Financial Performance - Net loss was $2.2 million, or $0.28 per common share, for the three months ended December 31, 2025, compared to a net loss of $1.6 million, or $0.48 per common share for the same period in 2024[98]. - Total operating expenses increased by $0.4 million to $2.3 million for the three months ended December 31, 2025, compared to $1.9 million for the same period last year[95]. - The company had an accumulated deficit of $68.2 million and working capital of $12.0 million, including $12.1 million in cash and cash equivalents as of December 31, 2025[110]. - The company expects to continue incurring substantial operating losses as it develops product candidates and seeks marketing approval[111]. Cash Flow - Net cash used in operating activities was $2.1 million for the three months ended December 31, 2025, compared to $1.5 million for the same period in 2024[101]. - Net cash provided by financing activities was $3.4 million for the three months ended December 31, 2025, compared to $2.1 million for the same period in 2024[114]. - Cash and cash equivalents at the end of the quarter were $12.1 million, compared to $10.8 million as of September 30, 2025[101]. Research and Development - Research and development (R&D) expenses increased by $0.1 million to $1.1 million for the three months ended December 31, 2025, primarily due to increased expenses for manufacturing-related activities[95]. - R&D expenses increased to $1.1 million for the three months ended December 31, 2025, compared to $1.0 million for the same period in 2024, primarily due to manufacturing-related activities[116]. - EB05, a drug candidate for Acute Respiratory Distress Syndrome, met primary and secondary endpoints in a Phase 3 clinical study, showing clinically meaningful improvement in survival and recovery[92]. - EB06, an anti-CXCL10 monoclonal antibody candidate, is in discussions for a Phase 2 proof of concept study in patients with moderate-to-severe nonsegmental vitiligo, with enrollment anticipated by midyear 2026[90]. - The company is pursuing additional uses for paridiprubart in chronic diseases and is eligible for reimbursement of certain development expenses from the Government of Canada[92]. Financing Activities - The company sold 1,177,568 common shares for net proceeds of approximately $3.4 million under the At The Market Offering Agreement during the three months ended December 31, 2025[93]. - The company sold an aggregate of 834 Series B-1 Preferred Shares and 3,468,746 common shares for gross proceeds of approximately $15.0 million in a private placement[102]. - The company filed a shelf registration statement allowing for the offer and sale of up to $150.0 million of securities, effective September 9, 2025[103]. - The company plans to seek additional financing through equity sales, government grants, and potential strategic transactions to fund operations and product development[111]. Administrative Expenses - General and administrative (G&A) expenses increased by $0.3 million to $1.2 million for the three months ended December 31, 2025, primarily due to an increase in noncash share-based compensation[97]. - The company recorded grant income of $0.1 million for the three months ended December 31, 2025, a decrease from $0.3 million in the same period last year[105]. Off-Balance Sheet Arrangements - The company has no off-balance sheet arrangements that could materially affect its financial condition[117].

Financial Performance - For the first quarter ended December 31, 2025, Edesa reported a net loss of $2.2 million, or $0.28 per common share, compared to a net loss of $1.6 million, or $0.48 per common share for the same period in 2024[6]. - Total operating expenses increased by $0.4 million to $2.3 million for the three months ended December 31, 2025, compared to $1.9 million for the same period in the previous year[5]. - General and administrative expenses increased by $0.3 million to $1.2 million for the three months ended December 31, 2025, primarily due to an increase in noncash share-based compensation[8]. - The company reported a decrease in total other income by $0.2 million to $0.1 million for the three months ended December 31, 2025, primarily due to reduced reimbursement funding from the Canadian government's Strategic Response Fund[5]. Research and Development - Research and development expenses rose by $0.1 million to $1.1 million for the three months ended December 31, 2025, primarily due to increased manufacturing-related activities[8]. - Edesa is exploring accelerated commercialization pathways for its monoclonal antibody paridiprubart following positive Phase 3 study results[4]. - Edesa plans to present its Phase 3 respiratory and subgroup data at upcoming scientific and medical conferences[3]. - The company plans to begin recruitment for its Phase 2 study in moderate-to-severe nonsegmental vitiligo by midyear 2026, subject to regulatory approvals[3]. Financial Position - Edesa had cash and cash equivalents of $12.1 million and working capital of $12.0 million as of December 31, 2025[7]. - Total assets increased to $14.7 million as of December 31, 2025, compared to $13.5 million as of September 30, 2025[15].

