Core Viewpoint - Edesa Biotech reported stable financial results for Q3 2025, with a GAAP EPS loss of $(0.25), slightly better than the consensus estimate, while maintaining a focus on advancing its clinical assets in dermatology and respiratory diseases [1][2][3]. Financial Performance - GAAP EPS loss narrowed to $(0.25) from $(0.52) year over year, reflecting a 51.9% improvement [2][6] - Revenue remained at $0, consistent with the company's pre-commercial status [1][2] - Operating expenses were $1.9 million, unchanged from the prior year [5][2] - Net loss was $(1.7 million), remaining stable year over year [2][6] - Cash and cash equivalents stood at $12.4 million as of June 30, 2025 [1] Company Overview and Strategy - Edesa Biotech focuses on developing therapies for immune and inflammatory diseases, particularly in dermatology and respiratory conditions [3][10] - The company has realigned resources towards dermatology, prioritizing the development of EB06, an experimental anti-CXCL10 monoclonal antibody [4][10] Clinical Development - Edesa Biotech is advancing EB06 for treating moderate-to-severe nonsegmental vitiligo, with plans to submit an IND application to the FDA by the end of 2025 [7] - The EB05 program for acute respiratory distress syndrome is progressing under a government-funded clinical platform, reducing near-term R&D cash burden [7][11] - The EB01 asset for allergic contact dermatitis is Phase 3-ready but received less focus during the quarter [7] Operational Focus and Future Outlook - The company emphasized careful spending and operational efficiency, with no dividends declared during the period [8][12] - Management did not provide numerical forward guidance but highlighted ongoing preparations for EB06's manufacturing data [12][13] - Investors are encouraged to monitor clinical timelines and regulatory submissions that could impact operational costs and pipeline progress [13]

PART I - FINANCIAL INFORMATION This section presents the company's unaudited interim financial statements and management's analysis of its financial condition and operational results [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed interim consolidated financial statements, including balance sheets, statements of operations, cash flows, and changes in shareholders' equity, along with detailed notes explaining the company's operations, accounting policies, assets, liabilities, equity, and related party transactions for the periods ended June 30, 2025 and 2024 [Condensed Interim Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Interim%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's financial position, detailing assets, liabilities, and shareholders' equity at specific points in time Condensed Interim Consolidated Balance Sheets (June 30, 2025 vs. September 30, 2024) | Metric | June 30, 2025 | September 30, 2024 | | :-------------------------------- | :------------ | :----------------- | | Cash and cash equivalents | $12,361,690 | $1,037,320 | | Total current assets | $12,761,092 | $1,675,622 | | Total assets | $14,804,800 | $3,813,982 | | Total current liabilities | $672,674 | $1,832,827 | | Total shareholders' equity | $14,132,126 | $1,981,155 | - Cash and cash equivalents significantly increased to **$12.4 million** as of June 30, 2025, from **$1.0 million** at September 30, 2024[10](index=10&type=chunk) - Total assets grew substantially to **$14.8 million** from **$3.8 million**, while total current liabilities decreased to **$0.7 million** from **$1.8 million**[10](index=10&type=chunk) [Condensed Interim Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Interim%20Consolidated%20Statements%20of%20Operations) This statement outlines the company's revenues, expenses, and net loss over specific interim periods Condensed Interim Consolidated Statements of Operations (Three and Nine Months Ended June 30) | Metric (USD) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Research and development | $939,067 | $897,305 | $2,443,191 | $2,778,100 | | General and administrative | $964,676 | $1,035,140 | $2,998,127 | $3,232,248 | | Loss from operations | $(1,903,743) | $(1,932,445) | $(5,441,318) | $(6,010,348) | | Net loss | $(1,749,464) | $(1,668,212) | $(4,957,165) | $(5,207,994) | | Loss per common share - basic and diluted | $(0.25) | $(0.52) | $(0.95) | $(1.64) | - Net loss for the nine months ended June 30, 2025, improved to **$5.0 million** from **$5.2 million** in the prior year, with basic and diluted loss per share decreasing to **$0.95** from **$1.64**[12](index=12&type=chunk) - Research and development expenses decreased for the nine-month period, while general and administrative expenses also saw a reduction[12](index=12&type=chunk) [Condensed Interim Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Interim%20Consolidated%20Statements%20of%20Cash%20Flows) This statement details the cash inflows and outflows from operating, investing, and financing activities over specific interim periods Condensed Interim Consolidated Statements of Cash Flows (Nine Months Ended June 30) | Cash Flow Activity (USD) | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | | Net cash used in operating activities | $(5,601,268) | $(3,923,166) | | Net cash provided by financing activities | $16,844,415 | $623,466 | | Net change in cash and cash equivalents | $11,324,370 | $(3,320,513) | | Cash and cash equivalents, end of period | $12,361,690 | $2,040,884 | - Net cash provided by financing activities significantly increased to **$16.8 million** for the nine months ended June 30, 2025, compared to **$0.6 million** in the prior year, primarily due to proceeds from common and preferred share issuances[14](index=14&type=chunk) - The company experienced a positive net change in cash and cash equivalents of **$11.3 million**, ending the period with **$12.4 million** in cash[14](index=14&type=chunk) [Condensed Interim Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=Condensed%20Interim%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) This statement tracks the changes in the company's equity components, including common shares, preferred shares, and accumulated deficit, over specific interim periods Shareholders' Equity Changes (Nine Months Ended June 30, 2025) | Metric | September 30, 2024 | June 30, 2025 | | :-------------------------------- | :----------------- | :------------ | | Common Shares (value) | $47,236,024 | $54,271,112 | | Series A-1 Preferred Shares | - | $1,054,735 | | Series B-1 Preferred Shares | - | $8,168,063 | | Additional Paid-in Capital | $13,576,757 | $14,406,511 | | Accumulated Deficit | $(58,589,013) | $(63,645,218) | | Total Shareholders' Equity | $1,981,155 | $14,132,126 | - Total shareholders' equity increased significantly from **$2.0 million** at September 30, 2024, to **$14.1 million** at June 30, 2025, driven by the issuance of common and preferred shares[15](index=15&type=chunk)[16](index=16&type=chunk) - The company issued Series A-1 and Series B-1 Preferred Shares, contributing **$1.05 million** and **$8.17 million**, respectively, to equity[15](index=15&type=chunk)[16](index=16&type=chunk) [1. Nature of Operations](index=8&type=section&id=1.%20Nature%20of%20Operations) This section describes the company's core business, its financial performance, and its ability to continue as a going concern - Edesa Biotech, Inc. is a biopharmaceutical company focused on acquiring, developing, and commercializing clinical-stage drugs for inflammatory and immune-related diseases[17](index=17&type=chunk) - The company incurred a comprehensive loss of **$4.8 million** for the nine months ended June 30, 2025, resulting in an accumulated deficit of **$63.6 million**, and had a net cash outflow from operating activities of **$5.6 million**[20](index=20&type=chunk) - The company's ability to continue as a going concern is dependent on obtaining additional funding through financings, strategic activities, and grants[20](index=20&type=chunk) [2. Basis of Presentation](index=8&type=section&id=2.%20Basis%20of%20Presentation) This section explains the accounting principles, estimates, and currency used in preparing the unaudited condensed interim consolidated financial statements - The unaudited condensed interim consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information and include the accounts of the Company and its wholly-owned subsidiaries, with all intercompany balances and transactions eliminated[22](index=22&type=chunk)[23](index=23&type=chunk) - The preparation of financial statements requires management to make estimates and assumptions, particularly in areas such as valuation of assets, deferred income taxes, and share-based compensation[24](index=24&type=chunk) - The consolidated financial statements are presented in U.S. dollars, which is the functional currency for the Company and its U.S. subsidiary, while its Canadian subsidiary's functional currency is Canadian dollars[25](index=25&type=chunk) [3. Intangible Assets](index=9&type=section&id=3.%20Intangible%20Assets) This section details the company's intangible assets, primarily an acquired license, and their associated amortization - The company holds an acquired license for certain monoclonal antibodies (the Constructs), granting exclusive world-wide rights for 25 years from the first commercial sale, recorded as an intangible asset[26](index=26&type=chunk)[28](index=28&type=chunk) Intangible Assets, Net (USD) | Metric | June 30, 2025 | September 30, 2024 | | :-------------------------- | :------------ | :----------------- | | The Constructs | $2,529,483 | $2,529,483 | | Less: accumulated amortization | $(526,514) | $(450,635) | | Total intangible assets, net | $2,002,969 | $2,078,848 | - Amortization expense was **$0.03 million** for each of the three months ended June 30, 2025 and 2024, and **$0.08 million** for each of the nine months ended June 30, 2025 and 2024[30](index=30&type=chunk) [4. Right-of-Use Lease with Related Party](index=9&type=section&id=4.%20Right-of-Use%20Lease%20with%20Related%20Party) This section describes the company's lease agreement for executive offices with a related party and the associated costs - The company leases executive offices from a related company, with the lease extended until November 30, 2025, after which it will be month-to-month[32](index=32&type=chunk) Right-of-Use Lease Cost (USD) | Period | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | | Three Months Ended | $0 | $19,299 | | Nine Months Ended | $17,885 | $59,208 | [5. Commitments](index=10&type=section&id=5.