```markdown [FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q) [Registrant Information](index=1&type=section&id=Registrant%20Information) ESSA Pharma Inc. filed its Quarterly Report on Form 10-Q for the period ended June 30, 2025. The company is incorporated in British Columbia, Canada, and its common shares are traded on the Nasdaq Capital Market under the symbol EPIX. As of August 13, 2025, there were **47,308,394 common shares outstanding** - ESSA Pharma Inc. filed its Quarterly Report on Form 10-Q for the period ended June 30, 2025[2](index=2&type=chunk) - The company's common shares are traded on the Nasdaq Capital Market under the symbol EPIX[3](index=3&type=chunk) Outstanding Common Shares as of August 13, 2025 | Metric | Value | | :----- | :---- | | Outstanding Common Shares | 47,308,394 | [Filer Status](index=1&type=section&id=Filer%20Status) ESSA Pharma Inc. is classified as a non-accelerated filer and a smaller reporting company. The company is not an emerging growth company and has confirmed compliance with SEC filing requirements and electronic submission of Interactive Data Files - The registrant is a non-accelerated filer and a smaller reporting company[4](index=4&type=chunk) - The registrant has filed all required reports during the preceding 12 months and has been subject to filing requirements for the past 90 days[3](index=3&type=chunk) - The registrant has electronically submitted every Interactive Data File required during the preceding 12 months[3](index=3&type=chunk) [Table of Contents](index=2&type=section&id=Table%20of%20Contents) [Cautionary Note Regarding Forward-Looking Statements](index=3&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) [Forward-Looking Statements Disclosure](index=3&type=section&id=Forward-Looking%20Statements%20Disclosure) This section highlights that the report contains forward-looking statements regarding the company's plans, objectives, future events, and financial performance, particularly concerning the proposed acquisition by XenoTherapeutics, Inc. (the 'Transaction'), shareholder approvals, clinical trial discontinuation, and associated costs. These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially - The report includes forward-looking statements related to plans, objectives, goals, strategies, future events, revenue, performance, capital expenditures, and financing needs[7](index=7&type=chunk) - Key forward-looking statements include those related to the Transaction, shareholder approvals for liquidation, initial cash distribution, treatment of options/warrants, costs of discontinuing clinical trials, and anticipated cost savings[7](index=7&type=chunk) - Such statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different from those expressed or implied[7](index=7&type=chunk) [Risk Factor Summary](index=5&type=section&id=RISK%20FACTOR%20SUMMARY) This section provides a summary of material factors that make an investment in ESSA Pharma's Common Shares speculative or risky. These risks include the availability of sufficient financing, ability to protect intellectual property, success of strategic transactions (including the current acquisition), risks related to discontinuing masofaniten development, ongoing regulatory obligations, potential litigation, and market volatility - Investment in Common Shares is speculative due to risks such as financing availability, intellectual property protection, success of strategic transactions, and market competition[11](index=11&type=chunk)[12](index=12&type=chunk) - Specific risks include the decision to discontinue masofaniten development, potential undesirable side effects of product candidates, increased costs from prolonged clinical trials, and uncertainty in raising additional funding[13](index=13&type=chunk)[14](index=14&type=chunk) - Other risks cover intellectual property claims, computer system failures, business disruptions, competition, foreign currency fluctuations, and the costs of operating as a public company[14](index=14&type=chunk) [PART I. FINANCIAL INFORMATION](index=10&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements and Supplementary Data](index=10&type=section&id=Item%201.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the unaudited condensed consolidated interim financial statements for ESSA Pharma Inc., including balance sheets, statements of operations and comprehensive loss, statements of cash flows, and statements of changes in shareholders' equity, along with accompanying notes. The financial statements are expressed in United States dollars and prepared in accordance with U.S. GAAP [Condensed Consolidated Interim Balance Sheets](index=11&type=section&id=Condensed%20Consolidated%20Interim%20Balance%20Sheets) The balance sheet shows a decrease in total assets and liabilities from September 30, 2024, to June 30, 2025. Cash and cash equivalents decreased by approximately **$17.76 million**, while short-term investments saw a slight increase. Total liabilities significantly decreased, primarily due to reductions in accounts payable and accrued liabilities, and the termination of operating lease liabilities Condensed Consolidated Interim Balance Sheets (Selected Items) | Metric | June 30, 2025 (USD) | September 30, 2024 (USD) | Change (USD) | Change (%) | | :-------------------------------- | :------------------ | :----------------------- | :----------- | :--------- | | Cash and cash equivalents | 85,952,587 | 103,709,537 | (17,756,950) | -17.12% | | Short-term investments | 23,667,161 | 23,050,582 | 616,579 | 2.68% | | Total assets | 110,502,100 | 128,112,003 | (17,609,903) | -13.75% | | Accounts payable and accrued liabilities | 1,599,955 | 3,176,973 | (1,577,018) | -49.64% | | Total liabilities | 1,599,955 | 3,506,233 | (1,906,278) | -54.37% | | Total shareholders' equity | 108,902,145 | 124,605,770 | (15,703,625) | -12.60% | [Condensed Consolidated Interim Statements of Operations and Comprehensive Loss](index=13&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For the nine months ended June 30, 2025, the company reported a net loss of **$(18.91) million**, a decrease from **$(22.19) million** in the prior year. This improvement was driven by a significant reduction in research and development expenses, despite an increase in general and administration expenses. Basic and diluted loss per common share also improved from **$(0.50)** to **$(0.43)** Condensed Consolidated Interim Statements of Operations and Comprehensive Loss (Selected Items) | Metric | 9 Months Ended June 30, 2025 (USD) | 9 Months Ended June 30, 2024 (USD) | Change (USD) | Change (%) | | :------------------------------------ | :--------------------------------- | :--------------------------------- | :----------- | :--------- | | Research and development | 8,427,148 | 17,018,874 | (8,591,726) | -50.49% | | General and administration | 13,536,542 | 9,707,565 | 3,828,977 | 39.44% | | Total operating expenses | (21,963,690) | (26,726,439) | 4,762,749 | -17.82% | | Investment and other income | 3,187,397 | 4,536,761 | (1,349,364) | -29.74% | | Net loss for the period | (18,909,992) | (22,187,604) | 3,277,612 | -14.77% | | Loss and comprehensive loss for the period | (18,943,732) | (22,167,573) | 3,223,841 | -14.54% | | Basic and diluted loss per common share | (0.43) | (0.50) | 0.07 | -14.00% | [Condensed Consolidated Interim Statements of Cash Flows](index=14&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Cash%20Flows) For the nine months ended June 30, 2025, net cash used in operating activities decreased to **$(17.52) million** from **$(19.35) million** in the prior year. Cash flows from investing activities shifted from a significant inflow of **$70.76 million** in 2024 to an outflow of **$(0.24) million** in 2025, primarily due to changes in short-term investment purchases and proceeds. There were no cash flows from financing activities in 2025, compared to an inflow of **$0.87 million** in 2024 Condensed Consolidated Interim Statements of Cash Flows (Selected Items) | Metric | 9 Months Ended June 30, 2025 (USD) | 9 Months Ended June 30, 2024 (USD) | Change (USD) | Change (%) | | :------------------------------------ | :--------------------------------- | :--------------------------------- | :----------- | :--------- | | Net cash used in operating activities | (17,518,819) | (19,350,065) | 1,831,246 | -9.46% | | Net cash provided by (used in) investing activities | (238,131) | 70,764,832 | (71,002,963) | -100.34% | | Net cash provided by financing activities | — | 865,839 | (865,839) | -100.00% | | Change in cash and cash equivalents for the period | (17,756,950) | 52,283,228 | (70,040,178) | -133.97% | | Cash and cash equivalents, end of period | 85,952,587 | 85,985,140 | (32,553) | -0.04% | [Condensed Consolidated Interim Statement of Changes in Shareholders' Equity](index=15&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Changes%20in%20Shareholders%27%20Equity) Shareholders' equity decreased from **$124.61 million** at September 30, 2024, to **$108.90 million** at June 30, 2025. This decline is primarily due to the accumulated deficit from net losses, partially offset by increases in additional paid-in capital from share-based payments. No new common shares were issued during the nine months ended June 30, 2025 Changes in Shareholders' Equity (Selected Items) | Metric | September 30, 2024 (USD) | June 30, 2025 (USD) | Change (USD) | Change (%) | | :-------------------------- | :----------------------- | :------------------ | :----------- | :--------- | | Common shares | 279,862,420 | 279,862,420 | 0 | 0.00% | | Additional paid-in capital | 54,810,797 | 58,050,904 | 3,240,107 | 5.91% | | Accumulated deficit | (208,004,180) | (226,914,172) | (18,909,992) | 9.09% | | Total Shareholders' Equity | 124,605,770 | 108,902,145 | (15,703,625) | -12.60% | - Share-based payments contributed **$3,240,107** to additional paid-in capital for the nine months ended June 30, 2025[24](index=24&type=chunk) [Notes to the Condensed Consolidated Interim Financial Statements](index=16&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Statements) These notes provide detailed information on the company's nature of operations, basis of presentation, recent accounting pronouncements, and specific financial instrument details. Key updates include the termination of masofaniten clinical trials, the definitive agreement for acquisition by XenoTherapeutics, Inc., and a class action lawsuit [1. Nature of Operations](index=16&type=section&id=1.%20NATURE%20OF%20OPERATIONS) ESSA Pharma Inc., incorporated in British Columbia, was focused on developing small molecule drugs for prostate cancer. However, the company has terminated its clinical trial of masofaniten (EPI-7386) and entered into a definitive agreement for acquisition by XenoTherapeutics, Inc. subsequent to June 30, 2025 - The Company was focused on developing small molecule drugs for the treatment of prostate cancer[26](index=26&type=chunk) - As of June 30, 2025, no products are in commercial production or use[26](index=26&type=chunk) - Subsequent to June 30, 2025, the Company announced the termination of its clinical trial of masofaniten (EPI-7386) and entered into a definitive agreement to be acquired by XenoTherapeutics, Inc[27](index=27&type=chunk) [2. Basis of Presentation](index=16&type=section&id=2.%20BASIS%20OF%20PRESENTATION) The unaudited condensed consolidated interim financial statements are prepared in accordance with U.S. GAAP and SEC rules for interim financial information. They include all necessary recurring adjustments and reflect the accounts of the Company and its wholly-owned subsidiaries, with inter-company transactions eliminated - Financial statements are prepared in accordance with U.S. GAAP and SEC rules for interim financial information[28](index=28&type=chunk) - All adjustments are normal recurring adjustments and are necessary for fair presentation[29](index=29&type=chunk) - The statements include accounts of the Company and its wholly owned subsidiaries, with inter-company transactions eliminated[30](index=30&type=chunk) [3. Recent Accounting Pronouncements](index=18&type=section&id=3.%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) The company is evaluating the impact of recently issued FASB ASUs, including ASU No. 2023-09 (Income Taxes) and new guidance on expense category disclosures, which are not yet adopted. Other ASUs issued but not yet adopted are not expected to have a material impact - The Company is evaluating ASU No. 2023-09 (Income Taxes) for annual fiscal periods beginning after December 31, 2024[34](index=34&type=chunk) - New FASB guidance on expense category disclosures, effective for fiscal years beginning after December 15, 2026, is also being evaluated[35](index=35&type=chunk) [4. Short-Term Investments](index=19&type=section&id=4.%20SHORT-TERM%20INVESTMENTS) Short-term investments, primarily U.S. treasury securities, are classified as available-for-sale and carried at fair value. As of June 30, 2025, these investments had an aggregate fair market value of **$23.7 million**, with a gross unrealized loss of **$22,456** - Short-term investments consist of U.S. treasury securities, classified as available-for-sale and carried at fair value[38](index=38&type=chunk) Short-term Investments as of June 30, 2025 | Metric | Value (USD) | | :-------------------- | :---------- | | Amortized Cost | 23,601,440 | | Unrealized Losses | (22,456) | | Accrued Investment Income | 88,177 | | Estimated Fair Value | 23,667,161 | - As of June 30, 2025, short-term investments had an aggregate fair market value of **$23.7 million**, in an aggregate gross unrealized loss position of **$22,456**[39](index=39&type=chunk) [5. Prepaids](index=19&type=section&id=5.%20PREPAIDS) Prepaid expenses decreased significantly from **$636,463** at September 30, 2024, to **$355,204** at June 30, 2025. This reduction is primarily due to a decrease in prepaid CMC and clinical expenses and other deposits, while prepaid insurance increased Prepaids (Selected Items) | Metric | June 30, 2025 (USD) | September 30, 2024 (USD) | Change (USD) | Change (%) | | :------------------------------------ | :------------------ | :----------------------- | :----------- | :--------- | | Prepaid insurance | 337,399 | 75,841 | 261,558 | 344.88% | | Prepaid CMC and clinical expenses and deposits | — | 226,005 | (226,005) | -100.00% | | Other deposits and prepaid expenses | 17,805 | 334,617 | (316,812) | -94.68% | | Balance, end of period | 355,204 | 636,463 | (281,259) | -44.19% | [6. Accounts Payable and Accrued Liabilities](index=19&type=section&id=6.