TORONTO, Feb. 13, 2026 (GLOBE NEWSWIRE) -- Edesa Biotech, Inc. (Nasdaq:EDSA), a clinical-stage biopharmaceutical company focused on developing host-directed therapeutics for immuno-inflammatory diseases, today reported financial results for the three months ended December 31, 2025 and provided an update on its business. During the first quarter, Edesa progressed manufacturing of its dermatology drug candidate, EB06 (an anti-CXCL10 monoclonal antibody), and placebo for an upcoming Phase 2 study in moderate-t ...

Drug Development and Clinical Trials - The company is developing EB06, an anti-CXCL10 monoclonal antibody for vitiligo, with a Phase 2 study expected to enroll by mid-2026, pending regulatory approval[22]. - EB05, a new class of Host-Directed Therapeutics, showed statistically significant improvement in survival and recovery in a Phase 3 study for ARDS, which accounts for approximately 10% of ICU admissions globally[23][37]. - The Phase 2 study indicated a 28-day mortality rate of 7.7% for the EB05 plus SOC group versus 40% for the placebo plus SOC group in critically ill patients, with a p-value of 0.04[45]. - The U.S. government has selected EB05 for a Phase 2 platform study funded by BARDA, focusing on ARDS treatments[46]. - The Canadian government committed up to C$23 million in funding for a Phase 3 clinical study of EB05, with C$5.75 million being non-repayable[48]. - The company is evaluating additional product candidates targeting inflammatory and immune-related diseases, including potential treatments for pulmonary fibrosis[51]. - The company must complete extensive clinical trials to demonstrate the safety and efficacy of its product candidates, which are expensive and uncertain[159]. - Unacceptable adverse events in clinical trials could delay or prevent regulatory approval and commercialization of the company's product candidates[161]. - Prolonged or delayed clinical trials may incur additional costs and hinder the timely commercialization of product candidates[162]. - The company faces potential delays in clinical trials, which could increase development costs and affect commercial prospects for its product candidates[164]. - There is uncertainty regarding the clinical trial designs and endpoints required for obtaining marketing approval, which may lead to additional trials and financial impacts[165]. Market Opportunity and Financials - The estimated prevalence of vitiligo is between 0.5% to 2% of the global population, indicating a significant market opportunity[26]. - The total addressable patient population for EB01, a therapy for Allergic Contact Dermatitis, is estimated to be as high as 5 million in major markets and Canada[34]. - ARDS-related ICU admissions are estimated at 600,000 annually in the seven major markets and Canada, with average ICU costs exceeding $100,000 per patient[37]. - The company has received over C$37 million in competitive government grants and funding awards, validating its technology and drug development capabilities[24]. - The company expects research and development expenses to increase significantly, particularly for drug candidates beyond Phase 2 clinical development[127]. - Substantial additional funding will be needed to finance operations through regulatory approval of product candidates; failure to raise capital could delay or eliminate development programs[121]. - The company anticipates that its cash and cash equivalents may not be sufficient to fund operations for one year after the filing date unless additional capital is raised or spending is delayed[125]. - The company has entered into the 2023 SIF Agreement with the Government of Canada, which includes up to C$23 million in partially repayable funding for the development of investigational therapy EB05, with a project completion deadline of December 31, 2028[134]. - The company relies on government grants, including C$14.1 million from the 2021 SIF Agreement, to support its EB05 development program[133]. Regulatory Environment - The company plans to pursue expedited regulatory review and orphan drug programs to accelerate clinical development timelines for its product candidates[27]. - The FDA requires extensive preclinical testing and multiple phases of human clinical trials before a product candidate can be marketed in the U.S.[72][74]. - The company must submit an NDA or BLA to the FDA after completing clinical trials, which includes comprehensive data on product development and testing[74]. - The Prescription Drug User Fee Act mandates user fees for each NDA or BLA submission, which are adjusted annually by the FDA[75]. - The FDA reviews NDA or BLA submissions within 60 days to determine if they are substantially complete, with performance goals to review 90% of original standard NDAs or BLAs within 10 months and 90% of original priority NDAs or BLAs within 6 months[1]. - The FDA may require a Risk Evaluation and Mitigation Strategy (REMS) if the benefits of a biologic do not outweigh potential risks, which must be submitted before BLA approval[2]. - The FDA typically inspects manufacturing facilities and clinical sites before approving an NDA or BLA to ensure compliance with GMP and GCP requirements[3]. - If the FDA issues a complete response letter, it may outline specific deficiencies that could be minor or major, affecting the approval process[4]. - Orphan drug designation can provide exclusivity for seven years if the product receives the first FDA approval for a specific active ingredient for a rare disease[5]. - The FDA has programs like Fast Track and Breakthrough Therapy designations to expedite the development and review of drugs addressing serious conditions[6]. - Priority Review designation allows for a six-month review period for drugs that significantly improve safety or effectiveness compared to existing treatments[7]. - Accelerated Approval may require post-approval studies to verify clinical benefits, and the FDA can withdraw approval if confirmatory trials fail[8]. - The Biologics Price Competition and Innovation Act provides a 12-year exclusivity period for reference products, impacting the approval of biosimilars[9]. - Sponsors of clinical trials must register and disclose information on clinicaltrials.gov, with results required to be disclosed after trial completion[10]. Competition and Market Risks - The pharmaceutical industry is highly competitive, with potential competitors including large pharmaceutical companies and smaller biotech firms, many of which have greater resources[68]. - The company faces substantial competition, which may result in others commercializing products for target indications before it does[121]. - The competitive landscape is significant, with major pharmaceutical and biotechnology companies potentially developing more effective treatments[172]. - Regulatory pricing and reimbursement practices may adversely affect the company's ability to generate revenue from approved products[173]. - The company faces significant competition in securing partnerships for Phase 3 clinical testing, which is crucial for funding and advancing its product candidates[184]. Intellectual Property and Licensing - The company has an exclusive license agreement with NovImmune SA, which includes potential milestone payments up to $356 million[57]. - The company has exclusive rights to develop and commercialize a pharmaceutical product for topical dermal and anorectal applications under the Yissum License Agreement, with a total commitment of up to $18.4 million in milestone payments[62]. - The Inventor License Agreement grants the company global rights for all fields of use for the pharmaceutical product, with future potential payments totaling up to $69.1 million based on commercial approval and sales milestones[64]. - The company is dependent on maintaining patent protection for its technologies, as failure to do so could allow competitors to commercialize similar products[196]. - The company may face legal proceedings regarding intellectual property rights, which could adversely affect its business and market position[199]. - Intellectual property litigation may lead to significant expenses and distract management, potentially increasing operating losses[200]. Management and Workforce - The leadership team has extensive experience in drug development and commercialization, enhancing the company's competitive position in the biopharmaceutical sector[24]. - The company employs 17 full-time employees, with 10 in research and development and 7 in management and administration[114]. - More than 50% of the workforce consists of women, and over 50% are individuals from underrepresented racial or ethnic groups[115]. - The company is highly dependent on key executives, and the loss of any of these individuals could materially impact its objectives[155]. - The company faces competition in attracting and retaining qualified personnel, which is critical for achieving its business objectives[156]. - The company anticipates growth in employee numbers and operational scope, particularly in drug development and regulatory affairs, which may lead to management challenges[154]. Financial Position and Shareholder Information - The company is a late-stage biopharmaceutical firm with no products approved for commercial sale and has incurred significant losses since inception, expecting to continue incurring losses[121]. - As of September 30, 2025, the company has incurred an accumulated deficit of $65.9 million and expects to continue incurring significant operating losses for the foreseeable future[122]. - The company does not currently intend to pay dividends, relying on share price appreciation for investor returns[206]. - As of December 12, 2025, the CEO owns 19.99% of outstanding shares, and executive officers and directors collectively own 23.6%[211]. - Velan Capital beneficially owns 9.99% of outstanding shares and has the right to designate a director nominee[212]. - The company has filed Amended Articles for Series A-1 and Series B-1 Convertible Preferred Shares, each with a stated value of $10,000[216][217]. - Series A-1 Preferred Shares accrue a 10% annual return and are convertible at a fixed price of $3.445[219]. - Series B-1 Preferred Shares are convertible at a fixed price of $1.92[220]. - The market price of common shares may decline due to substantial sales or the perception of potential sales[207]. - The company must comply with Nasdaq listing requirements to avoid delisting, which could reduce liquidity and market price[204][205]. - The concentration of voting power among executives could delay or prevent beneficial corporate actions for other shareholders[213].