%20Commitments) This section outlines the company's contractual obligations, including research organization payments and contingent license and royalty commitments Approximate Aggregate Future Contractual Payments (as of June 30, 2025) | Year Ending September 30, | Amount (USD) | | :------------------------ | :----------- | | 2025 | $234,000 | | 2026 | $34,000 | | 2027 | $34,000 | | Total | $302,000 | - The company has commitments for contracted research organizations totaling **$302 thousand**, primarily due in fiscal year 2025[34](index=34&type=chunk) - Contingent license and royalty commitments include up to **$356 million** for the Constructs, **$18.4 million** for a pharmaceutical product (2016 agreement), and **$68.9 million** for global rights to the same product (2021 agreement)[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk) - The company's drug candidate, EB05, was selected for a U.S. government-funded Phase 2 platform trial for Acute Respiratory Distress Syndrome (ARDS), with Edesa providing drug product and technical support[38](index=38&type=chunk) [6. Capital Shares](index=11&type=section&id=6.%20Capital%20Shares) This section details the company's equity issuances, warrant activity, and share-based compensation expenses - In February 2025, the company issued 834 Series B-1 Preferred Shares and 3,468,746 Common Shares in a private placement, generating approximately **$15.0 million** in gross proceeds[39](index=39&type=chunk) - In October 2024, the company issued 150 Series A-1 Preferred Shares and warrants to an entity controlled by its CEO for an aggregate purchase price of **$1.54 million**[44](index=44&type=chunk) Warrant Activity (Nine Months Ended June 30) | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Balance - September 30 | 609,717 | 720,909 | | Issued | 326,560 | - | | Expired | (1,687) | (111,192) | | Balance - June 30 | 934,590 | 609,717 | - As of June 30, 2025, the company had **934,590** warrants outstanding with a weighted average exercise price of **$15.35** and **378,235** share options outstanding with a weighted average exercise price of **$24.71**[54](index=54&type=chunk)[58](index=58&type=chunk) - The company recorded **$0.2 million** and **$0.3 million** in share-based compensation expenses for the three and nine months ended June 30, 2025, respectively[66](index=66&type=chunk) [7. Government Contributions](index=16&type=section&id=7.%20Government%20Contributions) This section describes the company's multi-year contribution agreement with the Canadian Government's Strategic Innovation Fund and related grant income - In October 2023, the company entered into a multi-year contribution agreement with the Canadian Government's Strategic Innovation Fund (SIF) for up to **C$23 million** in partially repayable funding for its EB05 Phase 3 clinical study and related activities[68](index=68&type=chunk) Reimbursement Grant Income (USD) | Period | June 30, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Three Months Ended | $0.2 million | $0.2 million | | Nine Months Ended | $0.5 million | $0.7 million | [8. Financial Instruments](index=18&type=section&id=8.%20Financial%20Instruments) This section discusses the company's financial instruments, fair value measurements, and exposures to interest rate, credit, and foreign exchange risks - The company uses the fair value measurement framework, categorizing inputs into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs)[73](index=73&type=chunk)[74](index=74&type=chunk)[80](index=80&type=chunk) - Interest rate and credit risks are managed by maintaining bank accounts with credit-worthy institutions and assessing collectability of receivables[76](index=76&type=chunk)[77](index=77&type=chunk) - The company is exposed to foreign exchange risk from Canadian dollar balances; a **10%** annual change in the Canadian/U.S. exchange rate would impact loss and other comprehensive loss by approximately **$0.3 million**[78](index=78&type=chunk) [9. Loss per Share](index=19&type=section&id=9.%20Loss%20per%20Share) This section explains the calculation of basic and diluted loss per share, noting the anti-dilutive effect of certain securities - Securities that could potentially dilute basic earnings per share were excluded from the computation of diluted loss per share because their effect would have been anti-dilutive[81](index=81&type=chunk) [10. Related Party Transactions](index=19&type=section&id=10.%20Related%20Party%20Transactions) This section details transactions with related parties, including equity issuances, investor rights agreements, and lease payments - In February 2025, the CEO, directors, and affiliated entities participated in the Series B-1 private placement, purchasing Series B-1 Preferred Shares and Common Shares[82](index=82&type=chunk) - An Investor Rights Agreement grants the lead investor certain nomination rights to the board and protective provisions regarding amendments to governing documents and share rights[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk) - The company paid **$20 thousand** and **$60 thousand** for a lease from a CEO-controlled company for the three and nine months ended June 30, 2025, respectively[87](index=87&type=chunk) - A **$10.0 million** revolving credit agreement with a CEO-controlled entity was terminated in October 2024, with no funds borrowed[88](index=88&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and operational results, highlighting key developments, financial performance comparisons, and liquidity outlook. It emphasizes the company's focus on biopharmaceutical development, recent financing activities, and the need for future funding to support its clinical pipeline [Disclosure Regarding Forward-Looking Statements](index=20&type=section&id=Disclosure%20Regarding%20Forward-Looking%20Statements) This section cautions readers about forward-looking statements, outlining inherent risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements identified by words such as 'expects,' 'anticipates,' and 'believes,' which are subject to risks and uncertainties that could cause actual results to differ materially[90](index=90&type=chunk)[92](index=92&type=chunk) - Key risk factors include the ability to obtain funding, timing and results of clinical trials, regulatory approvals, market acceptance, competition, intellectual property protection, and general economic conditions[93](index=93&type=chunk)[94](index=94&type=chunk)[98](index=98&type=chunk) [Overview](index=22&type=section&id=Overview) This section introduces Edesa Biotech as a biopharmaceutical company developing therapies for inflammatory and immune-related diseases, highlighting its clinical pipeline - Edesa Biotech is a biopharmaceutical company developing innovative therapies for inflammatory and immune-related diseases, focusing on indications with unmet medical needs and large market opportunities[95](index=95&type=chunk) - The clinical pipeline includes EB06 for vitiligo (Phase 2), EB01 for Allergic Contact Dermatitis (Phase 3-ready, partnering stage), and EB05 for Acute Respiratory Distress Syndrome (ARDS) in a U.S. government-funded Phase 2 study[96](index=96&type=chunk)[97](index=97&type=chunk) [Recent Developments](index=23&type=section&id=Recent%20Developments) This section summarizes recent corporate activities, including equity offerings and the creation of new preferred share classes - The company sold **304,057** common shares through an At The Market (ATM) offering program (HCW ATM) for net proceeds of **$0.8 million** during the nine months ended June 30, 2025[99](index=99&type=chunk) - Amended Articles were filed to create Series A-1 and Series B-1 Convertible Preferred Shares, which rank senior to common shares in liquidation[100](index=100&type=chunk)[101](index=101&type=chunk) - The Series A-1 Preferred Shares offering generated **$1.54 million** from an entity controlled by the CEO, while the Series B-1 Preferred Shares offering generated approximately **$15.0 million** in gross proceeds from a private placement[102](index=102&type=chunk)[103](index=103&type=chunk) [Significant Accounting Policies and Estimates](index=24&type=section&id=Significant%20Accounting%20Policies%20and%20Estimates) This section confirms that there have been no material changes to the company's significant accounting policies or estimates - There have been no material changes to the company's significant accounting policies or estimates since the Annual Report on Form 10-K for the year ended September 30, 2024[104](index=104&type=chunk) [Results of Operations - Comparison of the Three Months Ended June 30, 2025 and 2024](index=24&type=section&id=Results%20of%20Operations%20-%20Three%20Months%20Ended%20June%2030,%202025%20and%202024) This section analyzes the company's financial performance, including operating expenses and net loss, for the three-month periods ended June 30, 2025 and 2024 Key Financials (Three Months Ended June 30) | Metric (USD) | June 30, 2025 | June 30, 2024 | Change ($) | Change (%) | | :-------------------------- | :------------ | :------------ | :--------- | :--------- | | Total operating expenses | $1.9 million | $1.9 million | $0 | 0% | | Research and development | $0.9 million | $0.9 million | $0 | 0% | | General and administrative | $1.0 million | $1.0 million | $0 | 0% | | Net loss | $(1.7 million)| $(1.7 million)| $0 | 0% | | Loss per common share | $(0.25) | $(0.52) | $0.27 | -51.9% | | Total other income | $154,000 | $264,000 | $(110,000) | -41.7% | | Grant income | $183,000 | $236,000 | $(53,000) | -22.5% | | Interest income | $600 | $33,000 | $(32,400) | -98.2% | | Foreign exchange loss | $(30,000) | $(5,000) | $(25,000) | 500% | - Net loss remained consistent at **$1.7 million** for both periods, but loss per common share improved to **$0.25** from **$0.52** due to an increased weighted average number of common shares[106](index=106&type=chunk) - Total other income decreased by **$110 thousand**, primarily due to a **$53 thousand** decrease in grant income and a significant drop in interest income from **$33 thousand** to **$0.6 thousand**[106](index=106&type=chunk)[107](index=107&type=chunk) [Results of Operations - Comparison of the Nine Months Ended June 30, 2025 and 2024](index=25&type=section&id=Results%20of%20Operations%20-%20Nine%20Months%20Ended%20June%2030,%202025%20and%202024) This section analyzes the company's financial performance, including operating expenses and net loss, for the nine-month periods ended June 30, 2025 and 2024 Key Financials (Nine Months Ended June 30) | Metric (USD) | June 30, 2025 | June 30, 2024 | Change ($) | Change (%) | | :-------------------------- | :------------ | :------------ | :--------- | :--------- | | Total operating expenses | $5.4 million | $6.0 million | $(0.6M) | -10% | | Research and development | $2.4 million | $2.8 million | $(0.4M) | -14.3% | | General