.

### Liquidity and Capital Resources

### Sources of Liquidity

We are a development stage company as we have not generated revenues to date and do not expect to have significant revenues until we are able to sell a product candidate after obtaining applicable regulatory approvals or we establish collaborations that provide funding, such as licensing fees, milestone payments, royalties, research funding or otherwise. Operations have been financed since inception, through the sale of equity and debt securities and the conversion of Common Share purchase warrants and share options. Our objectives, when managing capital, are to ensure there are sufficient funds available to carry out our research, development and eventual commercialization programs. When we have excess funds, we manage our liquidity risk by investing in highly liquid corporate and government bonds with staggered maturities to provide regular cash flow for current operations. We do not hold any asset-backed commercial paper and our cash is not subject to any external restrictions. We also manage liquidity risk by frequently monitoring actual and projected cash flows. The Board reviews and approves the Company’s operating and capital budgets, as well as any material transactions not in the ordinary course of business. The majority of our accounts payable and accrued liabilities have maturities of less than three months. We are dependent on our ability to generate revenues from our products or secure additional financing in order to continue our research and development activities and meet our ongoing obligations and existing liabilities. In May 2023, we entered into an agreement with a vendor which provided for the option to defer payment on approximately $5.5 million of current accounts payable and accrued liabilities until March 31, 2024. We repaid the entirety of the $5.9 million outstanding in March 2024, which terminated the agreement.

In August 2023, we completed a private placement of 9,945,969 Common Shares and, in lieu of Common Shares, 954,725 pre-funded warrants, each attached to a Common Share warrant exercisable at a price of $1.75 for gross proceeds of $20.4 million before deducting issuance costs of $2.7 million. Proceeds from the private placement are being used to advance the clinical development of PMN310, ProMIS’ lead therapeutic candidate, as well as for working capital and other general corporate expenses.

On September 22, 2023, we filed a registration statement on Form S-3 (File No. 333-274658) with the SEC, which was declared effective on September 29, 2023 (Shelf Registration Statement), in relation to the registration of Common Shares, preferred shares, subscription receipts, debt securities, warrants and/or units of any combination thereof for the purposes of selling, from time to time, our Common Shares, debt securities or other equity securities in one or more offerings. On January 5, 2024, we entered into an At The Market Offering Agreement with BTIG, LLC to provide for the offering, issuance and sale of up to an aggregate amount of $25.0 million of our Common Shares from time to time in “at-the-market” offerings under the Shelf Registration Statement and subject to the limitations thereof. During the three months ended March 31, 2024 we sold 75,862 shares for net proceeds of approximately $0.2 million.

We incurred a net loss of $3.6 million for the three months ended March 31, 2024 and reported an accumulated deficit of $97.1 million as of March 31, 2024. Management believes that these conditions raise substantial doubt as to the Company’s ability to continue as a going concern within 12 months of the date the Financial Statements are issued. Additional funding will be necessary to fund future clinical activities and to pay down our existing liabilities. We will seek additional funding through public and private financings, debt financings, collaboration agreements, strategic alliances and licensing agreements. Although we have been successful in raising capital in the past, changing macroeconomic factors including, but not limited to, rising interest rates, uncertainties in the banking industry and inflation have diminished certain opportunities to obtain funding in the current market environment. There is no assurance of success in obtaining such additional financing on terms acceptable to us, if at all, and there is no assurance that we will be able to enter into collaborations or other arrangements. If we are unable to obtain funding, it could force us to delay, reduce or eliminate research and development programs and product portfolio expansion or commercialization efforts. These potential delays, reductions and eliminations could adversely affect future business prospects, and our ability to continue as a going concern.

### Cash Flows

The following table summarizes our sources and uses of cash for the periods presented:

| ​ ​ ​ | ​ ​ | ​ ​ Three Months Ended March 31, 2024 | ​ | ​ ​ 2023 | ​ ​ | ​ ​ ​ ​ Change | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- |
| Net cash used in operating activities | ​ | $(10,291,447) | ​ | $(2,561,654) | ​ | $(7,729,793) | ​ |
| Net cash provided by financing activities | ​ | 190,274 | ​ | — | ​ | 190,274 | ​ |
| Effect of exchange rates on cash | ​ | — | ​ | 17,659 | ​ | (17,659) | ​ |
| Net increase (decrease) in cash | ​ | $(10,101,173) | ​ | $(2,543,995) | ​ | $(7,557,178) | ​ |

#### Cash Flows from Operating Activities

Cash used in operating activities was $10.1 million for the three months ended March 31, 2024, which consisted of a net loss of $3.6 million, decreased by non-cash activities of $0.1 million and increased by a net change of $6.7 million in our operating assets and liabilities. Non-cash activities primarily consisted of share-based compensation. Changes in cash flows related to operating assets and liabilities primarily consisted of a decrease of $6.4 million of accounts payable, including a repayment of $5.9 million on previously deferred accounts payable, and a $0.3 million decrease in accrued liabilities.

Cash used in operating activities was $2.6 million for the three months ended March 31, 2023, which consisted of a net loss of $5.0 million, offset by noncash activities of $0.2 million and a net change of $2.2 million in our operating assets and liabilities. The additive non-cash activities primarily consisted of charges for share-based compensation and change in fair value of warrant liability of $0.2 million. Changes in cash flows related to operating assets and liabilities primarily consisted of a net increase of $2.3 million of accounts payable and accrued liabilities, offset by $0.1 million decrease in prepaid expenses and other current assets.

#### Cash Flows from Investing Activities

There was no cash used in investing activities during the three months ended March 31, 2024 or 2023.

#### Cash Flows from Financing Activities

Cash provided by financing activities during the three months ended March 31, 2024 was $0.2 million from the sale of Common Shares under the At The Market Offering Agreement.