%20ACCOUNTS%20PAYABLE%20AND%20ACCRUED%20LIABILITIES) Accounts payable and accrued liabilities decreased by nearly 50% from **$3.18 million** at September 30, 2024, to **$1.60 million** at June 30, 2025. This reduction was driven by a significant decrease in accounts payable and employee compensation accruals, partially offset by an increase in accrued expenses Accounts Payable and Accrued Liabilities (Selected Items) | Metric | June 30, 2025 (USD) | September 30, 2024 (USD) | Change (USD) | Change (%) | | :-------------------------------- | :------------------ | :----------------------- | :----------- | :--------- | | Accounts payable | 971,372 | 2,403,519 | (1,432,147) | -59.59% | | Accrued expenses | 454,231 | 171,690 | 282,541 | 164.57% | | Employee compensation and vacation accruals | 174,352 | 601,764 | (427,412) | -71.03% | | Balance, end of period | 1,599,955 | 3,176,973 | (1,577,018) | -49.64% | [7. Operating Lease](index=20&type=section&id=7.%20OPERATING%20LEASE) The company terminated its lease agreement during the period ended June 30, 2025, resulting in both the operating lease right-of-use asset and operating lease liability being reduced to zero. A loss on termination of lease of **$145,220** was recognized - The Company terminated its lease agreement in the period ended June 30, 2025[42](index=42&type=chunk) Operating Lease Balances | Metric | September 30, 2024 (USD) | June 30, 2025 (USD) | | :-------------------------- | :----------------------- | :------------------ | | Operating lease right-of-use assets | 295,471 | — | | Operating lease liability | 329,260 | — | - A loss on termination of lease of **$145,220** was recorded for the nine months ended June 30, 2025[22](index=22&type=chunk) [8. Shareholders' Equity](index=20&type=section&id=8.%20SHAREHOLDERS%27%20EQUITY) The company has unlimited authorized common and preferred shares. It operates an Omnibus Incentive Plan and an Employee Share Purchase Plan (ESPP). During the nine months ended June 30, 2025, no shares were issued under the ESPP, and all participants withdrew. Stock options outstanding decreased due to expirations/forfeitures, and share-based compensation expense decreased significantly - The Company has an Omnibus Incentive Plan and an Employee Share Purchase Plan (ESPP)[45](index=45&type=chunk)[49](index=49&type=chunk) - During the nine months ended June 30, 2025, no shares were issued upon the exercise of Purchase Rights under the ESPP, and all participants withdrew[51](index=51&type=chunk) Stock Option Summary | Metric | September 30, 2024 | June 30, 2025 | | :-------------------------- | :----------------- | :------------ | | Number of Options Outstanding | 9,212,274 | 8,697,878 | | Weighted Average Exercise Price | $5.48 | $5.33 | Share-based Compensation Expense (9 Months Ended June 30) | Expense Category | 2025 (USD) | 2024 (USD) | Change (USD) | Change (%) | | :-------------------------- | :--------- | :--------- | :----------- | :--------- | | Research and development | 146,072 | 1,815,807 | (1,669,735) | -91.96% | | General and administration | 3,099,755 | 2,682,026 | 417,729 | 15.57% | | Total Share-based Payments | 3,245,827 | 4,497,833 | (1,252,006) | -27.84% | - Subsequent to June 30, 2025, **2,920,000 warrants** were exercised on a cashless basis, resulting in the issuance of **2,919,844 common shares**[59](index=59&type=chunk) [9. Related Party Transactions](index=24&type=section&id=9.%20RELATED%20PARTY%20TRANSACTIONS) Amounts due to related parties for key management personnel compensation and expense reimbursements decreased from **$98,360** at September 30, 2024, to **$54,049** at June 30, 2025. These amounts are non-interest bearing with no fixed repayment terms Amounts Due to Related Parties | Metric | June 30, 2025 (USD) | September 30, 2024 (USD) | | :-------------------------- | :------------------ | :----------------------- | | Due to related parties | 54,049 | 98,360 | - Amounts due to related parties are non-interest bearing, with no fixed terms of repayment[60](index=60&type=chunk) [10. Segmented Information](index=24&type=section&id=10.%20SEGMENTED%20INFORMATION) The company operates in a single industry segment: the development of small molecule drugs for prostate cancer. Its right-of-use assets were located in the USA - The Company operates in one industry: the development of small molecule drugs for prostate cancer[61](index=61&type=chunk) - The Company's right of use assets were located in the USA[61](index=61&type=chunk) [11. Financial Instruments and Risk](index=24&type=section&id=11.%20FINANCIAL%20INSTRUMENTS%20AND%20RISK) The company's financial instruments include cash and cash equivalents, short-term investments, receivables, and accounts payable. Fair values of most instruments approximate carrying values due to short maturity. The company manages credit risk by holding cash with major financial institutions and maintaining an investment policy for short-term investments. Liquidity risk is considered minimal due to sufficient working capital, and market risks (interest rate and foreign currency) are not currently significant - Financial instruments include cash, short-term investments, receivables, and accounts payable[62](index=62&type=chunk) - Fair values of most financial instruments approximate their carrying values[62](index=62&type=chunk) - Working capital of **$108,902,145** as of June 30, 2025, indicates minimal liquidity risk[66](index=66&type=chunk) - Interest rate and foreign currency fluctuations are not currently significant to the Company's risk assessment[68](index=68&type=chunk)[69](index=69&type=chunk) [12. Contingent Liability](index=26&type=section&id=12.%20CONTINGENT%20LIABILITY) A putative class action lawsuit was filed against the company and its officers on January 24, 2025, alleging violations of the Exchange Act due to material misstatements/omissions regarding masofaniten clinical trials. An amended complaint was filed on August 11, 2025, expanding the class period and naming an additional defendant. The company believes it has valid defenses and intends to vigorously defend the lawsuit, with the outcome and potential liability not estimable or probable at this early stage - A class action lawsuit was filed on January 24, 2025, alleging violations of Sections 10(b) and 20(a) of the Exchange Act[70](index=70&type=chunk) - The lawsuit alleges material misstatements/omissions regarding masofaniten (EPI-7386) clinical trials[70](index=70&type=chunk) - The company believes it has valid defenses and intends to defend the lawsuit vigorously; the outcome and potential liability are not estimable or probable[70](index=70&type=chunk) [13. Subsequent Event](index=26&type=section&id=13.%20SUBSEQUENT%20EVENT) Subsequent to June 30, 2025, ESSA Pharma Inc. entered into a definitive Business Combination Agreement with XenoTherapeutics, Inc. for Xeno to acquire all of ESSA's outstanding common shares. ESSA shareholders are estimated to receive approximately **US$1.91 per common share** in cash, plus one non-transferable contingent value right (CVR) for up to **US$0.06 per CVR**. The transaction is expected to close in the second half of 2025, subject to securityholder and court approvals - Subsequent to June 30, 2025, ESSA Pharma Inc. entered into a definitive Business Combination Agreement with XenoTherapeutics, Inc. for acquisition[71](index=71&type=chunk) - ESSA shareholders are estimated to receive approximately **US$1.91 per common share** in cash, plus one non-transferable contingent value right (CVR) for up to **US$2,950,000** (**US$0.06 per CVR**)[72](index=72&type=chunk)[73](index=73&type=chunk) - The transaction requires securityholder and court approvals and is expected to close in the second half of 2025[74](index=74&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%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, emphasizing the significant strategic shift from prostate cancer drug development to an acquisition by XenoTherapeutics, Inc. It details the termination of clinical trials for masofaniten (EPI-7386) due to lack of clear efficacy benefit, the ongoing strategic review, and the financial implications of these decisions. The discussion also covers historical drug development, competition, intellectual property, regulatory environment, and quarterly financial performance [Overview](index=28&type=section&id=Overview) ESSA Pharma Inc. has entered a definitive agreement for acquisition by XenoTherapeutics, Inc., expected to close in H2 2025, subject to securityholder approval. If the transaction fails, the company plans to seek shareholder approval for voluntary liquidation. ESSA previously focused on prostate cancer therapies but terminated clinical trials for masofaniten (EPI-7386) in October 2024 due to insufficient efficacy - ESSA entered a definitive agreement for acquisition by XenoTherapeutics, Inc. on July 13, 2025, expected to close in H2 2025[78](index=78&type=chunk) - If the transaction is not completed, ESSA expects to seek shareholder approval for voluntary liquidation and dissolution[79](index=79&type=chunk) - In October 2024, ESSA terminated clinical trials for masofaniten (EPI-7386) due to a lack of clear efficacy benefit compared to standard of care[82](index=82&type=chunk)[83](index=83&type=chunk) [Background and History](index=28&type=section&id=Background%20and%20History) ESSA Pharma Inc. previously focused on developing novel small molecule inhibitors targeting the N-terminal domain (NTD) of the androgen receptor (AR) for prostate cancer treatment. Their lead candidate, masofaniten (EPI-7386), was designed to bypass resistance mechanisms to current antiandrogens. Despite promising preclinical data and initial Phase 1 results with a first-generation compound (EPI-506), the Phase 2 trial for masofaniten was terminated in October 2024 due to a futility analysis showing low likelihood of meeting its primary endpoint - ESSA focused on developing small molecule inhibitors of the N-terminal domain (NTD) of the androgen receptor (AR) for prostate cancer[81](index=81&type=chunk) - The company believed its compounds, including masofaniten (EPI-7386), could bypass resistance mechanisms to current antiandrogens by blocking the AR-NTD[85](index=85&type=chunk)[90](index=90&type=chunk) - The Phase 2 clinical trial for masofaniten (EPI-7386) was terminated in October 2024 after an interim review showed no clear efficacy benefit and a low likelihood of meeting the primary endpoint[82](index=82&type=chunk)[83](index=83&type=chunk) [Our Strategy](index=36&type=section&id=Our%20Strategy) Following the termination of masofaniten (EPI-7386) clinical trials in October 2024 and the withdrawal of IND/CTAs, ESSA's strategy has shifted to a definitive agreement for acquisition by XenoTherapeutics, Inc. The company is undergoing a comprehensive review of strategic options to maximize shareholder value, acknowledging the potential for significant costs and complexity if the acquisition does not close - In October 2024, ESSA terminated clinical trials for masofaniten (EPI-7386) and decided to withdraw its IND and CTAs[105](index=105&type=chunk) - On July 13, 2025, ESSA entered a definitive agreement for acquisition by XenoTherapeutics, Inc., expected to close in H2 2025[106](index=106&type=chunk) - The company is undergoing a comprehensive review process to maximize shareholder value, with potential for significant costs and complexity if the transaction fails[107](index=107&type=chunk)[113](index=113&type=chunk) [The identification and characteristics of masofaniten (EPI-7386)](index=36&type=section&id=The%20identification%20and%20characteristics%20of%20masofaniten%20(EPI-7386)) Masofaniten (EPI-7386) was selected as ESSA's lead clinical candidate due to its increased potency, reduced metabolic susceptibility, and superior pharmaceutical properties compared to first-generation compounds. It demonstrated activity in AR-dependent prostate cancer models and a favorable tolerability profile in preclinical studies. An IND was allowed in April 2020, and clinical testing began in July 2020, but all trials were terminated in October 2024 - Masofaniten (EPI-7386) was nominated as the lead clinical candidate for mCRPC treatment due to higher potency, metabolic stability, and favorable tolerability in preclinical studies[110](index=110&type=chunk) - An IND was submitted to the FDA on March 30, 2020, and allowed on April 30, 2020, with clinical testing commencing in July 2020[111](index=111&type=chunk) - All clinical trials evaluating masofaniten (EPI-7386) were terminated in October 2024, and the IND/CTAs are being withdrawn[112](index=112&type=chunk)[113](index=113&type=chunk) [Advancing masofaniten (EPI-7386) through clinical development](index=38&type=section&id=Advancing%20masofaniten%20(EPI-7386)%20through%20clinical%20development) Prior to October 2024, ESSA was advancing masofaniten (EPI-7386) through two main clinical trials: EPI-7386-CS-001 (monotherapy and combination with abiraterone/apalutamide) and EPI-7386-CS-010 (combination with enzalutamide). These trials aimed to assess safety, pharmacokinetics, and anti-tumor activity in various prostate cancer patient populations. All clinical trials were terminated in October 2024 due to the strategic decision to discontinue development - ESSA was advancing masofaniten (EPI-7386) through two clinical trials: EPI-7386-CS-001 (monotherapy and combination) and EPI-7386-CS-010 (combination with enzalutamide)[114](index=114&type=chunk) - The Phase 1a dose escalation of EPI-7386-CS-001 completed enrollment, and two dose levels (600 mg QD and 600 mg BID) were advanced to Phase 1b dose expansion[122](index=122&type=chunk)[123](index=123&type=chunk) - The Phase 1/2 study of masofaniten in combination with enzalutamide (EPI-7386-CS-010) was conducted in collaboration with Astellas, with Phase 1 completed and Phase 2 enrolling patients before termination[128](index=128&type=chunk)[129](index=129&type=chunk) - All clinical trials, including collaborations with Janssen and planned trials with Bayer, were terminated in October 2024[130](index=130&type=chunk)[134](index=134&type=chunk) [Preclinical Development of Anitens and other indications](index=43&type=section&id=Preclinical%20Development%20of%20Anitens%20and%20other%20indications) The company has decided to terminate its preclinical development programs, including work on other Aniten molecules and AR ANITAC NTD degraders, as part of its strategic options review - The Company has decided to terminate its preclinical development programs and related work[135](index=135&type=chunk) - Prior to termination, preclinical work included studies on other Aniten molecules and AR ANITAC NTD degraders[135](index=135&type=chunk) [Recent