and administrative | $3.0 million | $3.2 million | $(0.2M) | -6.3% | | Net loss | $(5.0 million)| $(5.2 million)| $0.2M | -3.8% | | Loss per common share | $(0.95) | $(1.64) | $0.69 | -42.1% | | Total other income | $0.5 million | $0.8 million | $(0.3M) | -37.5% | | Grant income | $0.5 million | $0.6 million | $(0.1M) | -16.7% | | Interest income | $3,000 | $137,000 | $(134,000) | -97.8% | | Foreign exchange loss | $(54,000) | $(10,000) | $(44,000) | 440% | - Total operating expenses decreased by **$0.6 million** to **$5.4 million**, driven by a **$0.4 million** reduction in R&D expenses (lower EB05 costs offset by EB06) and a **$0.2 million** decrease in G&A expenses[108](index=108&type=chunk)[111](index=111&type=chunk) - Net loss improved to **$5.0 million** from **$5.2 million**, and loss per common share decreased to **$0.95** from **$1.64**[109](index=109&type=chunk) [Capital Expenditures](index=25&type=section&id=Capital%20Expenditures) This section reports on the company's capital spending, noting the absence of significant expenditures during the reported periods - There were no significant capital expenditures for the three and nine months ended June 30, 2025 and 2024[110](index=110&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's funding sources, cash position, working capital, and future capital requirements - The company's operations are funded through equity issuances, preferred shares, government grants, and tax incentives, as it continues to incur operating losses as a clinical-stage company[112](index=112&type=chunk) - Net cash used in operating activities increased to **$5.6 million** for the nine months ended June 30, 2025, from **$3.9 million** in the prior year[113](index=113&type=chunk) - Recent financing activities include **$15.0 million** gross proceeds from Series B-1 shares, **$0.8 million** net proceeds from HCW ATM, and **$1.54 million** from Series A-1 shares, significantly bolstering cash reserves[114](index=114&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk) - As of June 30, 2025, the company had an accumulated deficit of **$63.6 million**, working capital of **$12.1 million**, and **$12.4 million** in cash and cash equivalents[121](index=121&type=chunk) - Management expects current cash and proceeds from recent financings to fund operations through the end of fiscal 2026, but plans to seek additional financing through equity, grants, debt, or strategic arrangements[121](index=121&type=chunk) [Cash Flows](index=28&type=section&id=Cash%20Flows) This section provides a detailed breakdown of cash generated from or used in operating, investing, and financing activities - Net cash used in operating activities was **$5.6 million** for the nine months ended June 30, 2025, compared to **$3.9 million** for the same period in 2024[123](index=123&type=chunk) - Net cash provided by financing activities significantly increased to **$16.8 million** for the nine months ended June 30, 2025, from **$0.6 million** in the prior year, primarily due to proceeds from common and preferred share sales[125](index=125&type=chunk) - There was no cash used in investing activities for the nine months ended June 30, 2025 and 2024[124](index=124&type=chunk) [Research and Development](index=29&type=section&id=Research%20and%20Development) This section details the company's research and development expenses and their expected fluctuations based on clinical program activity - R&D expenses were **$0.9 million** for the three months and **$2.4 million** for the nine months ended June 30, 2025, reflecting a decrease primarily due to lower clinical expenses for EB05, partially offset by increased costs for EB06[126](index=126&type=chunk) - R&D expenses are expected to fluctuate based on clinical program activity, study initiation, and patient recruitment rates[126](index=126&type=chunk) [Off-Balance Sheet Arrangements](index=29&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of any material off-balance sheet arrangements that could impact the company's financial condition - The company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on its financial condition or results of operations[127](index=127&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Edesa Biotech, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide disclosure under this item[128](index=128&type=chunk) [Item 4. Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, and reported no material changes in internal control over financial reporting during the quarter - Management, including the Principal Executive Officer and Principal Financial Officer, concluded that the disclosure controls and procedures were effective as of June 30, 2025[130](index=130&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[131](index=131&type=chunk) PART II - OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and other disclosures [Item 1. Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings or claims outside the ordinary course of business - The company is not currently a party to any material legal proceedings or claims outside the ordinary course of business[133](index=133&type=chunk) [Item 1A. Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously discussed in the company's Annual Report on Form 10-K - There have been no material changes to the risk factors discussed in Item 1A. Risk Factors in the Annual Report on Form 10-K for the year ended September 30, 2024[134](index=134&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report for the period - None to report for unregistered sales of equity securities and use of proceeds[135](index=135&type=chunk) [Item 3. Defaults Upon Senior Securities](index=30&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the quarter - None to report for defaults upon senior securities[136](index=136&type=chunk) [Item 4. Mine Safety Disclosures](index=30&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable to the company[137](index=137&type=chunk) [Item 5. Other Information](index=30&type=section&id=Item%205.%20Other%20Information) No Rule 10b-1 or non-Rule 10b5-1 trading arrangements were adopted, modified, or terminated by the company's directors and officers during the fiscal quarter - None of the company's directors and officers adopted, modified, or terminated a Rule 10b-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the fiscal quarter ended June 30, 2025[138](index=138&type=chunk) [Item 6. Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including employment agreements, consulting agreements, plan amendments, and certifications - The exhibit index includes employment and consulting agreements, an amendment to the equity incentive compensation plan, and certifications from the CEO and CFO[141](index=141&type=chunk)

[Company Overview and Business Update](index=1&type=section&id=Company%20Overview%20and%20Business%20Update) This section provides an introduction to Edesa Biotech, a clinical-stage biopharmaceutical company, and updates on its business and pipeline development [Company Introduction](index=1&type=section&id=Company%20Introduction) Edesa Biotech, a clinical-stage biopharmaceutical company focused on immuno-inflammatory diseases, reported its financial results for the three and nine months ended June 30, 2025, and provided a business update - Edesa Biotech, Inc. (Nasdaq: EDSA) is a clinical-stage biopharmaceutical company focused on developing host-directed therapeutics for immuno-inflammatory diseases[2](index=2&type=chunk) [Business Highlights and Pipeline Update](index=1&type=section&id=Business%20Highlights%20and%20Pipeline%20Update) Edesa advanced manufacturing activities for its drug candidate EB06 to support a Phase 2 study for moderate-to-severe nonsegmental vitiligo, with FDA IND submission anticipated by the end of calendar 2025 - Advanced manufacturing activities for **EB06** (an anti-CXCL10 monoclonal antibody) support U.S. regulatory approval of a Phase 2 study in moderate-to-severe nonsegmental vitiligo patients[3](index=3&type=chunk) - Anticipates submitting **EB06** drug manufacturing data to the U.S. FDA for its IND application by the end of calendar 2025[3](index=3&type=chunk) - Increased expenditures for the **EB06** program were offset by decreased **EB05** expenses, benefiting from the fully funded U.S. government 'Just Breathe' study for ARDS[4](index=4&type=chunk) [Financial Performance Summary](index=1&type=section&id=Financial%20Performance%20Summary) This section summarizes Edesa Biotech's financial results for the three and nine months ended June 30, 2025, detailing operating expenses, other income, and net loss [Three Months Ended June 30, 2025](index=1&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025) For the three months ended June 30, 2025, total operating expenses remained consistent at $1.9 million, while net loss was $1.7 million, or $0.25 per common share Financial Highlights (Three Months Ended June 30) | Metric | Q3 2025 | Q3 2024 | | :----- | :------ | :------ | | Total Operating Expenses | $1.9 million | $1.9 million | | Total Other Income | $154,000 | $264,000 | | Net Loss | $1.7 million | $1.7 million | | Loss per Common Share | $0.25 | $0.52 | - Total other income **decreased by $110,000**, primarily due to reduced Canadian government funding and lower interest income[6](index=6&type=chunk) [Nine Months Ended June 30, 2025](index=1&type=section&id=Nine%20Months%20Ended%20June%2030%2C%202025) For the nine months ended June 30, 2025, total operating expenses decreased by $0.6 million to $5.4 million, resulting in an improved net loss of $5.0 million Financial Highlights (Nine Months Ended June 30) | Metric | YTD 2025 | YTD 2024 | | :----- | :------- | :------- | | Total Operating Expenses | $5.4 million | $6.0 million | | Research and Development Expenses | $2.4 million | $2.8 million | | General and Administrative Expenses | $3.0 million | $3.2 million | | Total Other Income | $0.5 million | $0.8 million | | Net Loss | $5.0 million | $5.2 million | | Loss per Common Share | $0.95 | $1.64 | - Research and development expenses **decreased by $0.4 million to $2.4 million**, driven by lower **EB05** external research expenses, partially offset by increased **EB06** costs[8](index=8&type=chunk)[15](index=15&type=chunk) - General and administrative expenses **decreased by $0.2 million to $3.0 million**, primarily due to reduced professional service fees and noncash share-based compensation[8](index=8&type=chunk)[15](index=15&type=chunk) [Financial Statements](index=3&type=section&id=Financial%20Statements) This section presents the unaudited condensed interim consolidated statements of operations, financial position, and cash flows for Edesa Biotech [Condensed