There was no cash provided by financing activities during the three months ended March 31, 2023.

### Critical Accounting Policies and Estimates

Our MD&A is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S GAAP and on a basis consistent with those accounting principles followed by us and disclosed in Note 2 to our audited consolidated financial statements for the year ended December 31, 2023. The preparation of these unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires our management to make certain judgments and estimates that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgement about the carrying value of assets and liabilities that are not readily apparent from other sources. Significant estimates and judgments include, but are not limited to, accruals for research and development expenses and the valuation of warrant liabilities. Accordingly, actual results may differ from these judgments and estimates under different assumptions or conditions and any such difference may be material.

There have been no material changes to our critical accounting estimates since December 31, 2023.

### Recently Issued Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to the accompanying unaudited condensed consolidated financial statements.

### Emerging Growth Company Status

We are an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

We have elected to use this extended transition period to enable us to comply with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

### Fully Diluted Share Capital

The number of issued and outstanding Common Share Equivalents as of March 31, 2024 was as follows:

| ​ ​ ​ ​ ​ | ​ ​ ​ ​ | ​ Number of Common Share Equivalents |
| --- | --- | ---: |
| Common Shares | ​ | 18,961,116 |
| Options issued and outstanding under stock option plan | ​ | 1,152,597 |
| Warrants | ​ | 13,456,328 |
| Series 2 Convertible Preferred Shares |  | 1,166,667 |
| Deferred share units |  | 1,061 |
| **Total - March 31, 2024** |  | 34,737,769 |

## Market risk

As filed, 1,780 characters.

In the normal course of business, we are exposed to a number of financial risks that can affect our operating performance. These risks are credit risk, liquidity risk and market risk. Our overall risk management program and prudent business practices seek to minimize any potential adverse effects on the Company’s financial performance.

### Credit Risk

Financial instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and short-term investments. We manage our exposure to credit losses by placing our cash with accredited financial institutions, which at times, may exceed federally insured limits, and when we have excess funds, such funds are invested in high-quality government and corporate issuers with low credit risk. Cash held is not subject to any external restrictions. As of the year ended December 31, 2023 and three months ended March 31, 2024, a hypothetical 10% relative change in interest rates would not have a material impact on our Financial Statements.

### Liquidity Risk

Our exposure to liquidity risk is dependent on purchasing obligations and raising funds to meet commitments and sustain operations. We are a pre-revenue development stage company, and we rely on external fundraising to support our operations. We also manage liquidity risk by continuously monitoring actual and projected cash flows. Our Board of Directors reviews and approves the Company’s operating budget, as well as any material transaction.

### Inflation Risk

Inflation generally affects us by increasing our cost of labor, outside consultants and CROs. We do not believe that inflation had a material effect on our business, financial condition or results of operations during the three months ended March 31, 2024.

## Controls and procedures

As filed, 2,062 characters.

### Evaluation of Disclosure Controls and Procedures

The Company maintains “disclosure controls and procedures,” as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2024. Based on the evaluation of our disclosure controls and procedures, our management concluded that, as of March 31, 2024, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in this Quarterly Report on Form 10-Q was (a) reported within the time periods specified by SEC rules and regulations, and (b) communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding any required disclosure.

### Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act that occurred during the quarter ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 3,694 characters.

*We operate in a rapidly changing environment that involves a number of risks which could materially affect our business, financial condition or future results, some of which are beyond our control. In addition to the other information set forth in this Quarterly Report on Form 10-Q, the risks and uncertainties that we believe are most important for you to consider are discussed under the heading “Risk Factors Summary” and in Item 1A – “Risk Factors” in the Company’s Form 10-K, as amended and supplemented by the information in “Part II, Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the quarters ended March 31, 2024. The risk factors set forth below are risk factors containing changes, which may be material, from the risk factors previously disclosed under the heading “Risk Factors Summary” and in Item 1A – “Risk Factors” in the Company’s Form 10-K as filed with the SEC and such subsequently filed Quarterly Report.*

***We have incurred losses since inception, we anticipate that we will incur continued losses for the foreseeable future and there is substantial doubt about our ability to continue as a going concern for the full one-year period following the date of this filing of the Quarterly Report on Form 10-Q. We will require additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our development programs, commercialization efforts or other operations.***

The development of biopharmaceutical therapeutic candidates is capital-intensive. We expect our expenses to increase in connection with our ongoing activities, particularly as we conduct our ongoing and planned preclinical studies of our development programs, initiate clinical trials for our therapeutic candidates and seek regulatory approval for our current therapeutic candidates and any future therapeutic candidates we may develop. If we obtain regulatory approval for any of our therapeutic candidates, we also expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution. Because the outcome of any preclinical study or clinical trial is highly uncertain, we cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of our therapeutic candidates. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. We had working capital of approximately $0.9 million as of March 31, 2024. Management believes its working capital position raises substantial doubt about the Company’s ability to continue as a going concern within the next twelve months from the date of filing of this Form 10-Q. We will require substantial additional funds for further research and development, planned clinical testing, regulatory approvals, establishment of manufacturing capabilities and, if necessary, the marketing and sale of our products. Our ability to raise additional financing and maintain operations in the future could be at substantial risk and there can be no assurance that additional funding or partnerships will be available on acceptable terms that would foster successful commercialization of our products. Failing to raise capital when needed or on attractive terms could force us to delay, reduce or eliminate our research and development programs or any future commercialization efforts.

We may attempt to raise additional funds for these purposes through public or private equity or debt financing, collaborations with other biopharmaceutical companies and/or from other sources.

Filed May 14, 2024.
Source: SEC EDGAR, the filing index for accession 0001558370-24-008145. Last ingested by Listed: Nov 3, 2026, 08:46 ET. No prices; not investment advice.