Developments](index=43&type=section&id=Recent%20Developments) Recent developments include the definitive Business Combination Agreement with XenoTherapeutics, Inc. for acquisition, announced July 13, 2025. This follows the termination of all masofaniten (EPI-7386) clinical studies in October 2024 due to a futility analysis. The company is now focused on maximizing shareholder value through this transaction or other strategic alternatives, while incurring significant associated costs [Business Combination Agreement](index=43&type=section&id=Business%20Combination%20Agreement) ESSA Pharma Inc. entered a definitive agreement on July 13, 2025, to be acquired by XenoTherapeutics, Inc. The transaction, expected to close in H2 2025, is subject to securityholder and court approvals. If the transaction fails, ESSA may pursue liquidation or other strategic options, incurring significant costs - ESSA entered a definitive agreement on July 13, 2025, for acquisition by XenoTherapeutics, Inc[136](index=136&type=chunk) - The transaction is expected to close in the second half of 2025, contingent on securityholder and court approvals[136](index=136&type=chunk) - Failure to complete the transaction could lead to significant costs and the pursuit of other strategic options, including liquidation[137](index=137&type=chunk)[139](index=139&type=chunk) [Termination of Clinical Studies and Evaluation of Strategic Options](index=45&type=section&id=Termination%20of%20Clinical%20Studies%20and%20Evaluation%20of%20Strategic%20Options) In October 2024, ESSA terminated all clinical trials for masofaniten (EPI-7386), including the Phase 2 combination trial with enzalutamide, due to a futility analysis showing no clear efficacy benefit. This decision led to the withdrawal of IND/CTAs and the initiation of a comprehensive review of strategic options to maximize shareholder value, which may incur substantial costs - ESSA terminated its Phase 2 clinical trial for masofaniten (EPI-7386) in October 2024 due to a futility analysis[140](index=140&type=chunk) - The interim review showed a higher-than-expected PSA90 response in enzalutamide monotherapy and no clear efficacy benefit for the combination[140](index=140&type=chunk) - All other masofaniten clinical studies were terminated, IND/CTAs withdrawn, and a strategic options review initiated to maximize shareholder value[141](index=141&type=chunk) [2024 Clinical Trial Updates](index=45&type=section&id=2024) In 2024, ESSA presented updated dose escalation data from its Phase 1/2 study of masofaniten combined with enzalutamide. The combination was well-tolerated, with no maximum tolerated dose reached, and rapid, deep, and durable PSA reductions were observed in evaluable patients. The recommended Phase 2 combination doses were identified as masofaniten 600 mg BID with enzalutamide 160 mg QD, and the Phase 2 dose expansion portion was underway before termination - Updated dose escalation data from the Phase 1/2 study of masofaniten + enzalutamide showed the combination was well-tolerated[144](index=144&type=chunk)[149](index=149&type=chunk) - Rapid, deep, and durable PSA reductions were observed in **88%** of evaluable patients (**14 of 16**) achieving PSA50 and PSA90[145](index=145&type=chunk)[150](index=150&type=chunk) - The recommended Phase 2 combination doses were masofaniten **600 mg BID** with enzalutamide **160 mg QD**[144](index=144&type=chunk)[149](index=149&type=chunk) [2023 Clinical Trial Updates](index=47&type=section&id=2023) In 2023, ESSA presented updates on its Phase 1/2 study of masofaniten (EPI-7386) in combination with enzalutamide, noting no effect on enzalutamide exposure but a reduction in masofaniten exposure mitigated by twice-daily dosing. The combination was well-tolerated, and rapid, deep, and durable PSA reductions were observed in evaluable patients. The randomized Phase 2 dose expansion portion of the study was initiated but later discontinued - Masofaniten (EPI-7386) had no effect on enzalutamide exposure, but enzalutamide reduced masofaniten exposure, mitigated by BID dosing[153](index=153&type=chunk) - The combination was well-tolerated, with most frequent adverse events being Grade 1 and 2[154](index=154&type=chunk)[158](index=158&type=chunk) - Rapid, deep, and durable PSA reductions were observed in **88%** of evaluable patients (**14 of 16**) achieving PSA50, and **81%** (**13 of 16**) achieving PSA90[155](index=155&type=chunk)[159](index=159&type=chunk) - The randomized Phase 2 dose expansion portion of the study was initiated in September 2023 but later discontinued[155](index=155&type=chunk)[161](index=161&type=chunk) - On July 13, 2025, ESSA entered into a definitive agreement for acquisition by XenoTherapeutics, Inc[136](index=136&type=chunk) - On October 31, 2024, ESSA terminated its Phase 2 clinical trial for masofaniten (EPI-7386) due to a futility analysis showing no clear efficacy benefit[140](index=140&type=chunk) - All remaining company-sponsored and investigator-sponsored clinical studies for masofaniten (EPI-7386) were also terminated, and IND/CTAs withdrawn[141](index=141&type=chunk) - The company initiated a comprehensive review of strategic options to maximize shareholder value, incurring significant costs[141](index=141&type=chunk)[142](index=142&type=chunk) [Future Clinical Development Program](index=51&type=section&id=Future%20Clinical%20Development%20Program) Prior to October 2024, ESSA planned further clinical development involving randomized trials in earlier prostate cancer patient populations. However, following the termination of all masofaniten (EPI-7386) clinical studies and withdrawal of IND/CTAs, the company is now focused on a comprehensive review of strategic options to maximize shareholder value - Prior to October 2024, ESSA planned further clinical development with randomized trials in earlier prostate cancer patient populations[168](index=168&type=chunk) - All company-sponsored and investigator-sponsored clinical studies for masofaniten (EPI-7386) have been terminated, and IND/CTAs withdrawn[169](index=169&type=chunk) - ESSA has initiated a comprehensive review process to review its strategic options to maximize shareholder value[169](index=169&type=chunk) [Competition](index=51&type=section&id=Competition) The prostate cancer market is highly competitive, with many companies possessing greater financial resources and expertise. Numerous approved therapies exist, including those from Astellas, Pfizer, Johnson & Johnson, Sanofi, Bayer, Merck, AstraZeneca, Clovis Oncology, and Novartis. ESSA previously believed its NTD inhibition approach offered a unique, differentiated mechanism to bypass resistance to current AR LBD-targeted therapies, but its product candidate development has been discontinued - The prostate cancer market is highly competitive, with many competitors having significantly greater financial resources and expertise[170](index=170&type=chunk) Currently Approved Prostate Cancer Therapies | Name | Brand Name | Company Name(s) | Stage | | :-------------------- | :--------- | :---------------------- | :------ | | Enzalutamide | Xtandi | Astellas and Pfizer | Marketed | | Abiraterone acetate | Zytiga | Johnson & Johnson | Marketed | | Abiraterone acetate | Yonsa | Sun Pharma | Marketed | | Sipuleucel-T | Provenge | Valeant | Marketed | | Docetaxel | n/a | Sanofi and various | Marketed | | Cabazitaxel | Jevtana | Sanofi | Marketed | | Radium-233 | Xofigo | Bayer | Marketed | | Apalutamide (ARN-509) | Erleada | Johnson & Johnson | Marketed | | Darolutamide | Nubeqa | Bayer | Marketed | | Pembrolizumab | Keytruda | Merck | Marketed | | Olaparib | Lynparza | AstraZeneca | Marketed | | Rucaparib | Rubraca | Clovis Oncology | Marketed | | Vipivotide tetraxetan | Pluvicto | Novartis | Marketed | | Niraparib/abiraterone acetate | Akeega | Johnson & Johnson | Marketed | | Talazaparib (w/enzalutamide) | Talzenna | Pfizer | Marketed | - ESSA believed its NTD inhibition approach was unique and had the potential to bypass AR-dependent resistance pathways[173](index=173&type=chunk)[175](index=175&type=chunk) [Collaborative Agreements](index=53&type=section&id=Collaborative%20Agreements) Following the decision in October 2024 to discontinue clinical studies and masofaniten (EPI-7386) development, ESSA is no longer engaged in clinical development collaborations. Future collaborative agreements are dependent on the outcome of the ongoing strategic evaluation - In October 2024, ESSA decided to discontinue its clinical studies, including those related to collaborative agreements[176](index=176&type=chunk) - ESSA is not currently engaged in any collaborations for clinical development[176](index=176&type=chunk) - Future collaborative agreements are dependent on the results of ESSA's ongoing strategic evaluation[176](index=176&type=chunk) [Patents and Proprietary Rights](index=53&type=section&id=Patents%20and%20Proprietary%20Rights) ESSA previously in-licensed intellectual property (Licensed IP) related to AR-modulating compounds from UBC and BCCA. However, ESSA provided notice of termination for this License Agreement effective December 12, 2024. As of December 2024, ESSA owns rights to a patent portfolio including **83 issued patents**, covering its Aniten structural classes and masofaniten (EPI-7386), with expected expiration dates between 2036 and 2044 - ESSA previously in-licensed intellectual property (Licensed IP) from the British Columbia Cancer Agency and the University of British Columbia[177](index=177&type=chunk)[178](index=178&type=chunk) - ESSA provided notice of termination of the License Agreement to the Licensors, effective December 12, 2024[181](index=181&type=chunk) - As of December 2024, ESSA owns rights to a patent portfolio including **83 issued patents**, covering Aniten structural classes and masofaniten (EPI-7386), with expected expiration dates between 2036 and 2044[184](index=184&type=chunk)[185](index=185&type=chunk) [Regulatory Environment](index=55&type=section&id=Regulatory%20Environment) Given the decision to close INDs and CTAs for masofaniten, the current focus is on compliant clinical trial shutdown. Historically, drug development involves extensive preclinical and clinical testing (Phases 1, 2, 3) under strict regulatory requirements (GLP, GCP, cGMP) by authorities like the FDA and TPD. The process culminates in an NDA/NDS submission, followed by regulatory review, facility inspections, and post-approval requirements, including potential REMS and ongoing compliance - Current focus is on compliant clinical trial shutdown following the decision to close INDs and CTAs for masofaniten[187](index=187&type=chunk) - Drug development is subject to regulation for safety, efficacy, quality, and ethics by governmental authorities like the FDA and TPD[187](index=187&type=chunk) - The process involves preclinical studies, human testing (Phase 1, 2, 3 clinical trials), New Drug Application (NDA) submission, regulatory review, and post-approval requirements[189](index=189&type=chunk)[190](index=190&type=chunk)[191](index=191&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk)[197](index=197&type=chunk)[203](index=203&type=chunk) [Selected Quarterly Financial Information](index=63&type=section&id=Selected%20Quarterly%20Financial%20Information) ESSA has consistently incurred net losses since inception and expects this trend to continue as it winds down programs and evaluates strategic options. Comprehensive losses for the nine months ended June 30, 2025, were **$(4.01) million**, an improvement from **$(7.23) million** in the prior year. Cash and cash equivalents, short-term investments, total assets, and working capital have generally decreased over the last eight quarters - ESSA has never been profitable and has incurred net losses since inception, expecting losses to continue[211](index=211&type=chunk) Selected Quarterly Financial Data (USD) | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 | | :-------------------------- | :------------ | :------------- | :---------------- | :----------------- | :------------ | :------------- | :---------------- | :----------------- | | Research and development expense | (531,441) | 3,484,442 | 5,474,147 | 4,187,950 | 5,464,123 | 6,177,987 | 5,376,764 | 5,226,231 | | General and administration | 5,428,588 | 3,897,235 | 3,506,628 | 4,210,719 | 3,174,195 | 4,315,502 | 2,217,868 | 1,922,382 | | Comprehensive loss | (4,010,426) | (6,392,609) | (8,540,697) | (6,318,117) | (7,233,091) | (8,990,284) | (5,944,198) | (5,479,603) | | Basic and diluted loss per share | (0.09) | (0.14) | (0.19) | (0.14) | (0.16) | (0.20) | (0.14) | (0.12) | | Cash and cash equivalents | 85,952,587 | 86,308,345 | 93,310,889 | 103,709,537 | 85,985,140 | 91,683,074 | 35,344,517 | 33,701,912 | | Short-term investments | 23,667,161 | 27,564,067 | 27,242,430 | 23,050,582 | 44,709,312 | 44,205,592 | 106,775,273 | 114,374,489 | | Total assets | 110,502,100 | 115,415,420 | 122,634,340 | 128,112,003 | 132,666,307 | 137,896,175 | 144,489,279 | 149,122,131 | | Working capital | 108,902,145 | 113,452,776 | 118,418,042 | 124,258,528 | 128,515,998 | 133,123,568 | 140,337,994 | 145,301,807 | [Results of Operations for the Nine Months Ended June 30, 2025 and 2024](index=64&type=section&id=Results%20of%20Operations%20for%20the%20Nine%20Months%20Ended%20June%2030,%202025%20and%202024) For the nine months ended June 30, 2025, the comprehensive loss decreased to **$(4.00) million** from **$(7.23) million** in the prior year. This was primarily driven by a significant reduction in research and development expenses due to the wind-down of clinical trials and preclinical work, despite an increase in general and administration expenses [Research and Development Expenditures](index=64&type=section&id=Research%20and%20Development%20Expenditures) Research and development expense significantly decreased by **50.49%** to **$8.43 million** for the nine months ended June 30, 2025, from **$17.02 million** in the prior year. This reduction reflects the wind-down of masofaniten clinical trials and cessation of preclinical work, leading to decreases in clinical costs, preclinical and data analysis costs, manufacturing costs, and legal patents and license fees. Share-based payments also saw a substantial decrease due to terminations and forfeitures Research and Development Expenses (9 Months Ended June 30) | Expense Category | 2025 (USD) | 2024 (USD) | Change (USD) | Change (%) | | :-------------------------- | :--------- | :--------- | :----------- | :--------- | | Clinical | 5,040,514 | 6,891,138 | (1,850,624) | -26.86% | | Salaries and benefits | 1,968,627 | 2,309,430 | (340,803) | -14.76% | | Manufacturing | 555,912 | 1,223,189 | (667,277) | -54.55% | | Legal patents and license fees | 316,991 | 818,910 | (501,919) | -61.29% | | Preclinical and data analysis | 180,357 | 2,832,804 | (2,652,447) | -93.63% | | Share-based payments | 141,043 | 1,837,353 | (1,696,310) | -92.32% | | Total R&D Expense | 8,427,148 | 17,018,874 | (8,591,726) | -50.49% | - Expenditures after October 31, 2024, reflect the wind-down of clinical trials and cessation of preclinical work[212](index=212&type=chunk) - The decrease in share-based payments expense is due to terminations and related forfeitures for stock options vesting[215](index=215&type=chunk) [General and Administration Expenditures](index=65&type=section&id=General%20and%20Administration%20Expenditures) General and administration expenses increased by **39.44%** to **$13.54 million** for the nine months ended June 30, 2025, from **$9.71 million** in the prior year. This rise was primarily driven by higher professional fees for legal and accounting services related to corporate activities and a shareholder lawsuit, as well as increased salaries and benefits due to wage adjustments and executive termination costs. Director fees also increased due to base increases and an additional board member General and Administration Expenses (9 Months Ended June 30) | Expense Category | 2025 (USD) | 2024 (USD) | Change (USD) | Change (%) | | :-------------------------- | :--------- | :--------- | :----------- | :--------- | | Salaries and benefits | 4,690,904 | 4,019,104 | 671,800 | 16.72% | | Professional fees | 3,452,796 | 948,608 | 2,504,188 | 263.99% | | Share-based payments | 3,099,064 | 2,698,864 | 400,200 | 14.83% | | Director fees | 538,498 | 327,875 | 210,623 | 64.24% | | Total G&A Expense | 13,536,542 | 9,707,565 | 3,828,977 | 39.44% | - Professional fees increased due to legal and accounting services for corporate activities and a shareholder lawsuit[219](index=219&type=chunk) - Salaries and benefits increased due to wage adjustments and termination costs for executives[219](index=219&type=chunk) [Three months ended June 30, 2025 and 2024](index=67&type=section&id=Three%20months%20ended%20June%2030,%202025%20and%202024) For the three months ended June 30, 2025, the comprehensive loss was **$(4.01) million**, an improvement from **$(7.23) million** in the prior year. Research and development expenses showed a net recovery of **$(0.53) million**, primarily due to staff terminations and related share-based payment forfeitures. General and administration expenses increased to **$5.43 million**, driven by higher professional fees, salaries, and director fees - Comprehensive loss for the three months ended June 30, 2025, was **$(4,010,426)**, compared to **$(7,233,091)** in 2024[222](index=222&type=chunk) - Research and development expenses were a net recovery of **$(531,441)** in 2025, down from **$6,177,987** in 2024, due to clinical trial wind-down and staff terminations[223](index=223&type=chunk) - General and administration expenses increased to **$5,428,588** in 2025 from **$3,174,195** in 2024, driven by professional fees, salaries, and director fees[224](index=224&type=chunk) - Comprehensive loss for the nine months ended June 30, 2025, was **$(4,003,274)**, compared to **$(7,233,747)** in 2024, indicating a reduced loss[212](index=212&type=chunk) [Liquidity and Capital Resources](index=67&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, ESSA had working capital of **$108.90 million** and available cash reserves and short-term investments of **$109.62 million**, which management believes are sufficient to satisfy obligations and planned expenditures for over twelve months. Future cash requirements may vary, and additional funding may be necessary, though there's no assurance of successful fundraising Liquidity Metrics | Metric | June 30, 2025 (USD) | September 30, 2024 (USD) | | :------------------------------------ | :------------------ | :----------------------- | | Working capital | 108,902,145 | 124,258,528 | | Cash reserves and short-term investments | 109,619,748 | 126,760,119 | | Current liabilities | 1,599,955 | 3,301,027 | - Management believes the company has sufficient capital for over twelve months[225](index=225&type=chunk) - Future cash requirements may vary, and additional funds may be needed, with no assurance of successful fundraising[226](index=226&type=chunk) [Critical Accounting Policies and Estimates](index=67&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The preparation of financial statements requires management to make significant estimates and assumptions about future events, which are continually evaluated. Changes in accounting estimates are recognized prospectively. A summary of critical accounting policies is provided in the annual consolidated financial statements for the year ended September 30, 2024 - Management makes estimates and assumptions about future events that affect reported amounts in financial statements[227](index=227&type=chunk) - Estimates and assumptions are reviewed quarterly, and changes are recognized prospectively[228](index=228&type=chunk) - A summary of critical accounting policies is in Note 3 of the 2024 annual consolidated financial statements[230](index=230&type=chunk) [Trend Information](index=69&type=section&id=Trend%20Information) ESSA Pharma Inc. does not generate revenue and was focused on prostate cancer drug development, but has no products in commercial production. Its financial success now depends on efficiently winding down programs and completing the acquisition or identifying strategic alternatives to maximize shareholder value - ESSA is a pharmaceutical company that does not currently generate revenue[231](index=231&type=chunk) - The company's financial success depends on efficiently winding down programs and completing the Transaction or identifying strategic alternatives[231](index=231&type=chunk) [Off-Balance Sheet Arrangement](index=69&type=section&id=Off-Balance%20Sheet%20Arrangement) ESSA has no material undisclosed off-balance sheet arrangements that would significantly affect its financial condition or results of operations - ESSA has no material undisclosed off-balance sheet arrangements[232](index=232&type=chunk) [Outstanding Share Data](index=69&type=section&id=Outstanding%20Share%20Data) As of August 13, 2025, ESSA's authorized share capital includes an unlimited number of common shares (**47,308,394 issued and outstanding**) and preferred shares (none outstanding). There were **7,127,969 exercisable stock options** and **702,554 unexercisable outstanding options**, with no restricted stock units Outstanding Share Data as of August 13, 2025 | Metric | Number | | :------------------------------------ | :------- | | Issued and outstanding Common Shares | 47,308,394 | | Exercisable outstanding stock options | 7,127,969 | | Unexercisable outstanding options | 702,554 | | Outstanding restricted stock units | 0 | [Safe Harbor](index=69&type=section&id=Safe%20Harbor) This section refers to the 'Cautionary Note Regarding Forward-Looking Statements' for important disclosures about the forward-looking nature of the report's content - Refers to the 'Cautionary Note Regarding Forward-Looking Statements' for forward-looking disclosures[234](index=234&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=70&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, ESSA Pharma Inc. is not required to provide the detailed quantitative and qualitative disclosures about market risk typically required under this item - As a smaller reporting company, ESSA Pharma Inc. is not required to provide quantitative and qualitative disclosures about market risk[236](index=236&type=chunk) [Item 4. Controls and Procedures](index=70&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, with the participation of the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025, concluding they were effective at a reasonable assurance level. Internal control over financial reporting was also assessed as effective based on the 2013 COSO framework. No material changes in internal control over financial reporting occurred during the quarter [Evaluation of Disclosure Controls and Procedures](index=70&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) As of June 30, 2025, management, with CEO and CFO participation, concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level - Management, with CEO and CFO participation, evaluated disclosure controls and procedures as of June 30, 2025[237](index=237&type=chunk) - Disclosure controls and procedures were concluded to be effective at the reasonable assurance level[238](index=238&type=chunk) [Management's Annual Report on Internal Control over Financial Reporting](index=70&type=section&id=Management%27s%20Annual%20Report%20on%20Internal%20Control%20over%20Financial%20Reporting) Management assessed the effectiveness of internal control over financial reporting as of June 30, 2025, using the 2013 COSO framework, and concluded it was effective. The effectiveness of any internal control system is subject to inherent limitations - Management assessed the effectiveness of internal control over financial reporting as of June 30, 2025[240](index=240&type=chunk) - The assessment used the 2013 COSO framework, concluding that internal control over financial reporting was effective[240](index=240&type=chunk) [Changes in Internal Control Over Financial Reporting](index=70&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) There were no material changes in the company's internal control over financial reporting during the quarter ended June 30, 2025 - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[241](index=241&type=chunk) [PART II. OTHER INFORMATION](index=71&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=71&type=section&id=Item%201.%20Legal%20Proceedings) A putative class action lawsuit was filed against ESSA and its officers on January 24, 2025, alleging material misstatements regarding masofaniten clinical trials. An amended complaint was filed on August 11, 2025, expanding the class period. The company intends to vigorously defend the lawsuit, believing it has valid defenses, and the outcome and potential liability are not estimable at this early stage - A class action lawsuit was filed on January 24, 2025, alleging violations of Sections 10(b) and 20(a) of the Exchange Act[243](index=243&type=chunk) - The lawsuit alleges material misstatements/omissions regarding masofaniten (EPI-7386) clinical trials[243](index=243&type=chunk) - The company believes it has valid defenses and intends to defend the lawsuit vigorously; the outcome and potential liability are not estimable or probable[243](index=243&type=chunk) [Item 1A. Risk Factors](index=71&type=section&id=Item%201A.Risk%20Factors) No material changes to risk factors were disclosed other than those related to the potential failure to complete the acquisition by XenoTherapeutics, Inc. The failure of this transaction could materially adversely affect the company's operations, financial condition, and share price, potentially leading to liquidation or other costly strategic alternatives - No material changes in risk factors from the Annual Report on Form 10-K, except for those related to the Transaction[245](index=245&type=chunk) - Failure to complete the acquisition by XenoTherapeutics, Inc. could materially adversely affect results, financial condition, and share price[246](index=246&type=chunk)[247](index=247&type=chunk) - If the Transaction does not close, other strategic options may include shareholder distribution, wind-down, liquidation, or other costly transactions[247](index=247&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=71&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 - No unregistered sales of equity securities or use of proceeds to report[249](index=249&type=chunk) [Item 3. Defaults Upon Senior Securities](index=73&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities to report for the period - No defaults upon senior securities to report[251](index=251&type=chunk) [Item 4. Mine Safety Disclosures](index=73&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to ESSA Pharma Inc - This item is not applicable[252](index=252&type=chunk) [Item 5. Other Information](index=73&type=section&id=Item%205.%20Other%20Information) During the three months ended June 30, 2025, no director or officer of the company adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[253](index=253&type=chunk) [Item 6. Exhibits, Financial Statement Schedules](index=74&type=section&id=Item%206.%20Exhibits,%20Financial%20Statement%20Schedules) This section lists the exhibits filed with the Form 10-Q, including amended articles of incorporation, specimen common share certificate, certifications from the CEO and CFO, and Inline XBRL documents - Exhibits include amended articles of incorporation, specimen common share certificate, and certifications from the CEO and CFO[257](index=257&type=chunk) - Inline XBRL documents (Instance, Schema, Calculation, Label, Presentation, Definition Linkbase Documents) are also filed[257](index=257&type=chunk) [SIGNATURES](index=75&type=section&id=SIGNATURES) [Signatures](index=75&type=section&id=Signatures) The Quarterly Report on Form 10-Q was duly signed on August 13, 2025, by David Parkinson, Chief Executive Officer, and David Wood, Chief Financial Officer, on behalf of ESSA Pharma Inc - The report was signed on August 13, 2025[260](index=260&type=chunk) - Signed by David Parkinson, Chief Executive Officer, and David Wood, Chief Financial Officer[260](index=260&type=chunk) ```

Core Viewpoint - ESSA Pharma Inc. has announced a return of capital distribution amounting to US$80 million to its shareholders as part of the winding-up of the company's business following a court order [1][3]. Group 1: Distribution Details - The distribution is scheduled to be paid on August 22, 2025, to shareholders of record as of the close of business on August 19, 2025 [2]. - Each shareholder is estimated to receive approximately US$1.91 per common share, excluding any contingent value rights payments related to the transaction with XenoTherapeutics, Inc. [4]. Group 2: Transaction with XenoTherapeutics - The distribution will occur prior to a special meeting of shareholders, optionholders, and warrantholders to consider the transaction with XenoTherapeutics, which is expected to be held on September 10, 2025 [3]. - The company obtained an interim court order on August 5, 2025, authorizing the special meeting [3]. Group 3: Company Background - ESSA Pharma Inc. is a pharmaceutical company that previously focused on developing novel therapies for prostate cancer [5].