Interim Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Interim%20Consolidated%20Statements%20of%20Operations) This section presents the unaudited condensed interim consolidated statements of operations, detailing revenues, expenses, and net loss for the three and nine months ended June 30, 2025, and 2024 Condensed Interim Consolidated Statements of Operations | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Research and development | $939,067 | $897,305 | $2,443,191 | $2,778,100 | | General and administrative | $964,676 | $1,035,140 | $2,998,127 | $3,232,248 | | Loss from operations | $(1,903,743) | $(1,932,445) | $(5,441,318) | $(6,010,348) | | Reimbursement grant income | $183,281 | $236,226 | $536,744 | $661,062 | | Other income (loss) | $(29,002) | $28,007 | $(51,791) | $142,092 | | Net loss | $(1,749,464) | $(1,668,212) | $(4,957,165) | $(5,207,994) | | Loss per common share - basic and diluted | $(0.25) | $(0.52) | $(0.95) | $(1.64) | [Condensed Interim Consolidated Statements of Financial Position](index=4&type=section&id=Condensed%20Interim%20Consolidated%20Statements%20of%20Financial%20Position) This section provides the unaudited condensed interim consolidated balance sheet, outlining the company's assets, liabilities, and shareholders' equity as of June 30, 2025, and September 30, 2024 Condensed Interim Consolidated Statements of Financial Position | Metric | June 30, 2025 | September 30, 2024 | | :-------------------------------- | :-------------- | :----------------- | | Cash and cash equivalents | $12,361,690 | $1,037,320 | | Total Assets | $14,804,800 | $3,813,982 | | Current liabilities | $672,674 | $1,832,827 | | Shareholders' equity | $14,132,126 | $1,981,155 | | Total liabilities and shareholders' equity | $14,804,800 | $3,813,982 | [Condensed Interim Consolidated Statements of Cash Flows](index=4&type=section&id=Condensed%20Interim%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the unaudited condensed interim consolidated statements of cash flows for the nine months ended June 30, 2025, and 2024, detailing cash movements from operating, financing, and the effect of exchange rate changes Condensed Interim Consolidated Statements of Cash Flows | Metric | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Net cash used in operating activities | $(5,601,268) | $(3,923,166) | | Net cash provided by financing activities | $16,844,415 | $623,466 | | Net change in cash and cash equivalents | $11,324,370 | $(3,320,513) | | Cash and cash equivalents, end of period | $12,361,690 | $2,040,884 | [Additional Information](index=2&type=section&id=Additional%20Information) This section provides supplementary details on Edesa Biotech's working capital, upcoming investor conferences, company overview, and forward-looking statements [Working Capital](index=2&type=section&id=Working%20Capital) As of June 30, 2025, Edesa Biotech reported $12.4 million in cash and cash equivalents and $12.1 million in working capital Working Capital as of June 30, 2025 | Metric | Amount | | :----- | :----- | | Cash and cash equivalents | $12.4 million | | Working capital | $12.1 million | [Investor Calendar](index=2&type=section&id=Investor%20Calendar) Edesa management is scheduled to participate in two investor conferences in August and September 2025: the Canaccord Genuity 45th Annual Growth Conference and the H.C. Wainwright 27th Annual Global Investment Conference - Edesa management will participate in the **Canaccord Genuity 45th Annual Growth Conference** (August 12-13, 2025) and the **H.C. Wainwright 27th Annual Global Investment Conference** (September 8-10, 2025)[12](index=12&type=chunk) [About Edesa Biotech, Inc.](index=2&type=section&id=About%20Edesa%20Biotech%2C%20Inc.) Edesa Biotech, Inc. is a clinical-stage biopharmaceutical company focused on developing innovative treatments for inflammatory and immune-related diseases - Edesa Biotech, Inc. is a clinical-stage biopharmaceutical company developing innovative treatments for inflammatory and immune-related diseases[13](index=13&type=chunk) - The clinical pipeline focuses on Medical Dermatology (**EB06** for vitiligo, **EB01** for chronic Allergic Contact Dermatitis) and Respiratory (**EB05** for Acute Respiratory Distress Syndrome)[13](index=13&type=chunk) - The **EB05** program is evaluated in a U.S. government-funded platform study and has received two funding awards from the Government of Canada[13](index=13&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements regarding Edesa's business plans, including EB06 development and regulatory submission, and highlights various risks and uncertainties - Forward-looking statements are identified by words such as 'anticipate,' 'believe,' 'plan,' 'estimate,' 'expect,' 'intend,' 'may,' 'will,' 'would,' 'could,' 'should,' 'might,' 'potential,' or 'continue'[14](index=14&type=chunk) - Forward-looking statements include plans to channel operational efforts into regulatory preparation and drug manufacturing of **EB06**, aiming for rapid clinical testing and FDA IND submission by end of calendar 2025[14](index=14&type=chunk) - Risks include obtaining regulatory approval, access to sufficient capital, product efficacy, compliance with license agreements, intellectual property protection, and public health crisis impacts[16](index=16&type=chunk)

Core Viewpoint - Edesa Biotech, Inc. is advancing its drug candidate EB06 for treating moderate-to-severe nonsegmental vitiligo and has reported financial results for the three and nine months ended June 30, 2025, indicating a strategic focus on this development program [1][2][3]. Financial Performance - For the three months ended June 30, 2025, total operating expenses were $1.9 million, consistent with the same period in 2024 [5]. - The net loss for the quarter was $1.7 million, or $0.25 per common share, compared to a net loss of $1.7 million, or $0.52 per common share, for the same period in 2024 [6]. - For the nine months ended June 30, 2025, total operating expenses decreased by $0.6 million to $5.4 million compared to $6.0 million for the same period in 2024 [7]. - The net loss for the nine months was $5.0 million, or $0.95 per common share, compared to a net loss of $5.2 million, or $1.64 per common share, for the same period in 2024 [10]. Research and Development Focus - Research and development expenses for the nine months ended June 30, 2025, decreased by $0.4 million to $2.4 million, primarily due to reduced external research expenses related to EB05, offset by increased expenses for EB06 [7]. - The company is channeling operational efforts into regulatory preparation and drug manufacturing for EB06, aiming for rapid progression into clinical testing [4]. Cash Position and Working Capital - As of June 30, 2025, Edesa had cash and cash equivalents of $12.4 million and working capital of $12.1 million [11]. Upcoming Events - Edesa management is scheduled to participate in the Canaccord Genuity 45th Annual Growth Conference on August 12-13, 2025, and the H.C. Wainwright 27th Annual Global Investment Conference on September 8-10, 2025 [12].

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This part details Edesa Biotech's unaudited interim consolidated financial statements and related notes for the specified periods [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This chapter provides the unaudited condensed interim consolidated financial statements and accompanying notes for Edesa Biotech, Inc [Condensed Interim Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Interim%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and shareholders' equity at specific interim dates | Metric | March 31, 2025 | September 30, 2024 | | :-------------------------------- | :------------- | :----------------- | | Cash and cash equivalents | $13,896,650 | $1,037,320 | | Total current assets | $14,387,289 | $1,675,622 | | Total assets | $16,454,299 | $3,813,982 | | Total current liabilities | $914,701 | $1,832,827 | | Total shareholders' equity | $15,539,598 | $1,981,155 | [Condensed Interim Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Interim%20Consolidated%20Statements%20of%20Operations) This section outlines the company's financial performance, including research and development, general and administrative expenses, and net loss for interim periods | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Research and development | $484,306 | $1,176,337 | $1,504,124 | $1,880,795 | | General and administrative | $1,154,580 | $1,044,137 | $2,033,451 | $2,197,108 | | Loss from operations | $(1,638,886) | $(2,220,474) | $(3,537,575) | $(4,077,903) | | Net loss | $(1,590,448) | $(1,861,331) | $(3,207,701) | $(3,539,782) | | Net comprehensive loss | $(1,654,179) | $(1,872,514) | $(3,252,776) | $(3,551,537) | | Loss per common share - basic and diluted | $(0.30) | $(0.58) | $(0.74) | $(1.12) | [Condensed Interim Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Interim%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the cash inflows and outflows from operating, investing, and financing activities for interim periods | Cash Flow Activity | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Net cash used in operating activities | $(3,900,501) | $(3,066,687) | | Net cash provided by financing activities | $16,844,415 | $517,441 | | Net change in cash and cash equivalents | $12,859,330 | $(2,561,766) | | Cash and cash equivalents, end of period | $13,896,650 | $2,799,631 | [Condensed Interim Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=Condensed%20Interim%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) This section tracks changes in shareholders' equity, including net loss and share issuances, over interim periods - Total shareholders' equity significantly increased from **$1,981,155** at September 30, 2024, to **$15,539,598** at March 31, 2025, primarily due to the issuance of common shares, Series A-1 preferred shares, and Series B-1 preferred shares[17](index=17&type=chunk)[18](index=18&type=chunk) - The company issued **3,772,803 common shares**, **150 Series A-1 preferred shares**, and **834 Series B-1 preferred shares** during the six months ended March 31, 2025, contributing to the increase in capital shares[17](index=17&type=chunk)[18](index=18&type=chunk) [Notes to Condensed Interim Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Interim%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed interim consolidated financial statements [1. Nature of Operations](index=9&type=section&id=1.