Financial Performance - For the fiscal year ended September 30, 2025, Edesa reported a net loss of $7.2 million, or $1.27 per common share, compared to a net loss of $6.2 million, or $1.93 per common share for the previous year[6]. - Total operating expenses increased by $0.9 million to $7.9 million for the year ended September 30, 2025, compared to $7.0 million for the prior year[5]. - Total other income decreased by $0.1 million to $0.7 million for the year ended September 30, 2025, primarily due to a decrease in interest income[5]. Research and Development - Research and development expenses rose by $0.8 million to $3.7 million for the year ended September 30, 2025, primarily due to increased manufacturing-related activities[8]. - A Phase 3 study of paridiprubart met primary and secondary endpoints with statistical significance, and Edesa is exploring development partnerships for this asset[3]. - The company initiated manufacturing activities for a Phase 2 study of EB06, with recruitment expected to begin by midyear 2026[3]. Financial Position - Edesa had cash and cash equivalents of $10.8 million and working capital of $10.4 million as of September 30, 2025[7]. - Edesa's balance sheet was strengthened, and the Canadian government funding agreement was extended to support manufacturing and development for the respiratory program[4]. Strategic Initiatives - The company plans to participate in one-on-one meetings during JP Morgan week starting January 12, 2026, to engage with potential partners[9]. - Edesa is focused on executing the Phase 2 vitiligo study, advancing respiratory assets toward commercialization, and expanding manufacturing capacity[4].