Core Viewpoint - ESSA Pharma Inc. is moving forward with a business combination agreement with XenoTherapeutics, intending to apply for court orders to facilitate a cash distribution to shareholders prior to the transaction's closing [1][2]. Group 1: Transaction Details - The business combination involves Xeno acquiring all issued and outstanding common shares of ESSA [1]. - ESSA plans to apply for an interim order to hold a special meeting for transaction approval and a distribution order for an initial cash distribution to shareholders [1][2]. - If authorized, each ESSA shareholder is estimated to receive approximately US$1.91 per common share, excluding any contingent value rights payments [2]. Group 2: Court Hearing Information - The hearing for the court orders is scheduled for August 5, 2025, at 9:45 a.m. Pacific time at the Supreme Court of British Columbia [3]. - Individuals affected by the orders may present evidence or arguments at the hearing [4]. Group 3: Filing and Response Requirements - ESSA intends to file its Petition Record on July 31, 2025, one business day before the hearing [5]. - Response materials must be submitted to ESSA's counsel by 1:00 p.m. on July 31, 2025, to be included in the Petition Record [5]. Group 4: Company Background - ESSA Pharma Inc. is a pharmaceutical company focused on developing novel therapies for prostate cancer treatment [6].

Core Viewpoint - The article discusses the investigation by Monteverde & Associates PC into the sale of ESSA Pharma Inc. to Xeno Acquisition Corp., highlighting the financial implications for ESSA shareholders and questioning the fairness of the deal [1]. Summary by Relevant Sections Company Overview - Monteverde & Associates PC is recognized as a Top 50 Firm in the 2024 ISS Securities Class Action Services Report and has successfully recovered millions for shareholders [1]. Transaction Details - ESSA shareholders will receive a cash payment per share based on ESSA's cash balance at closing, minus transaction costs, liabilities, and a $4 million transaction fee to Xeno [1]. - Shareholders are also entitled to one non-transferable contingent value right per share, which includes potential future payments of up to $150,000, less remaining liabilities and expenses, and up to $2.8 million, less legal and other expenses incurred after closing [1]. Legal Context - The firm emphasizes the importance of legal representation for shareholders and offers free consultations regarding concerns related to the transaction [2][3].

Mergers and Acquisitions - Monogram Technologies Inc. will be acquired by Zimmer Biomet Holdings, Inc. for $4.04 per share, totaling an equity value of approximately $177 million and an enterprise value of about $168 million. Shareholders may also receive a contingent value right worth up to $12.37 per share if certain milestones are met by 2030 [2] - Veritex Holdings, Inc. is set to be acquired by Huntington Bancshares Incorporated in a stock transaction where HBI will issue 1.95 shares for each Veritex share, implying a value of $33.91 per share and an aggregate transaction value of $1.9 billion [4] - ESSA Pharma Inc. will be acquired by XenoTherapeutics, Inc. for approximately $1.91 in cash per share, along with a contingent value right that could yield up to $0.06 per share within 18 months post-transaction [6] - Waters Corporation will merge with Becton, Dickinson and Company, with BD's shareholders expected to own about 39.2% and Waters' shareholders approximately 60.8% of the combined entity [8] Investigations - Investigations are ongoing regarding whether the boards of Monogram, Veritex, ESSA, and Waters breached their fiduciary duties by failing to conduct fair processes in their respective transactions and whether the deal considerations provide fair value to shareholders [2][4][6][8]

Core Viewpoint - ESSA Pharma Inc. has entered into a definitive agreement with XenoTherapeutics, Inc. for Xeno to acquire all outstanding common shares of ESSA, with the transaction expected to close in the second half of 2025 [1][5]. Transaction Details - ESSA shareholders will receive a cash payment per common share based on ESSA's cash balance at closing, with an estimated total of approximately US$1.91 per common share, excluding contingent value rights (CVR) [2][3]. - Each ESSA shareholder will also receive one non-transferable CVR for each common share, entitling them to a pro rata portion of up to US$2,950,000 (up to US$0.06 per CVR) within 18 months following the transaction's close [2]. - The transaction requires approval from at least 66⅔% of votes cast by ESSA shareholders and securityholders, as well as court approval [5]. Company Strategy - The ESSA Board of Directors believes that the agreement with Xeno and XOMA Royalty maximizes shareholder value and provides a more certain value compared to liquidation [4]. - The transaction is structured to expedite cash distribution to shareholders, with an initial cash distribution application to be made to the Supreme Court of British Columbia [3]. Advisory and Support - Leerink Partners is serving as the exclusive financial advisor to ESSA, with legal counsel provided by Blake, Cassels & Graydon LLP and Skadden, Arps, Slate, Meagher & Flom LLP [9]. - The transaction committee, composed of independent directors, unanimously recommended the agreement to the Board, which has also approved the transaction [7][8]. Company Background - ESSA Pharma Inc. is a pharmaceutical company focused on developing therapies for prostate cancer [10]. - XenoTherapeutics, Inc. is a non-profit biotechnology company focused on advancing xenotransplantation [11]. - XOMA Royalty Corporation is a biotechnology royalty aggregator that supports biotech companies by acquiring future economic rights [12].

Company Overview - ESSA Pharma is focused on developing novel therapies for prostate and other androgen-driven cancers[7] - The company's lead candidate, EPI-7386, is a first-in-class oral, small molecule androgen receptor N-terminal domain inhibitor ("Aniten")[9, 28] - As of March 31, 2023, ESSA had $157 million in cash and short-term deposits, providing a runway through 2025[9, 69] EPI-7386 Monotherapy Development - Phase 1a study showed EPI-7386 was safe and well-tolerated, with tumor volume decreases observed in some patients[38] - ctDNA declines were observed in patients with AR mutations, amplifications, and truncations, suggesting activity against these tumors[38] - Phase 1b expansion study is underway to verify the recommended Phase 2 dose and gain further insight into EPI-7386's biological activity[40, 41] EPI-7386 Combination Therapy Development - ESSA is collaborating with multiple companies to evaluate EPI-7386 in combination with second-generation antiandrogens like enzalutamide, apalutamide, and darolutamide[49] - Initial data from the Phase 1/2 EPI-7386 + enzalutamide combination study showed rapid, deep, and durable PSA reductions[58] - In the combination study, 5 out of 6 patients achieved a PSA90, and 4 out of 6 patients achieved a PSA90 in 90 days and ultimately achieved a PSA < 02 ng/mL[58] Market and Opportunity - Prostate cancer is the 2nd most common cause of male cancer deaths, with an estimated 268,000 new cases and 34,500 deaths in 2022 in America[19] - Global sales of leading antiandrogens generated over $86 billion in 2021[19]

ESSA Pharma Q2 2025 Financial Report [Strategic Update](index=1&type=section&id=Strategic%20Update) ESSA Pharma is evaluating strategic options to maximize shareholder value after discontinuing clinical programs, while reducing costs - The company is evaluating a range of strategic options which may include a merger, amalgamation, take-over, business combination, asset sale or acquisition, shareholder distribution, wind-up, liquidation and dissolution[2](index=2&type=chunk) - The strategic review process is expected to involve continuing headcount and other cost reductions[2](index=2&type=chunk) - Management has indicated that productive steps have been taken towards a decision and an update is expected in the near future[2](index=2&type=chunk) [Summary of Financial Results](index=1&type=section&id=Summary%20of%20Financial%20Results) For Q2 2025, ESSA reported a net loss of **$6.4 million**, a significant improvement from the prior year, primarily due to reduced R&D expenditures Q2 Financial Performance | Metric | Q2 2025 (ended Mar 31) | Q2 2024 (ended Mar 31) | | :--- | :--- | :--- | | Net Loss | $6.4 million | $9.0 million | | R&D Expenditures | $3.5 million | $6.2 million | | G&A Expenditures | $3.9 million | $4.3 million | | Investment and other income | $1.0 million | $1.5 million | - The decrease in R&D expenses was primarily attributed to the wind-down of clinical trials and the cessation of preclinical work[3](index=3&type=chunk) [Liquidity and Outstanding Share Capital](index=2&type=section&id=Liquidity%20and%20Outstanding%20Share%20Capital) As of March 31, 2025, ESSA maintained a strong liquidity position with **$113.9 million** in cash and no long-term debt, with **44.4 million** common shares outstanding Liquidity and Capital Position | Metric | As of March 31, 2025 | | :--- | :--- | | Cash reserves and short-term investments | $113.9 million | | Net working capital | $113.5 million | | Long-term debt | None | | Common shares issued and outstanding | 44,388,550 | - An additional **2,920,000** common shares are issuable upon the exercise of prefunded warrants[8](index=8&type=chunk) [Consolidated Financial Statements](index=4&type=section&id=Consolidated%20Financial%20Statements) This section presents the unaudited consolidated balance sheets and statements of operations, detailing the company's financial position and performance [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets were **$115.4 million**, a decrease from fiscal 2024, primarily due to reduced cash reserves Balance Sheet Summary | Account (in thousands USD) | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Cash | $86,308 | $103,710 | | Total assets | $115,415 | $128,112 | | Current liabilities | $1,714 | $3,301 | | Shareholders' equity | $113,547 | $124,606 | | Total liabilities and shareholders' equity | $115,415 | $128,112 | [Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For Q2 2025, the company reported a net loss of **$6.4 million** or **($0.14)** per share, an improvement from the prior year, with the six-month loss remaining stable Three Months Ended March 31 | Three Months Ended March 31 (in thousands USD) | 2025 | 2024 | | :--- | :--- | :--- | | Research and development | $3,484 | $6,178 | | General and administration | $3,897 | $4,316 | | Net loss for the period | ($6,374) | ($8,990) | | Basic and diluted loss per common share | ($0.14) | ($0.20) | Six Months Ended March 31 | Six Months Ended March 31 (in thousands USD) | 2025 | 2024 | | :--- | :--- | :--- | | Net loss for the period | ($14,907) | ($14,954) | | Basic and diluted loss per common share | ($0.34) | ($0.34) | [About ESSA Pharma Inc.](index=2&type=section&id=About%20ESSA%20Pharma%20Inc.) ESSA Pharma Inc. was previously focused on developing novel therapies for the treatment of prostate cancer - The company was previously focused on developing novel therapies for the treatment of prostate cancer[1](index=1&type=chunk)[5](index=5&type=chunk) [Forward-Looking Statement Disclaimer](index=2&type=section&id=Forward-Looking%20Statement%20Disclaimer) This report contains forward-looking statements regarding strategic alternatives and cost reductions, which are subject to significant risks and uncertainties - Forward-looking statements include information regarding the termination of clinical studies, the evaluation of strategic alternatives, and expected headcount and cost reductions[6](index=6&type=chunk) - These statements are subject to various known and unknown risks and uncertainties, and are based on a number of estimates and assumptions considered reasonable by management[7](index=7&type=chunk) - The company undertakes no obligation to update forward-looking statements except as required by law[9](index=9&type=chunk)