%20Nature%20of%20Operations) This note describes Edesa Biotech's business as a biopharmaceutical company and its going concern dependency on future funding - Edesa Biotech, Inc. is a biopharmaceutical company focused on acquiring, developing, and commercializing clinical-stage drugs for inflammatory and immune-related diseases[20](index=20&type=chunk) - The company's ability to continue as a going concern is dependent on obtaining additional funding, as it incurred a comprehensive loss of **$3.3 million** and had a net cash outflow from operating activities of **$3.9 million** for the six months ended March 31, 2025, resulting in an accumulated deficit of **$61.9 million**[23](index=23&type=chunk) [2. Basis of Presentation](index=9&type=section&id=2.%20Basis%20of%20Presentation) This note explains the accounting principles, significant estimates, and functional currencies used in preparing the interim financial statements - The financial statements are prepared in accordance with U.S. GAAP for interim financial information and do not include all disclosures required for complete financial statements[25](index=25&type=chunk) - Significant estimates are involved in areas such as valuation of accounts receivable, intangible assets, right-of-use assets, deferred income taxes, fair value of share-based compensation and warrants, and forecasting future cash flows for going concern assessment[27](index=27&type=chunk) - The Company's functional currency is U.S. dollars, while its Canadian subsidiary, Edesa Biotech Research, Inc., uses Canadian dollars[29](index=29&type=chunk) [3. Intangible Assets](index=11&type=section&id=3.%20Intangible%20Assets) This note details the company's acquired license for 'The Constructs' as an intangible asset, including its amortization schedule - The company holds an acquired license for 'The Constructs' with exclusive world-wide rights, recorded as an intangible asset and amortized over an estimated useful life of **25 years**[30](index=30&type=chunk)[32](index=32&type=chunk) | Metric | March 31, 2025 | September 30, 2024 | | :-------------------------- | :------------- | :----------------- | | The Constructs | $2,529,483 | $2,529,483 | | Less: accumulated amortization | $(501,221) | $(450,635) | | Total intangible assets, net | $2,028,262 | $2,078,848 | - Amortization expense was **$0.05 million** for both the six months ended March 31, 2025, and March 31, 2024[34](index=34&type=chunk) [4. Right-of-Use Lease with Related Party](index=11&type=section&id=4.%20Right-of-Use%20Lease%20with%20Related%20Party) This note describes the company's lease agreement for executive offices with a related party and associated costs - The company leases executive offices from a related company, with the lease extended until November 30, 2025, and then month-to-month[36](index=36&type=chunk) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Right-of-use lease cost | $0 | $19,793 | $17,885 | $39,909 | [5. Commitments](index=13&type=section&id=5.%20Commitments) This note outlines the company's contractual obligations, including contingent license and royalty payments and clinical study responsibilities | Year Ending September 30, | Contractual Payments | | :------------------------ | :------------------- | | 2025 | $232,000 | | 2026 | $34,000 | | 2027 | $34,000 | | Total | $300,000 | - The company has significant contingent license and royalty commitments, including up to **$356 million** for 'The Constructs' and up to **$18.4 million** for another pharmaceutical product, contingent on meeting certain milestones[39](index=39&type=chunk)[40](index=40&type=chunk) - An additional **$68.9 million** in remaining payments are committed for global rights to a pharmaceutical product, with **$25,000** and **$50,000** expenses recorded for milestones met in the three and six months ended March 31, 2025, respectively[41](index=41&type=chunk) - The drug candidate EB05 was selected for a U.S. government-funded Phase 2 clinical study for ARDS, with Edesa responsible for providing drug product and technical support[42](index=42&type=chunk) [6. Capital Shares](index=15&type=section&id=6.%20Capital%20Shares) This note details the company's equity transactions, including private placements, preferred share issuances, and warrant activity - On February 12, 2025, the company completed a private placement of Series B-1 Preferred Shares and common shares, generating approximately **$15.0 million** in gross proceeds[43](index=43&type=chunk) - On October 30, 2024, an entity controlled by the CEO purchased **150 Series A-1 Preferred Shares** and warrants for an aggregate purchase price of **$1,540,819**[48](index=48&type=chunk)[49](index=49&type=chunk) | Warrant Activity | Number of Warrant Shares () | Weighted Average Exercise Price | | :----------------------- | :--------------------------- | :------------------------------ | | Balance - Sep 30, 2024 | 609,717 | $21.74 | | Issued | 326,560 | $3.45 | | Expired | (1,687) | $22.40 | | Balance - Mar 31, 2025 | 934,590 | $15.35 | - The company recorded **$0.1 million** in share-based compensation expenses for both the three and six months ended March 31, 2025[67](index=67&type=chunk) [7. Government Contributions](index=21&type=section&id=7.%20Government%20Contributions) This note describes the company's funding agreement with the Canadian Government for its Phase 3 clinical study and related grant income - Under the 2023 SIF Agreement with the Canadian Government, the company is committed to **C$23 million** in partially repayable funding for its Phase 3 clinical study of EB05 and related activities[72](index=72&type=chunk)[73](index=73&type=chunk) - Grant income recorded under the 2023 SIF Agreement was **$0.1 million** for the three months ended March 31, 2025, and **$0.4 million** for the six months ended March 31, 2025[76](index=76&type=chunk) [8. Financial Instruments](index=23&type=section&id=8.%20Financial%20Instruments) This note explains the company's fair value measurement framework and exposure to foreign currency exchange rate risk - The company uses a fair value measurement framework, categorizing inputs into Level 1 (quoted prices), Level 2 (observable inputs), and Level 3 (unobservable inputs)[77](index=77&type=chunk)[78](index=78&type=chunk)[82](index=82&type=chunk) - A **10%** annual change in the Canadian/U.S. exchange rate would impact the company's loss and other comprehensive loss by approximately **$0.4 million**, due to exposure from Canadian dollar denominated assets[83](index=83&type=chunk) [9. Loss per Share](index=24&type=section&id=9.%20Loss%20per%20Share) This note explains the calculation of basic and diluted loss per share, noting the anti-dilutive effect of certain securities - Securities that could potentially dilute basic earnings per share were excluded from the computation of diluted loss per share because their effect would have been anti-dilutive[85](index=85&type=chunk) [10. Related Party Transactions](index=24&type=section&id=10.%20Related%20Party%20Transactions) This note discloses transactions with the CEO, directors, and affiliated entities, including private placements and a terminated credit agreement - The CEO, directors, and affiliated entities participated in the Series B-1 private placement, purchasing **834 Series B-1 Preferred Shares** and **3,468,746 common shares** for approximately **$15.0 million** in gross proceeds[86](index=86&type=chunk) - An Investor Rights Agreement grants the lead investor certain rights, including nominating a director to the board and protective provisions restricting company actions without lead investor consent[87](index=87&type=chunk)[88](index=88&type=chunk) - An entity controlled by the CEO purchased **150 Series A-1 Preferred Shares** and warrants for **$1,540,819**[90](index=90&type=chunk)[91](index=91&type=chunk) - The revolving credit agreement with a CEO-controlled entity was terminated in October 2024, with no funds borrowed and no termination penalties incurred[93](index=93&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, operational results, liquidity, capital resources, and forward-looking statements [DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS](index=26&type=section&id=DISCLOSURE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section warns that the report contains forward-looking statements subject to risks and uncertainties that may cause actual results to differ - The report contains forward-looking statements subject to risks and uncertainties, and actual results may differ materially from those projected[95](index=95&type=chunk)[97](index=97&type=chunk) - Key factors that could cause actual results to differ include funding ability, estimates of expenses and capital requirements, timing and results of clinical trials, regulatory approvals, market acceptance, competition, intellectual property protection, and compliance with Nasdaq listing requirements[98](index=98&type=chunk) [Overview](index=27&type=section&id=Overview) This section provides an overview of Edesa Biotech's focus on developing therapies for inflammatory and immune-related diseases and its clinical pipeline - Edesa Biotech is a biopharmaceutical company developing innovative therapies for inflammatory and immune-related diseases, focusing on areas with unmet medical needs and large market opportunities[100](index=100&type=chunk) - The clinical pipeline includes EB06 for vitiligo (Medical Dermatology) and EB05 (paridiprubart) for Acute Respiratory Distress Syndrome (ARDS) (Respiratory), with EB05 currently in a U.S. government-funded Phase 2 platform study[101](index=101&type=chunk)[102](index=102&type=chunk) [Recent Developments](index=27&type=section&id=Recent%20Developments) This section highlights recent corporate activities, including equity offerings, preferred share designations, and private placements - In October 2024, the company entered into an At The Market Offering Agreement (HCW ATM) to sell common shares for up to **$3.87 million** in gross proceeds, with **$0.8 million** net proceeds realized by March 31, 2025[103](index=103&type=chunk) - Amended Articles were filed in October 2024 and February 2025 to designate Series A-1 and Series B-1 Convertible Preferred Shares, respectively, both ranking senior to common shares in liquidation[104](index=104&type=chunk)[105](index=105&type=chunk) - A Series A-1 Preferred Shares offering in October 2024 involved the sale of **150 shares** and warrants to a CEO-controlled entity for **$1,540,819**[106](index=106&type=chunk) - A Series B-1 Preferred Shares offering in February 2025 generated approximately **$15.0 million** in gross proceeds from the sale of **834 Series B-1 Preferred Shares** and **3,468,746 common shares** in a private placement[107](index=107&type=chunk) [Significant Accounting Policies and Estimates](index=28&type=section&id=Significant%20Accounting%20Policies%20and%20Estimates) This section confirms no