Core Insights - Edesa Biotech, Inc. reported financial results for the fiscal year ended September 30, 2025, highlighting advancements in its clinical programs and financial performance [1][4]. Financial Performance - Total operating expenses increased by $0.9 million to $7.9 million for the year ended September 30, 2025, compared to $7.0 million for the prior year [4]. - Edesa reported a net loss of $7.2 million, or $1.27 per common share, compared to a net loss of $6.2 million, or $1.93 per common share, for the year ended September 30, 2024 [5]. - Cash and cash equivalents at September 30, 2025, were $10.8 million, with working capital of $10.4 million [6]. Clinical Developments - The company initiated manufacturing activities for a Phase 2 study of EB06, an anti-CXCL10 monoclonal antibody, targeting moderate-to-severe nonsegmental vitiligo, with recruitment expected to begin by mid-2026 [2]. - A Phase 3 study of paridiprubart (EB05) met primary and secondary endpoints with statistical significance, and the company is exploring partnerships for its development and commercialization [2][3]. Strategic Initiatives - Edesa's CEO emphasized the company's strategy to advance both dermatology and respiratory assets, aiming to deliver transformative therapies to patients with high unmet medical needs [3]. - The CFO noted that the company strengthened its balance sheet and extended its Canadian government funding agreement to support manufacturing and development for its respiratory program [3]. Research and Development Expenses - Research and development expenses increased by $0.8 million to $3.7 million for the year ended September 30, 2025, primarily due to increased manufacturing-related activities and preparations for the Phase 2 clinical study of EB06 [7]. - General and administrative expenses rose by $0.1 million to $4.2 million, mainly due to increased noncash share-based compensation [7]. Future Outlook - Edesa plans to participate in one-on-one meetings during JP Morgan week starting January 12, 2026, to engage with potential strategic and government partners [7].

Core Viewpoint - The article emphasizes the importance of enabling Javascript and cookies in browsers to prevent access issues, particularly when ad-blockers are enabled [1] Group 1 - The article suggests that users may face restrictions if they have ad-blockers enabled, indicating a need for adjustments in browser settings to ensure smooth access [1]

Core Insights - Edesa Biotech, Inc. announced positive results from a Phase 3 study of paridiprubart (EB05) for treating Acute Respiratory Distress Syndrome (ARDS), showing significant improvements in mortality and clinical outcomes [1][2][5] Study Results - Paridiprubart met both primary and secondary endpoints with statistical significance, demonstrating a 39% risk of death at 28 days compared to 52% for placebo, indicating a 13% absolute improvement in survival [3][10] - At 60 days, the risk of death was 46% for paridiprubart versus 59% for placebo, also reflecting a 13% absolute improvement and a 22% relative risk reduction [3][10] - Patients receiving paridiprubart showed a 41% higher relative rate of clinical improvement, meaning they no longer required invasive mechanical ventilation or organ support by Day 28 [3][8] Safety Profile - The safety population included over 275 subjects, and paridiprubart was generally well-tolerated, consistent with its previously observed safety profile [4][5] Patient Demographics - The study enrolled patients aged 18 and older from 38 hospitals across the USA, Canada, and Colombia, with similar demographics in both treatment and placebo groups [7][8] Mechanism of Action - Paridiprubart is a host-directed therapeutic designed to modulate the immune response against various health threats, inhibiting toll-like receptor 4 (TLR4) [14] Company Overview - Edesa Biotech focuses on developing innovative treatments for inflammatory and immune-related diseases, with a clinical pipeline that includes paridiprubart for ARDS and other therapeutic areas [16][17]

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)