```markdown [FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q%20Filing%20Information) [Registrant Details](index=1&type=page&id=Registrant%20Details) ESSA Pharma Inc. filed its Quarterly Report on Form 10-Q for the period ended March 31, 2025, with the SEC. The company is incorporated in British Columbia, Canada, and its common shares trade on the Nasdaq Capital Market under the symbol EPIX - Registrant: ESSA Pharma Inc[2](index=2&type=chunk) - Filing Period: Quarterly period ended March 31, 2025[2](index=2&type=chunk) - Trading Symbol: **EPIX** on Nasdaq Capital Market[3](index=3&type=chunk) [Filer Status and Compliance](index=1&type=page&id=Filer%20Status%20and%20Compliance) The registrant confirmed compliance with Section 13 or 15(d) of the Securities Exchange Act of 1934 for the preceding 12 months and electronic submission of Interactive Data Files. ESSA Pharma Inc. is classified as a non-accelerated filer and a smaller reporting company, and is not a shell company - Compliance: Filed all required reports and submitted Interactive Data Files electronically during the preceding **12 months**[3](index=3&type=chunk) - Filer Status: Non-accelerated filer and smaller reporting company[4](index=4&type=chunk) - Shell Company Status: Not a shell company[4](index=4&type=chunk) [Outstanding Common Shares](index=1&type=page&id=Outstanding%20Common%20Shares) As of May 7, 2025, ESSA Pharma Inc. had 44,388,550 common shares outstanding - Outstanding Common Shares (as of May 7, 2025): **44,388,550**[4](index=4&type=chunk) [Table of Contents](index=2&type=page&id=Table%20of%20Contents) [CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=3&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) [Nature of Forward-Looking Statements](index=3&type=page&id=Nature%20of%20Forward-Looking%20Statements) This section outlines the nature of forward-looking statements included in the Form 10-Q, emphasizing that they involve known and unknown risks and uncertainties that could cause actual results to differ materially from projections. Key areas for such statements include strategic alternatives, clinical trial discontinuation costs, funding, intellectual property, profitability, and future financial performance - Forward-looking statements relate to plans, objectives, goals, strategies, future events, revenue, performance, capital expenditures, and financing needs[7](index=7&type=chunk) - Statements are subject to significant medical, scientific, business, economic, competitive, political, and social uncertainties and contingencies[8](index=8&type=chunk) - Examples include assessment of strategic alternatives, costs of discontinuing clinical trials, ability to obtain funding, intellectual property protection, and future financial performance[9](index=9&type=chunk) [RISK FACTOR SUMMARY](index=5&type=page&id=RISK%20FACTOR%20SUMMARY) This summary highlights material factors that make an investment in ESSA Pharma Inc. speculative or risky, including the availability of financing, intellectual property protection, ability to out-license/in-license products, absence of adverse industry changes, key personnel retention, compliance with license terms, and market competition. It also specifically mentions risks related to the discontinuation of masofaniten (EPI-7386) development and the ongoing strategic review - Key risks include: availability of sufficient financing, ability to protect patents, successful out-licensing/in-licensing, absence of material adverse changes, and ability to attract/retain key personnel[13](index=13&type=chunk) - Specific risks related to masofaniten (EPI-7386) discontinuation, potential for unsuccessful strategic transactions, and the incurrence of significant losses since inception[14](index=14&type=chunk) - Other risks include intellectual property claims, computer system failures, competition, foreign currency fluctuations, product liability lawsuits, and operating as a public company[17](index=17&type=chunk) [PART I. FINANCIAL INFORMATION](index=9&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements and Supplementary Data](index=9&type=section&id=Item%201.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents ESSA Pharma Inc.'s unaudited condensed consolidated interim financial statements for the periods ended March 31, 2025, and September 30, 2024, including balance sheets, statements of operations and comprehensive loss, cash flows, and changes in shareholders' equity, along with detailed notes explaining the company's operations, accounting policies, and financial instrument details [Condensed Consolidated Interim Balance Sheets](index=10&type=page&id=Condensed%20Consolidated%20Interim%20Balance%20Sheets) The balance sheets show a decrease in total assets and shareholders' equity from September 30, 2024, to March 31, 2025, primarily driven by a reduction in cash and cash equivalents | Metric | March 31, 2025 | September 30, 2024 | | :--------------------------------- | :------------- | :----------------- | | Cash and cash equivalents | $86,308,345 | $103,709,537 | | Short-term investments | $27,564,067 | $23,050,582 | | Total assets | $115,415,420 | $128,112,003 | | Total liabilities | $1,868,916 | $3,506,233 | | Total shareholders' equity | $113,546,504 | $124,605,770 | - Cash and cash equivalents decreased by **$17.4 million** from September 30, 2024, to March 31, 2025[21](index=21&type=chunk) - Total liabilities decreased by approximately **$1.6 million**, while total shareholders' equity decreased by approximately **$11 million**[21](index=21&type=chunk) [Condensed Consolidated Interim Statements of Operations and Comprehensive Loss](index=12&type=page&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) ESSA Pharma Inc. reported a net loss and comprehensive loss for both the three and six months ended March 31, 2025 and 2024, with a reduction in operating expenses in the current period compared to the prior year | 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 | $(3,484,442) | $(6,177,987) | $(8,958,589) | $(11,554,751) | | General and administration | $(3,897,235) | $(4,315,502) | $(8,107,954) | $(6,533,370) | | Total operating expenses | $(7,381,677) | $(10,493,489) | $(17,066,543) | $(18,088,121) | | Net loss for the period | $(6,374,787) | $(8,989,535) | $(14,906,718) | $(14,953,857) | | Loss and comprehensive loss for period| $(6,392,609) | $(8,990,284) | $(14,933,306) | $(14,934,482) | | Basic and diluted loss per common share| $(0.14) | $(0.20) | $(0.34) | $(0.34) | - Net loss for the three months ended March 31, 2025, decreased to **$6.37 million** from **$8.99 million** in the prior year, primarily due to lower R&D expenses[22](index=22&type=chunk) - Research and development expenses decreased by approximately **43.6%** for the three months ended March 31, 2025, compared to the same period in 2024[22](index=22&type=chunk) [Condensed Consolidated Interim Statements of Cash Flows](index=13&type=page&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Cash%20Flows) The cash flow statement for the six months ended March 31, 2025, shows a significant decrease in cash and cash equivalents, primarily due to net cash used in operating and investing activities, contrasting with a net cash increase in the prior year | Metric | Six months ended March 31, 2025 | Six months ended March 31, 2024 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Net cash used in operating activities | $(13,318,653) | $(13,604,966) | | Net cash provided by (used in) investing activities | $(4,082,539) | $70,741,345 | | Net cash provided by financing activities | $0 | $840,262 | | Change in cash and cash equivalents | $(17,401,192) | $57,981,162 | | Cash and cash equivalents, end of period | $86,308,345 | $91,683,074 | - Net cash used in operating activities remained relatively stable year-over-year[24](index=24&type=chunk) - Investing activities shifted from providing **$70.7 million** in cash in 2024 to using **$4.08 million** in 2025, largely due to changes in short-term investment purchases and proceeds[24](index=24&type=chunk) [Condensed Consolidated Interim Statement of Changes in Shareholders' Equity](index=14&type=page&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Changes%20in%20Shareholders'%20Equity) The statement of changes in shareholders' equity shows a decrease in total equity from September 30, 2024, to March 31, 2025, primarily due to the accumulated deficit from net losses, partially offset by share-based payments | Metric | September 30, 2024 | March 31, 2025 | | :------------------------------------ | :----------------- | :------------- | | Common shares | $279,862,420 | $279,862,420 | | Additional paid-in capital | $54,810,797 | $58,684,837 | | Accumulated other comprehensive loss | $(2,063,267) | $(2,089,855) | | Accumulated deficit | $(208,004,180) | $(222,910,898) | | Total Shareholders' Equity | $124,605,770 | $113,546,504 | - Accumulated deficit increased by approximately **$14.9 million** from September 30, 2024, to March 31, 2025, reflecting the net loss for the period[25](index=25&type=chunk) - Additional paid-in capital increased by **$3.87 million**, mainly due to share-based payments[25](index=25&type=chunk) [Notes to the Condensed Consolidated Interim Financial Statements](index=15&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Statements) These notes provide essential context and detail for the condensed consolidated interim financial statements, covering the company's nature of operations, accounting policies, recent pronouncements, and specific financial instrument breakdowns, including short-term investments, prepaids, liabilities, shareholders' equity, and financial risks [1. NATURE OF OPERATIONS](index=15&type=page&id=1.%20NATURE%20OF%20OPERATIONS) ESSA Pharma Inc. was incorporated in British Columbia in 2009 and has historically focused on developing small molecule drugs for prostate cancer. However, as of March 31, 2025, the company has terminated its clinical trial of masofaniten (EPI-7386) and is evaluating future operations, with no products currently in commercial production - Company focus: Development of small molecule drugs for prostate cancer[28](index=28&type=chunk) - Clinical Trial Status: Termination of masofaniten (EPI-7386) clinical trial announced[29](index=29&type=chunk) - Commercial Production: No products in commercial production or use as of **March 31, 2025**[28](index=28&type=chunk) [2. BASIS OF PRESENTATION](index=15&type=page&id=2.%20BASIS%20OF%20PRESENTATION) The unaudited condensed consolidated interim financial statements are prepared in accordance with U.S. GAAP and SEC rules for interim financial information, reflecting normal recurring adjustments. They include the accounts of the Company and its wholly-owned subsidiaries, with all amounts expressed in U.S. dollars - Preparation Standard: U.S. GAAP and SEC rules for interim financial information[30](index=30&type=chunk) - Consolidation: Includes accounts of the Company and its wholly-owned subsidiaries[32](index=32&type=chunk) - Currency: All amounts expressed in United States dollars[33](index=33&type=chunk) [3. RECENT ACCOUNTING PRONOUNCEMENTS](index=17&type=page&id=3.%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) The company is evaluating the impact of recently issued FASB ASUs, including ASU No. 2023-09 on Income Taxes (effective after December 31, 2024) and new guidance on expense category disclosures (effective after December 15, 2026), on its consolidated financial statements - ASU 2023-09 (Income Taxes): Enhances transparency of income tax disclosures, effective for annual periods after **December 31, 2024**. Company is evaluating impact[36](index=36&type=chunk) - New FASB guidance (Expense Categories): Requires additional disclosures for specific expense categories, effective for fiscal years after **December 15, 2026**. Company is evaluating impact[37](index=37&type=chunk) [4. SHORT-TERM INVESTMENTS](index=18&type=page&id=4.%20SHORT-TERM%20INVESTMENTS) Short-term investments primarily consist of U.S. treasury securities and guaranteed investment certificates (GICs), classified as available-for-sale and carried at fair value. As of March 31, 2025, these investments had an aggregate fair market value of $27.6 million, with a gross unrealized loss of $15,304 - Composition: Includes GICs (**4.50%** interest, matures within **12 months**) and U.S. treasury securities[40](index=40&type=chunk)[41](index=41&type=chunk) - Classification: Available-for-sale, carried at fair value with unrealized gains/losses in accumulated other comprehensive loss[41](index=41&type=chunk) | Metric | March 31, 2025 | | :-------------------- | :------------- | | Estimated Fair Value | $27,564,067 | | Gross Unrealized Loss | $(15,304) | [5. PREPAIDS](index=18&type=page&id=5.%20PREPAIDS) Prepaid expenses increased from $636,463 at September 30, 2024, to $879,477 at March 31, 2025, primarily due to a significant rise in prepaid insurance, while prepaid CMC and clinical expenses decreased | Category | March 31, 2025 | September 30, 2024 | | :------------------------------------ | :------------- | :----------------- | | Prepaid insurance | $649,121 | $75,841 | | Prepaid CMC and clinical expenses and deposits | $7,500 | $226,005 | | Other deposits and prepaid expenses | $222,856 | $334,617 | | **Balance, end of period** | **$879,477** | **$636,463** | - Prepaid insurance saw a substantial increase from **$75,841** to **$649,121**[43](index=43&type=chunk) - Prepaid CMC and clinical expenses and deposits decreased significantly from **$226,005** to **$7,500**[43](index=43&type=chunk) [6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES](index=18&type=page&id=6.%20ACCOUNTS%20PAYABLE%20AND%20ACCRUED%20LIABILITIES) Total accounts payable and accrued liabilities decreased from $3,176,973 at September 30, 2024, to $1,588,715 at March 31, 2025, mainly driven by a reduction in accounts payable | Category | March 31, 2025 | September 30, 2024 | | :------------------------------------ | :------------- | :----------------- | | Accounts payable | $864,155 | $2,403,519 | | Accrued expenses | $266,520 | $171,690 | | Employee compensation and vacation accruals | $458,040 | $601,764 | | **Balance, end of period** | **$1,588,715** | **$3,176,973** | - Accounts payable decreased by over **$1.5 million**, reflecting reduced operational expenditures[44](index=44&type=chunk) - Employee compensation and vacation accruals also decreased by approximately **$143,000**[44](index=44&type=chunk) [7. OPERATING LEASE](index=20&type=page&id=7.