material changes to the company's significant accounting policies or estimates since the last annual report - There have been no material changes to the company's significant accounting policies or estimates since the Annual Report on Form 10-K for the year ended September 30, 2024[108](index=108&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance by comparing operating expenses, grant income, and net loss across interim periods [Comparison of the Three Months Ended March 31, 2025 and 2024](index=28&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20March%2031,%202025%20and%202024) This section compares the company's operating expenses, grant income, and net loss for the three-month periods ended March 31, 2025 and 2024 - Total operating expenses decreased by **$0.6 million** to **$1.6 million** for the three months ended March 31, 2025, compared to **$2.2 million** in the prior year[109](index=109&type=chunk) | Expense Category | 3 Months Ended Mar 31, 2025 | 3 Months Ended Mar 31, 2024 | Change ($) | | :-------------------------------- | :---------------------------- | :---------------------------- | :--------- | | Research and development | $484,306 | $1,176,337 | $(692,031) | | General and administrative | $1,154,580 | $1,044,137 | $110,443 | | Grant income | $52,268 | $304,002 | $(251,734) | | Interest income | $265 | $43,193 | $(42,928) | | Net loss | $(1,590,448) | $(1,861,331) | $270,883 | | Loss per common share | $(0.30) | $(0.58) | $0.28 | - R&D expenses decreased primarily due to lower external research expenses for EB05, partially offset by increased EB06-related expenses[112](index=112&type=chunk) - G&A expenses increased due to higher salaries and related costs, partially offset by decreased noncash share-based compensation and professional service fees[112](index=112&type=chunk) [Comparison of the Six Months Ended March 31, 2025 and 2024](index=29&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20March%2031,%202025%20and%202024) This section compares the company's operating expenses, grant income, and net loss for the six-month periods ended March 31, 2025 and 2024 - Total operating expenses decreased by **$0.6 million** to **$3.5 million** for the six months ended March 31, 2025, compared to **$4.1 million** in the prior year[112](index=112&type=chunk) | Expense Category | 6 Months Ended Mar 31, 2025 | 6 Months Ended Mar 31, 2024 | Change ($) | | :-------------------------------- | :---------------------------- | :---------------------------- | :--------- | | Research and development | $1,504,124 | $1,880,795 | $(376,671) | | General and administrative | $2,033,451 | $2,197,108 | $(163,657) | | Grant income | $353,463 | $424,836 | $(71,373) | | Interest income | $1,931 | $104,159 | $(102,228) | | Net loss | $(3,207,701) | $(3,539,782) | $332,081 | | Loss per common share | $(0.74) | $(1.12) | $0.38 | - R&D expenses decreased primarily due to lower external research expenses for EB05, partially offset by increased EB06-related costs[118](index=118&type=chunk) - G&A expenses decreased due to lower noncash share-based compensation and professional service fees, partially offset by increased salaries and related costs[118](index=118&type=chunk) [Capital Expenditures](index=30&type=section&id=Capital%20Expenditures) This section states that there were no significant capital expenditures during the reported three and six-month interim periods - There were no significant capital expenditures for the three and six months ended March 31, 2025, and 2024[115](index=115&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's financial position, funding sources, and plans for future financing to support operations and development - As a clinical-stage company, Edesa has not generated significant revenue and expects to incur operating losses, historically funded through equity issuances, warrants, preferred shares, government grants, and tax incentives[116](index=116&type=chunk) - At March 31, 2025, the company had an accumulated deficit of **$61.9 million**, working capital of **$13.5 million**, and cash and cash equivalents of **$13.9 million**[126](index=126&type=chunk) - Recent financing activities include **$15.0 million** gross proceeds from Series B-1 Preferred Shares and common shares, **$1.5 million** from Series A-1 Preferred Shares, and **$0.8 million** net proceeds from the HCW ATM[119](index=119&type=chunk)[120](index=120&type=chunk)[122](index=122&type=chunk) - The company expects current cash and equivalents, along with SIF reimbursements, to fund operations through the end of fiscal 2026, but plans to seek additional financing through equity, grants, debt, or strategic transactions to support long-term growth and product development[126](index=126&type=chunk)[127](index=127&type=chunk) [Cash Flows](index=33&type=section&id=Cash%20Flows) This section analyzes changes in cash flows from operating, investing, and financing activities for the six-month interim periods - Net cash used in operating activities increased to **$3.9 million** for the six months ended March 31, 2025, compared to **$3.1 million** in the prior year, primarily due to an investment in working capital[128](index=128&type=chunk) - Net cash provided by financing activities significantly increased to **$16.8 million** for the six months ended March 31, 2025, from **$0.5 million** in the prior year, driven by proceeds from common and preferred share sales[130](index=130&type=chunk) - There was no cash used in investing activities for the six months ended March 31, 2025, and 2024[129](index=129&type=chunk) [Research and Development](index=33&type=section&id=Research%20and%20Development) This section details the decrease in R&D expenses, primarily due to lower EB05 clinical costs, partially offset by increased EB06 expenses - R&D expenses decreased to **$0.5 million** for the three months ended March 31, 2025 (from **$1.2 million** in 2024) and to **$1.5 million** for the six months ended March 31, 2025 (from **$1.9 million** in 2024)[131](index=131&type=chunk) - The decrease in R&D expenses was primarily due to lower clinical expenses related to EB05, partially offset by increased costs for EB06 as the company prepares for its Phase 2 clinical study[131](index=131&type=chunk) [Off-Balance Sheet Arrangements](index=33&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of any material off-balance sheet arrangements impacting the company's financial condition - The company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on its financial condition or results of operations[132](index=132&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Edesa Biotech, Inc. is exempt from providing quantitative and qualitative market risk disclosures - The company is a smaller reporting company and is not required to provide disclosure under this item[133](index=133&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and procedures and reports no material changes in internal control over financial reporting [Disclosure Controls and Procedures](index=34&type=section&id=Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of March 31, 2025 - Management, including the CEO and CFO, concluded that the disclosure controls and procedures were effective as of March 31, 2025, providing reasonable assurance that material information is known to senior management[134](index=134&type=chunk)[135](index=135&type=chunk) [Changes in Internal Control over Financial Reporting](index=34&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports no material changes in internal control over financial reporting during the quarter ended March 31, 2025 - There were no changes in internal control over financial reporting during the quarter ended March 31, 2025, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[136](index=136&type=chunk) [PART II — OTHER INFORMATION](index=35&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) This part provides additional information not covered in the financial statements, including legal proceedings, risk factors, and other disclosures [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings or claims beyond the ordinary course of business - The company is not currently involved in any material legal proceedings or claims beyond the ordinary course of business[138](index=138&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously discussed in the Annual Report on Form 10-K for the year ended September 30, 2024 - No material changes to the risk factors discussed in the Annual Report on Form 10-K for the year ended September 30, 2024[139](index=139&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report for the quarter - No unregistered sales of equity securities and use of proceeds to report[140](index=140&type=chunk) [Item 3. Defaults Upon Senior Securities](index=35&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the quarter - No defaults upon senior securities were reported[141](index=141&type=chunk) [Item 4. Mine Safety Disclosures](index=35&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to Edesa Biotech, Inc.'s operations - Mine safety disclosures are not applicable to the company[142](index=142&type=chunk) [Item 5. Other Information](index=35&type=section&id=Item%205.%20Other%20Information) This section discloses no changes in trading arrangements by directors or officers and details a consulting agreement with the former CFO - No directors or officers adopted, modified, or terminated Rule 10b-1 or non-Rule 10b5-1 trading arrangements during the fiscal quarter ended March 31, 2025[143](index=143&type=chunk) - Edesa Biotech Research, Inc. entered into a **two-year Consulting Agreement** with former CFO Stephen Lemieux for financial and accounting services at **CAD $250.00 per hour**, plus prorated 2025 bonus and potential restricted stock units[144](index=144&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including amended articles, various agreements, and certifications - The exhibit index includes Amended Articles, Securities Purchase Agreements, Investor Rights Agreement, Employment Agreement, Consulting Agreement, and various certifications (CEO, CFO)[147](index=147&type=chunk)