%20OPERATING%20LEASE) The company's operating lease right-of-use asset and liability decreased from September 30, 2024, to March 31, 2025, with a remaining lease term of 28 months for its South San Francisco office and an incremental borrowing rate of 10.25% | Metric | September 30, 2024 | March 31, 2025 | | :------------------------------------ | :----------------- | :------------- | | Operating lease right-of-use asset | $295,471 | $248,017 | | Operating lease liability | $329,260 | $280,201 | - Remaining lease term for South San Francisco office: **28 months**[45](index=45&type=chunk) - Incremental borrowing rate applied to lease liability: **10.25%**[45](index=45&type=chunk) [8. SHAREHOLDERS' EQUITY](index=20&type=section&id=8.%20SHAREHOLDERS'%20EQUITY) This section details the components of shareholders' equity, including authorized shares, omnibus incentive plan, employee share purchase plan, stock options, and warrants. It highlights the mechanisms for equity compensation and the status of outstanding equity instruments [Omnibus Incentive Plan](index=20&type=page&id=Omnibus%20Incentive%20Plan) The Company adopted an Omnibus Incentive Plan in February 2021, allowing for various share-based awards, though only stock options have been issued under it to date. The plan reserves a maximum of 10,810,907 common shares for issuance - Plan Adoption: **February 25, 2021**[49](index=49&type=chunk) - Awards Issued: Only stock options have been issued under the Omnibus Plan[49](index=49&type=chunk) - Maximum Reserved Shares: **10,810,907** common shares[51](index=51&type=chunk) [Employee Share Purchase Plan](index=22&type=page&id=Employee%20Share%20Purchase%20Plan) The Employee Share Purchase Plan (ESPP) allows eligible employees to purchase common shares at a discount, with offerings typically over six-month periods. During the six months ended March 31, 2025, no shares were issued under the ESPP as all participants withdrew - Purchase Rights: Employees can buy shares at not less than **85%** of market price[52](index=52&type=chunk) - Shares Reserved: Maximum of **192,142** common shares[52](index=52&type=chunk) - Activity (6 months ended March 31, 2025): Nil shares issued; all participants withdrew[54](index=54&type=chunk) [Stock Options](index=24&type=page&id=Stock%20Options) Stock options are granted under the Legacy Option Plan and Omnibus Plan with terms up to 10 years. As of March 31, 2025, 9,022,151 options were outstanding with a weighted average exercise price of $5.43, and 7,841,219 were exercisable | Metric | March 31, 2025 | | :------------------------------------ | :------------- | | Balance outstanding | 9,022,151 | | Weighted Average Exercise Price | $5.43 | | Balance exercisable | 7,841,219 | - Share-based payments expense for options was **$1,172,109** for the three months ended March 31, 2025, and **$3,879,760** for the six months ended March 31, 2025[59](index=59&type=chunk) - Options have varying exercise prices, with a weighted average remaining contractual life of **5.72 years**[58](index=58&type=chunk) [Warrants](index=25&type=page&id=Warrants) As of March 31, 2025, 2,920,000 warrants were outstanding, enabling holders to acquire common shares at an exercise price of $0.0001, following an amendment in FY2024 to remove the expiry date - Outstanding Warrants: **2,920,000**[61](index=61&type=chunk) - Exercise Price: **$0.0001**[61](index=61&type=chunk) - Amendment: Expiry date removed in FY2024[61](index=61&type=chunk) [9. RELATED PARTY TRANSACTIONS](index=25&type=page&id=9.%20RELATED%20PARTY%20TRANSACTIONS) As of March 31, 2025, the Company had $177,746 due to related parties for key management personnel compensation and expense reimbursements. These amounts are non-interest bearing with no fixed repayment terms - Amount Due to Related Parties (March 31, 2025): **$177,746**[62](index=62&type=chunk) - Purpose: Key management personnel compensation and expense reimbursements[62](index=62&type=chunk) - Terms: Non-interest bearing, no fixed repayment terms[62](index=62&type=chunk) [10. SEGMENTED INFORMATION](index=25&type=page&id=10.%20SEGMENTED%20INFORMATION) The Company operates in a single industry segment: the development of small molecule drugs for prostate cancer. Its right-of-use assets are located in the USA - Industry Segment: Development of small molecule drugs for prostate cancer[63](index=63&type=chunk) - Asset Location: Right-of-use assets are located in the USA[63](index=63&type=chunk) [11. FINANCIAL INSTRUMENTS AND RISK](index=25&type=section&id=11.%20FINANCIAL%20INSTRUMENTS%20AND%20RISK) This section outlines the Company's financial instruments and associated risks, including credit risk, liquidity risk, and market risk (interest rate and foreign currency). The fair values of most instruments approximate their carrying values due to short maturities, with U.S. treasury securities and money market funds measured using Level 2 inputs [Credit Risk](index=26&type=page&id=Credit%20Risk) The Company manages credit risk by placing cash and short-term investments with major financial institutions and maintaining an investment policy with minimum investment grades. Cash balances exceed insured limits in Canada and the U.S - Credit Risk Management: Places cash in segregated funds with major financial institutions and adheres to an investment policy with minimum investment grades[66](index=66&type=chunk) - Exposure: Cash balances exceed insured limits by Canada Deposit Insurance Corporation (C**$100,000**) and Federal Deposit Insurance Corporation (**$250,000**)[67](index=67&type=chunk) [Liquidity Risk](index=26&type=page&id=Liquidity%20Risk) As of March 31, 2025, the Company had working capital of $113,452,776. However, as it does not generate revenue, it relies on external financing, which may not always be available on favorable terms - Working Capital (March 31, 2025): **$113,452,776**[68](index=68&type=chunk) - Revenue Generation: The Company does not generate revenue[68](index=68&type=chunk) - Reliance: Dependent on external financing, which is subject to market conditions[68](index=68&type=chunk) [Market Risk](index=26&type=page&id=Market%20Risk) The Company's market risk exposure primarily relates to interest rate fluctuations on its cash and short-term investments, and foreign currency risk from Canadian dollar and Euro denominated assets. Neither is currently considered significant, and the Company does not engage in hedging activities - Interest Rate Risk: Not significant, as interest income is not central to capital management[70](index=70&type=chunk) - Foreign Currency Risk: Exposure to Canadian dollars and Euro is not currently significant; no hedging activities are undertaken[71](index=71&type=chunk) [12. CONTINGENT LIABILITY](index=27&type=page&id=12.%20CONTINGENT%20LIABILITY) A putative class action lawsuit was filed on January 24, 2025, against the Company and its officers, alleging violations of the Exchange Act due to material misstatements regarding masofaniten (EPI-7386) clinical trials. The Company intends to vigorously defend the lawsuit, and the outcome and potential losses are not estimable or probable at this early stage - Lawsuit Date: **January 24, 2025**[72](index=72&type=chunk) - Allegations: Violations of Sections **10(b)** and **20(a)** of the Exchange Act due to alleged material misstatements/omissions regarding masofaniten (EPI-7386) clinical trials[72](index=72&type=chunk) - Company Stance: Believes it has valid defenses and intends to defend vigorously; outcome and potential losses are not estimable or probable[72](index=72&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on ESSA Pharma Inc.'s financial condition and results of operations, including an overview of its strategic review, the history of its prostate cancer drug development, the termination of clinical trials for masofaniten (EPI-7386), recent developments, competition, intellectual property, regulatory environment, and a detailed analysis of financial performance and liquidity [Overview](index=28&type=page&id=Overview) ESSA Pharma Inc. is undergoing a comprehensive strategic review to maximize shareholder value, following the termination of its masofaniten (EPI-7386) clinical trials due to a lack of clear efficacy benefit. The review may include various strategic transactions, which are expected to be costly and time-consuming - Strategic Review: Initiated to maximize shareholder value, exploring options like merger, asset sale, or liquidation[75](index=75&type=chunk)[129](index=129&type=chunk) - Clinical Trial Termination: Masofaniten (EPI-7386) trials terminated in **October 2024** due to higher-than-expected PSA90 response in enzalutamide monotherapy and no clear efficacy benefit for the combination[78](index=78&type=chunk) - Costs and Risks: The strategic review process is expected to be costly, time-consuming, and complex, with no assurance of anticipated benefits or successful consummation of any transaction[76](index=76&type=chunk)[130](index=130&type=chunk) [Background and History of Prostate Cancer Drug Development](index=30&type=page&id=Background%20and%20History%20of%20Prostate%20Cancer%20Drug%20Development) ESSA's historical focus was on developing novel small molecule inhibitors targeting the N-terminal domain (NTD) of the androgen receptor (AR) for prostate cancer, aiming to bypass resistance mechanisms to existing antiandrogens. The company developed the 'Aniten' series, including first-generation EPI-506 and next-generation masofaniten (EPI-7386), based on preclinical data suggesting efficacy in AR-dependent tumors - Historical Focus: Developing small molecule inhibitors of the N-terminal domain (NTD) of the androgen receptor (AR) for prostate cancer[81](index=81&type=chunk) - Mechanism of Action: Designed to disrupt AR signaling by binding to the NTD, aiming to bypass resistance to classical antiandrogens[81](index=81&type=chunk)[86](index=86&type=chunk) - Previous Compounds: First-generation EPI-506 showed PSA declines but lacked sustained clinical benefit; next-generation masofaniten (EPI-7386) was developed for greater potency and improved properties[82](index=82&type=chunk)[96](index=96&type=chunk) [Our Strategy](index=35&type=page&id=Our%20Strategy) Following the termination of all masofaniten (EPI-7386) clinical trials and withdrawal of IND/CTAs in October 2024, ESSA is now focused on a comprehensive review of strategic options to maximize shareholder value, discontinuing its previous strategy of combining Aniten compounds with second-generation antiandrogens - Current Strategy: Comprehensive review of strategic options to maximize shareholder value[98](index=98&type=chunk) - Discontinued Activities: Termination of all masofaniten (EPI-7386) clinical trials and withdrawal of IND/CTAs[98](index=98&type=chunk) - Previous Strategic Approach: Combined Aniten compounds with second-generation antiandrogens in earlier lines of therapy for prostate cancer[99](index=99&type=chunk) [Identification and Characteristics of Masofaniten (EPI-7386)](index=35&type=page&id=Identification%20and%20Characteristics%20of%20Masofaniten%20(EPI-7386)) Masofaniten (EPI-7386) was selected as ESSA's lead clinical candidate due to its increased potency, reduced metabolic susceptibility, and superior pharmaceutical properties compared to first-generation compounds. It demonstrated activity in AR-dependent prostate cancer models and a favorable tolerability profile in preclinical studies, leading to IND submission in March 2020 before its eventual clinical trial termination - Selection Criteria: Increased potency (**20x** higher than EPI-506), reduced metabolic susceptibility, and superior pharmaceutical properties[97](index=97&type=chunk)[102](index=102&type=chunk) - Preclinical Activity: Active in AR-dependent prostate cancer models, including those resistant to second-generation antiandrogens[102](index=102&type=chunk) - Regulatory Filings: IND submitted to FDA on **March 30, 2020**, and CTA filed with Health Canada in **April 2020**, both subsequently withdrawn[103](index=103&type=chunk) [Advancing Masofaniten (EPI-7386) Through Clinical Development](index=38&type=section&id=Advancing%20Masofaniten%20(EPI-7386)%20Through%20Clinical%20Development) Prior to October 2024, ESSA was advancing masofaniten (EPI-7386) through two main clinical trials (EPI-7386-CS-001 and EPI-7386-CS-010), exploring monotherapy and combination treatments with other antiandrogens for various prostate cancer stages. All these clinical trials were subsequently terminated - Clinical Trials: EPI-7386-CS-001 (monotherapy and combination with abiraterone/apalutamide) and EPI-7386-CS-010 (combination with enzalutamide)[105](index=105&type=chunk)[108](index=108&type=chunk) - Target Patient Populations: mCRPC, mHSPC, nmCRPC, and neo-adjuvant prostate