[Executive Summary](index=1&type=section&id=Executive%20Summary) Edesa Biotech reported Q2 FY2025 results, highlighting a strategic pivot towards its vitiligo drug candidate EB06, supported by a recent $15 million equity financing. The company is advancing regulatory and manufacturing activities for a U.S. Phase 2 study for EB06 [Company Highlights & Strategic Focus](index=1&type=section&id=Company%20Highlights%20%26%20Strategic%20Focus) Edesa Biotech reported Q2 FY2025 results, highlighting a strategic pivot towards its vitiligo drug candidate EB06, supported by a recent $15 million equity financing. The company is advancing regulatory and manufacturing activities for a U.S. Phase 2 study for EB06 - Completed a **$15 million** equity financing from healthcare-focused institutional investors, existing shareholders, and insiders to support the development of the company's vitiligo drug candidate EB06[3](index=3&type=chunk) - Financial results for the quarter reflected a pivot in operational activity to the company's vitiligo development program (EB06) from its respiratory program[5](index=5&type=chunk) - Initiated outreach to potential investigators and manufacturing-related activities to support U.S. regulatory approval for a Phase 2 study in moderate-to-severe nonsegmental vitiligo patients[3](index=3&type=chunk) [Business Update](index=1&type=section&id=Business%20Update) Edesa is actively advancing its EB06 vitiligo program while managing other pipeline assets, including EB05 for ARDS and EB01 for ACD [Vitiligo Program (EB06) Development](index=1&type=section&id=Vitiligo%20Program%20(EB06)%20Development) Edesa is actively advancing its EB06 vitiligo program, with manufacturing and regulatory preparations underway for a U.S. Phase 2 study. The company anticipates submitting manufacturing data to the FDA in H2 2025, with topline results potentially available 12-18 months post-regulatory clearance - Initial steps in the manufacturing of the biological drug EB06 are ongoing, with anticipation of submitting drug manufacturing data to the U.S. FDA for its investigational new drug (IND) application in the **second half of calendar 2025**[4](index=4&type=chunk)[7](index=7&type=chunk) - Topline results for the planned Phase 2 study could be available within **12 to 18 months** following regulatory clearance by the FDA. The planned Phase 2 study is already approved in Canada[7](index=7&type=chunk) - **Increased expenditures** for the EB06 program reflect the deployment of additional resources to manufacturing and preparatory regulatory activities to speed the launch of the upcoming vitiligo study[5](index=5&type=chunk)[6](index=6&type=chunk) [Other Pipeline Programs](index=1&type=section&id=Other%20Pipeline%20Programs) While focusing on EB06, Edesa continues to benefit from a fully funded government study for its respiratory drug EB05 (paridiprubart) for ARDS, which offset some EB06 expenses. The company also has EB01 for Allergic Contact Dermatitis and is preparing an IND for EB07 (paridiprubart) for pulmonary fibrosis - **Decreased expenses** for the EB05 drug candidate as the company benefits from a fully funded government study investigating Edesa's respiratory drug as a treatment for Acute Respiratory Distress Syndrome (ARDS)[5](index=5&type=chunk) - Medical dermatology assets include EB01 (1.0% daniluromer cream), a **Phase 3-ready** asset for moderate-to-severe chronic Allergic Contact Dermatitis (ACD)[15](index=15&type=chunk) - Preparing an investigational new drug application (IND) in the United States for EB07 (paridiprubart) to conduct a future Phase 2 study in patients with pulmonary fibrosis[15](index=15&type=chunk) [Financial Performance](index=1&type=section&id=Financial%20Performance) Edesa reported reduced net losses for both the three and six months ended March 31, 2025, driven by decreased operating expenses [Three Months Ended March 31, 2025](index=1&type=section&id=Three%20Months%20Ended%20March%2031%2C%202025) For Q2 FY2025, Edesa reported a reduced net loss of $1.6 million, or $0.30 per share, compared to $1.9 million, or $0.58 per share, in the prior year. This improvement was driven by a decrease in total operating expenses, primarily R&D, despite a decline in other income | Metric | Q2 FY2025 (3 months) | Q2 FY2024 (3 months) | Change | | :----------------------- | :------------------- | :------------------- | :----- | | Net Loss | $(1.6) million | $(1.9) million | $(0.3) million decrease | | Loss per Common Share | $(0.30) | $(0.58) | $(0.28) decrease | | Total Operating Expenses | $1.6 million | $2.2 million | $(0.6) million decrease | | Research & Development | $0.5 million | $1.2 million | $(0.7) million decrease | | General & Administrative | $1.2 million | $1.0 million | $0.2 million increase | | Total Other Income | $49,000 | $360,000 | $(311,000) decrease | - Research and development expenses decreased primarily due to **decreased external research expenses** related to manufacturing the company's investigational drug, paridiprubart, partially offset by an **increase in EB06-related expenses** for the planned Phase 2 vitiligo study[10](index=10&type=chunk) - Total other income decreased primarily due to a **decrease in reimbursement funding** from the Canadian government's Strategic Innovation Fund as well as a decrease in interest income[8](index=8&type=chunk) [Six Months Ended March 31, 2025](index=2&type=section&id=Six%20Months%20Ended%20March%2031%2C%202025) For the six-month period, Edesa's net loss decreased to $3.2 million, or $0.74 per share, from $3.5 million, or $1.12 per share, in the prior year. This was driven by a reduction in total operating expenses, including R&D and G&A, despite a decline in other income | Metric | H1 FY2025 (6 months) | H1 FY2024 (6 months) | Change | | :----------------------- | :------------------- | :------------------- | :----- | | Net Loss | $(3.2) million | $(3.5) million | $(0.3) million decrease | | Loss per Common Share | $(0.74) | $(1.12) | $(0.38) decrease | | Total Operating Expenses | $3.5 million | $4.1 million | $(0.6) million decrease | | Research & Development | $1.5 million | $1.9 million | $(0.4) million decrease | | General & Administrative | $2.0 million | $2.2 million | $(0.2) million decrease | | Total Other Income | $331,000 | $539,000 | $(208,000) decrease | - Research and development expenses decreased primarily due to **decreased external research expenses** related to manufacturing paridiprubart, partially offset by an **increase in EB06-related expenses** for the planned Phase 2 vitiligo study[17](index=17&type=chunk) - General and administrative expenses decreased primarily due to a **decrease in noncash share-based compensation** and professional service fees, partially offset by an **increase in salaries and related costs**[17](index=17&type=chunk) [Financial Position & Liquidity](index=2&type=section&id=Financial%20Position%20%26%20Liquidity) Edesa's financial position improved significantly with increased cash and working capital due to recent equity financing [Working Capital](index=2&type=section&id=Working%20Capital) As of March 31, 2025, Edesa reported a significant increase in cash and cash equivalents to $13.9 million and working capital of $13.5 million, largely due to the recent equity financing | Metric | March 31, 2025 | | :-------------------- | :------------- | | Cash and Cash Equivalents | $13.9 million | | Working Capital | $13.5 million | [Corporate Information](index=2&type=section&id=Corporate%20Information) Edesa Biotech is a clinical-stage biopharmaceutical company focused on immuno-inflammatory diseases, with upcoming event participation and forward-looking statements [Upcoming Events](index=2&type=section&id=Upcoming%20Events) Edesa plans to participate in the BIO International Convention in Boston from June 16-19, 2025, offering opportunities for meetings with company representatives - Edesa plans to participate in the BIO International Convention being held June 16-19, 2025, in Boston, Mass[14](index=14&type=chunk) [About Edesa Biotech](index=2&type=section&id=About%20Edesa%20Biotech) Edesa Biotech is a clinical-stage biopharmaceutical company focused on developing host-directed therapeutics for immuno-inflammatory diseases, with a pipeline in Medical Dermatology (EB06 for vitiligo, EB01 for ACD) and Respiratory (EB05 for ARDS, EB07 for pulmonary fibrosis) - Edesa Biotech, Inc. is a clinical-stage biopharmaceutical company developing innovative ways to treat inflammatory and immune-related diseases[15](index=15&type=chunk) - Its clinical pipeline is focused on two therapeutic areas: Medical Dermatology (EB06 for vitiligo, EB01 for Allergic Contact Dermatitis) and Respiratory (EB05 for Acute Respiratory Distress Syndrome, EB07 for pulmonary fibrosis)[15](index=15&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements regarding future performance, clinical trials, regulatory approvals, and financial resources, which are subject to various risks and uncertainties that could cause actual results to differ materially - This press release may contain forward-looking statements regarding plans for regulatory approval, potential of drug candidates, changes in treatment paradigms, resource deployment, and timing of clinical studies[16](index=16&type=chunk)[18](index=18&type=chunk) - Forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause actual results or future events to differ materially, including the ability to obtain regulatory approval, access to capital, product effectiveness, and intellectual property protection[18](index=18&type=chunk) [Condensed Interim Consolidated Financial Statements](index=3&type=section&id=Condensed%20Interim%20Consolidated%20Financial%20Statements) The report includes unaudited condensed interim consolidated financial statements, detailing operations, balance sheets, and cash flows [Statements of Operations](index=3&type=section&id=Statements%20of%20Operations) The unaudited condensed interim consolidated statements of operations provide detailed financial results for the three and six months ended March 31, 2025 and 2024, showing key expense categories, net loss, and loss per common share | Metric | 3 Months Ended Mar 31, 2025 | 3 Months Ended Mar 31, 2024 | 6 Months Ended Mar 31, 2025 | 6 Months Ended Mar 31, 2024 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Research and development | $484,306 | $1,176,337 | $1,504,124 | $1,880,795 | | General and administrative | $1,154,580 | $1,044,137 | $2,033,451 | $2,197,108 | | Loss from operations | $(1,638,886) | $(2,220,474) | $(3,537,575) | $(4,077,903) | | Reimbursement grant income | $52,268 | $304,002 | $353,463 | $424,836 | | Net loss | $(1,590,448) | $(1,861,331) | $(3,207,701) | $(3,539,782) | | Loss per common share | $(0.30) | $(0.58) | $(0.74) | $(1.12) | [Balance Sheets](index=4&type=section&id=Balance%20Sheets) The unaudited condensed interim consolidated balance sheets present the company's financial position as of March 31, 2025, and September 30, 2024, showing a significant increase in cash and shareholders' equity | Metric | March 31, 2025 | September 30, 2024 | | :-------------------------- | :-------------------------- | :-------------------------- | | Cash and cash equivalents | $13,896,650 | $1,037,320 | | Total Assets | $16,454,299 | $3,813,982 | | Current liabilities | $914,701 | $1,832,827 | | Shareholders' equity | $15,539,598 | $1,981,155 | | Total liabilities and shareholders' equity | $16,454,299 | $3,813,982 | [Statements of Cash Flows](index=4&type=section&id=Statements%20of%20Cash%20Flows) The unaudited condensed interim consolidated statements of cash flows detail the cash movements for the six months ended March 31, 2025, and 2024, highlighting significant cash provided by financing activities in the current period | Metric | 6 Months Ended Mar 31, 2025 | 6 Months Ended Mar 31, 2024 | | :---------------------------------- | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $(3,900,501) | $(3,066,687) | | Net cash provided by financing activities | $16,844,415 | $517,441 | | Net change in cash and cash equivalents | $12,859,330 | $(2,561,766) | | Cash and cash equivalents, beginning of period | $1,037,320 | $5,361,397 |

Core Viewpoint - Edesa Biotech, Inc. is advancing its clinical-stage biopharmaceutical development, particularly focusing on its vitiligo drug candidate EB06, while reporting financial results that reflect a strategic pivot in operational activities towards this program [1][4]. Financial Overview - For the three months ended March 31, 2025, total operating expenses decreased by $0.6 million to $1.6 million compared to $2.2 million for the same period in 2024 [7] - The company reported a net loss of $1.6 million, or $0.30 per common share, for the quarter, an improvement from a net loss of $1.9 million, or $0.58 per common share, for the same quarter last year [8] - For the six months ended March 31, 2025, total operating expenses decreased by $0.6 million to $3.5 million compared to $4.1 million for the same period in 2024 [9] - The net loss for the six months was $3.2 million, or $0.74 per common share, compared to a net loss of $3.5 million, or $1.12 per common share, for the same period last year [11] Business Development - The company completed a $15 million equity financing to support the development of EB06, an anti-CXCL10 monoclonal antibody for vitiligo [2] - Edesa has initiated outreach to potential investigators and manufacturing activities to support U.S. regulatory approval for a Phase 2 study in moderate-to-severe nonsegmental vitiligo patients [2][6] - The planned Phase 2 study for EB06 is already approved in Canada, with drug manufacturing data expected to be submitted to the FDA in the second half of 2025 [6] Research and Development - Research and development expenses decreased by $0.7 million to $0.5 million for the three months ended March 31, 2025, primarily due to decreased external research expenses related to the investigational drug paridiprubart [9][16] - General and administrative expenses increased by $0.2 million to $1.2 million for the three months ended March 31, 2025, mainly due to increased salaries and related costs [9] Cash Position - As of March 31, 2025, Edesa had cash and cash equivalents of $13.9 million and working capital of $13.5 million [12]

Company Overview - Edesa Biotech, Inc. is a clinical-stage biopharmaceutical company focused on developing host-directed therapeutics for immuno-inflammatory diseases [1][3] - The company has a clinical pipeline targeting two therapeutic areas: Medical Dermatology and Respiratory [3] Medical Dermatology - Edesa is developing EB06, an anti-CXCL10 monoclonal antibody candidate for treating vitiligo, an autoimmune disorder [3] - The company also has EB01 (1.0% daniluromer cream), which is Phase 3-ready for moderate-to-severe chronic Allergic Contact Dermatitis (ACD) [3] Respiratory - The most advanced respiratory drug candidate is EB05 (paridiprubart), currently evaluated in a U.S. government-funded study for Acute Respiratory Distress Syndrome [3] - EB05 has received two funding awards from the Government of Canada to support its development [3] - Edesa is preparing an investigational new drug application (IND) for EB07 (paridiprubart) to conduct a future Phase 2 study in patients with pulmonary fibrosis [3] Upcoming Events - Edesa will participate in the 2024 Bloom Burton & Co. Healthcare Investor Conference on May 5-6, 2025, in Toronto [1][2] - Management is scheduled to present on May 5 at 4:00pm ET [2]

Company Overview - Edesa Biotech, Inc. is a clinical-stage biopharmaceutical company focused on developing host-directed therapeutics for immuno-inflammatory diseases [1][4] - The company is developing innovative treatments in two therapeutic areas: Medical Dermatology and Respiratory [4] Leadership Change - Peter J. Weiler has been appointed as Chief Financial Officer, effective May 1, 2025, succeeding Stephen Lemieux [1][3] - Mr. Weiler has extensive experience in finance and corporate strategy within the biotechnology and pharmaceutical industries, previously serving as President of Exzell Pharma, Inc. and in various roles at Cipher Pharmaceuticals Inc. [2][3] Product Pipeline - Edesa's clinical pipeline includes EB06, an anti-CXCL10 monoclonal antibody candidate for vitiligo, and EB01, a Phase 3-ready asset for moderate-to-severe chronic Allergic Contact Dermatitis [4] - The company's advanced respiratory drug candidate, EB05, is being evaluated for Acute Respiratory Distress Syndrome and has received funding from the Government of Canada [4] - Edesa is preparing an investigational new drug application for EB07 to conduct a future Phase 2 study in patients with pulmonary fibrosis [4]

Financial Performance - For the three months ended December 31, 2024, Edesa Biotech reported a comprehensive loss of $1.6 million, resulting in an accumulated deficit of $60.2 million[23]. - The company had a net cash outflow from operating activities of $1.5 million and ended the quarter with $1.6 million in cash and cash equivalents[23]. - The company reported a net loss per common share of $0.48, an improvement from a loss of $0.54 per share in the previous year[13]. - Net loss for the three months ended December 31, 2024, was $1.6 million, or $0.48 per common share, compared to a net loss of $1.7 million, or $0.54 per common share for the same period in 2023[99]. - Net cash used in operating activities was $1.5 million for the three months ended December 31, 2024, compared to $1.4 million for the same period in 2023[103]. Expenses - Research and development expenses increased to $1.02 million from $0.70 million year-over-year, reflecting a growth of approximately 45%[13]. - General and administrative expenses decreased to $0.88 million from $1.15 million year-over-year, a reduction of about 24%[13]. - Total operating expenses remained unchanged at $1.9 million for both the three months ended December 31, 2024, and December 31, 2023[99]. - Research and development (R&D) expenses increased by $0.3 million to $1.0 million for the three months ended December 31, 2024, primarily due to increased external research expenses[100]. - General and administrative (G&A) expenses decreased by $0.3 million to $0.9 million for the three months ended December 31, 2024, due to a decrease in salaries and related costs[100]. Assets and Liabilities - Total current assets increased to $2.07 million from $1.68 million, a rise of approximately 24%[11]. - Total assets grew to $4.16 million from $3.81 million, marking an increase of about 9%[11]. - At December 31, 2024, the company had an accumulated deficit of $60.2 million and working capital of $0.2 million[111]. Financing Activities - The company issued 220,269 common shares, raising $0.63 million, and received $1.54 million from the issuance of Series A-1 preferred shares and warrants[19]. - The Company entered into a Securities Purchase Agreement to issue Series A-1 Convertible Preferred Shares for up to $5 million, with an initial conversion price of $3.445 per share[43]. - The Company sold 834 Series B-1 Preferred Shares at a purchase price of $10,000 each, generating gross proceeds of approximately $15.0 million[80]. - The company received gross proceeds of $15.0 million from the sale of common shares and Series B-1 Preferred Shares in a private placement subsequent to the quarter[111]. - Net cash provided by financing activities was $2.1 million for the three months ended December 31, 2024, compared to $0.3 million for the same period in 2023, with $1.5 million from the sale of Series A-1 Preferred Shares[115]. Commitments and Contingencies - The Company has commitments for contracted research organizations with approximate future contractual payments totaling $85,000 through September 30, 2029[38]. - The Company is committed to payments of up to $356 million under a license agreement contingent upon meeting certain commercial approval and sales milestones[39]. - The maximum amount repayable under the 2023 SIF Agreement is 1.4 times the original repayable amount, with repayments starting in 2029 based on revenue growth[64]. - The Company has a commitment to pay royalties based on net sales of products containing the Constructs, with no payments made during the three months ended December 31, 2024[39]. Research and Development - The Company plans to provide drug product and technical support for a Phase 2 clinical trial of its drug candidate, EB05, selected by BARDA[42]. - The company is developing EB06 for vitiligo, with regulatory approval from Health Canada for a Phase 2 study and data submission to the FDA anticipated in mid-2025[90]. - The most advanced respiratory drug candidate, EB05, is being evaluated in a U.S. government-funded study for Acute Respiratory Distress Syndrome (ARDS)[91]. - The company plans to commit substantial resources to R&D, clinical trials, and potential product acquisitions to augment its internal development pipeline[112]. Shareholder Information - The weighted average number of common shares outstanding increased to 3,345,135 from 3,128,024, reflecting a growth of approximately 7%[13]. - The total number of shares available for issuance under the 2019 Equity Incentive Compensation Plan is 642,737, with 119,574 shares remaining available for grant as of December 31, 2024[56]. - The remaining balance of restricted share units (RSUs) as of December 31, 2024 was 77,554, all of which vested immediately upon grant[62]. - As of the filing date, the Company believes it has shareholders' equity of at least $2.5 million, satisfying the minimum Nasdaq listing requirement[81]. Legal and Regulatory Matters - The company is not currently a party to any material legal proceedings or claims outside the ordinary course of business[125]. - The company reported no changes in internal control over financial reporting that materially affected its financial reporting during the quarter ended December 31, 2024[122].