cancer[99](index=99&type=chunk) - Termination: All clinical trials evaluating masofaniten (EPI-7386) were terminated in **October 2024**[105](index=105&type=chunk) [Phase 1 Clinical Trial - EPI-7386-CS-001 (Monotherapy & Combination)](index=39&type=page&id=Phase%201%20Clinical%20Trial%20-%20EPI-7386-CS-001%20(Monotherapy%20%26%20Combination)) The EPI-7386-CS-001 trial included a Phase 1a dose escalation and Phase 1b dose expansion for monotherapy, and a Part B for combination with abiraterone acetate/prednisone or apalutamide. The monotherapy phase completed enrollment, and two dose levels (600 mg QD and 600 mg BID) were advanced to Phase 1b before the study's termination - Trial Design: Part A (Monotherapy - Phase 1a Dose Escalation & Phase 1b Dose Expansion) and Part B (Combination with abiraterone acetate/prednisone or apalutamide)[110](index=110&type=chunk) - Monotherapy Enrollment: Completed enrollment in Part A, with **600 mg QD** and **600 mg BID** advanced to Phase 1b dose expansion[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) - Objectives: Assess safety, tolerability, pharmacokinetics, and preliminary anti-tumor activity[111](index=111&type=chunk)[115](index=115&type=chunk) [Clinical Trial - EPI-7386-CS-010 – Combination Treatment with Enzalutamide](index=41&type=page&id=Clinical%20Trial%20-%20EPI-7386-CS-010%20%E2%80%93%20Combination%20Treatment%20with%20Enzalutamide) This Phase 1/2 study evaluated masofaniten (EPI-7386) in combination with enzalutamide for mCRPC patients. Phase 1 completed enrollment, recommending 600 mg BID masofaniten with 160 mg enzalutamide for Phase 2. The Phase 2 study was enrolling patients globally before its termination - Collaboration: With Astellas Pharma Inc. for enzalutamide supply[121](index=121&type=chunk) - Phase 1 Outcome: Completed enrollment, recommended **600 mg BID** masofaniten with **160 mg** enzalutamide for Phase 2[121](index=121&type=chunk) - Phase 2 Status: Was enrolling **120 patients** globally (U.S., Canada, Europe, Australia) before termination[121](index=121&type=chunk) [Clinical Trial - EPI-7386-CS-001 – Combination Treatments with Abiraterone and with Apalutamide](index=41&type=page&id=Clinical%20Trial%20-%20EPI-7386-CS-001%20%E2%80%93%20Combination%20Treatments%20with%20Abiraterone%20and%20with%20Apalutamide) ESSA collaborated with Janssen to study masofaniten (EPI-7386) in combination with abiraterone acetate/prednisone and apalutamide. The amended protocol included a Part B for these combinations in mHSPC or mCRPC patients, and a 'window of opportunity' cohort for nmCRPC. This trial, along with a planned collaboration with Bayer for darolutamide, was terminated - Collaboration: With Janssen Research & Development, LLC for abiraterone acetate/prednisone and apalutamide supply[122](index=122&type=chunk) - Trial Design: Part B included Cohort 1 (combination with AAP for mHSPC/mCRPC) and Cohort 2 (single agent masofaniten for nmCRPC, followed by combination with apalutamide)[123](index=123&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) - Termination: All planned and ongoing combination trials, including a potential one with Bayer for darolutamide, were terminated[126](index=126&type=chunk) [Preclinical Development of Anitens and Other Indications](index=43&type=page&id=Preclinical%20Development%20of%20Anitens%20and%20Other%20Indications) ESSA has decided to terminate its preclinical development programs, including work on other Aniten molecules and AR ANITAC NTD degraders, during its strategic options review - Termination: Preclinical development programs and related work have been terminated[127](index=127&type=chunk) - Previous Work: Included research on other Aniten molecules and AR ANITAC NTD degraders[127](index=127&type=chunk) [Recent Developments](index=43&type=section&id=Recent%20Developments) Recent developments include the termination of all masofaniten (EPI-7386) clinical studies and the initiation of a strategic review process in October 2024. Prior to this, the company presented updated dose escalation data from its Phase 1/2 study in 2024 and 2023, showing favorable safety and efficacy signals, but these were ultimately superseded by the futility analysis [Termination of Clinical Studies and Evaluation of Strategic Options](index=43&type=page&id=Termination%20of%20Clinical%20Studies%20and%20Evaluation%20of%20Strategic%20Options) On October 31, 2024, ESSA terminated its Phase 2 clinical trial for masofaniten (EPI-7386) due to a futility analysis showing no clear efficacy benefit compared to enzalutamide monotherapy. Consequently, all other masofaniten clinical and preclinical studies were terminated, and the company initiated a comprehensive strategic review - Termination Date: **October 31, 2024**[128](index=128&type=chunk) - Reason: Futility analysis showed no clear efficacy benefit of masofaniten (EPI-7386) plus enzalutamide over enzalutamide monotherapy[128](index=128&type=chunk) - Consequence: All remaining company-sponsored and investigator-sponsored clinical and preclinical studies for masofaniten (EPI-7386) were terminated, and a strategic review was initiated[129](index=129&type=chunk) [2024 Clinical Updates](index=45&type=page&id=2024%20Clinical%20Updates) In 2024, ESSA presented updated Phase 1/2 study data for masofaniten (EPI-7386) combined with enzalutamide, showing it was well-tolerated with rapid, deep, and durable PSA reductions in evaluable patients. The recommended Phase 2 combination doses were identified as masofaniten 600 mg BID with enzalutamide 160 mg QD - Safety: Masofaniten combined with enzalutamide was well-tolerated, with most frequent adverse events being Grade **1** and **2**[132](index=132&type=chunk)[136](index=136&type=chunk) - Efficacy (n=16): **88%** achieved PSA50, **81-88%** achieved PSA90, and **63%** achieved PSA <0.2ng/mL[133](index=133&type=chunk)[137](index=137&type=chunk) - Recommended Phase 2 Doses: Masofaniten **600 mg BID** with enzalutamide **160 mg QD**[132](index=132&type=chunk)[136](index=136&type=chunk) [2023 Clinical Updates and Corporate Actions](index=46&type=page&id=2023%20Clinical%20Updates%20and%20Corporate%20Actions) In 2023, ESSA provided updates on the Phase 1/2 study of masofaniten (EPI-7386) with enzalutamide, noting no effect on enzalutamide exposure but a reduction in masofaniten exposure, mitigated by BID dosing. Corporate actions included filing a prospectus supplement for an ATM Sales Agreement of up to $50.0 million, initiating the Phase 2 portion of the study, and appointing a new board member - Drug Interaction: Masofaniten had no effect on enzalutamide exposure, but enzalutamide reduced masofaniten exposure (mitigated by BID dosing)[140](index=140&type=chunk) - Efficacy (n=16): **88%** achieved PSA50, **69-81%** achieved PSA90, and **56-70%** achieved PSA <0.2ng/mL[142](index=142&type=chunk)[145](index=145&type=chunk) - Corporate Actions: Entered ATM Sales Agreement for up to **$50.0 million**, initiated Phase 2 of the masofaniten/enzalutamide study, and appointed Lauren Merendino to the Board[146](index=146&type=chunk)[147](index=147&type=chunk)[149](index=149&type=chunk) [Future Clinical Development Program](index=50&type=page&id=Future%20Clinical%20Development%20Program) Prior to October 2024, ESSA planned further clinical development involving randomized trials in earlier prostate cancer patient populations. However, following the termination of all masofaniten (EPI-7386) clinical studies and withdrawal of IND/CTAs, the company is now focused on a comprehensive review of strategic options - Previous Plans: Conduct randomized clinical trials in earlier prostate cancer patient populations[154](index=154&type=chunk) - Current Status: All company-sponsored and investigator-sponsored clinical studies for masofaniten (EPI-7386) have been terminated[155](index=155&type=chunk) - Focus: Comprehensive review of strategic options to maximize shareholder value[155](index=155&type=chunk) [Competition](index=50&type=page&id=Competition) The prostate cancer market is highly competitive, with numerous companies possessing greater resources and many approved therapies. ESSA previously believed its NTD inhibitor approach offered a unique, differentiated mechanism to bypass resistance to current AR LBD-targeting therapies, but currently, no other AR-NTD antagonists are in clinical trials - Market Competition: Very high, with many companies having greater financial resources and expertise[156](index=156&type=chunk) - Approved Therapies: Numerous marketed drugs, including Xtandi, Zytiga, Erleada, Nubeqa, Keytruda, Lynparza, and Pluvicto[157](index=157&type=chunk) - Unique Approach: ESSA's Aniten compounds aimed to directly bind to AR-NTD, potentially bypassing AR-dependent resistance pathways[159](index=159&type=chunk) [Collaborative Agreements](index=52&type=page&id=Collaborative%20Agreements) ESSA has discontinued all clinical studies related to collaborative agreements for masofaniten (EPI-7386) and is not currently engaged in any clinical development collaborations. Future collaborative agreements are dependent on the outcome of its ongoing strategic evaluation - Discontinuation: All clinical studies related to collaborative agreements for masofaniten (EPI-7386) have been discontinued[162](index=162&type=chunk) - Current Status: Not currently engaged in any collaborations for clinical development[162](index=162&type=chunk) - Future Plans: Dependent on the results of ESSA's ongoing strategic evaluation[162](index=162&type=chunk) [Patents and Proprietary Rights](index=52&type=section&id=Patents%20and%20Proprietary%20Rights) ESSA has historically licensed intellectual property from UBC and BCCA and developed its own patent portfolio for its Aniten series. However, the license agreement with the Licensors was terminated effective December 12, 2024. As of December 2024, ESSA owns rights to 83 issued patents, including 23 U.S. patents, covering its compounds [License Agreement with UBC and the BCCA](index=52&type=page&id=License%20Agreement%20with%20UBC%20and%20the%20BCCA) ESSA had an exclusive worldwide license agreement with the British Columbia Cancer Agency and the University of British Columbia for intellectual property related to AR activity modulating compounds. This agreement, which involved annual royalties and milestone payments, was terminated by ESSA effective December 12, 2024 - Agreement: Exclusive worldwide rights to develop and commercialize products based on Licensed IP[164](index=164&type=chunk) - Financial Obligations: Minimum annual royalty of C**$85,000**, and potential milestone payments up to C**$2.4 million** for the first drug product[165](index=165&type=chunk)[166](index=166&type=chunk) - Termination: ESSA provided notice of termination effective **December 12, 2024**[167](index=167&type=chunk) [ESSA's Intellectual Property Strategy](index=52&type=page&id=ESSA's%20Intellectual%20Property%20Strategy) ESSA retains commercial rights for its Aniten series and has developed a strong patent portfolio, including 83 issued patents (23 U.S. patents) covering its compounds, with expected expiration dates between 2036 and 2044. The company emphasizes the importance of patents for new technologies and will continue to seek patents where appropriate - Commercial Rights: Retains all commercial rights for its Aniten series drug portfolio[168](index=168&type=chunk) - Patent Portfolio (as of December 2024): Includes **83** issued patents (**23** U.S. patents) covering multiple EPI- and Aniten structural classes[170](index=170&type=chunk) - Patent Protection: Masofaniten (EPI-7386) compound patents are expected to provide protection until **2036-2043**[171](index=171&type=chunk) [Regulatory Environment](index=54&type=section&id=Regulatory%20Environment) With the decision to close INDs and CTAs for masofaniten, ESSA's current focus is on compliant clinical trial shutdown. If ESSA pursues future product development, it will be subject to extensive regulation by governmental authorities worldwide, including the FDA in the U.S. and TPD in Canada, covering R&D, manufacturing, and marketing [Drug Products Development Process](index=55&type=page&id=Drug%20Products%20Development%20Process) The drug development process involves preclinical studies, IND submission, IRB approval, and multi-phase clinical trials (Phase 1, 2, 3) to establish safety and efficacy. Successful completion leads to an NDA/NDS submission, followed by regulatory review, facility inspections, and potential approval, which is a lengthy and costly process - Stages: Preclinical studies, IND submission, IRB approval, Phase **1**, **2**, and **3** clinical trials[175](index=175&type=chunk)[176](index=176&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk)[181](index=181&type=chunk) - Regulatory Submissions: IND/CTA must be accepted before human trials; NDA/NDS submitted for marketing approval[176](index=176&type=chunk)[183](index=183&type=chunk) - Approval Process: Involves FDA review, facility inspections (cGMP, GCP), and substantial application user fees (currently over **$2.5 million**)[186](index=186&type=chunk)[187](index=187&type=chunk) [Post-Approval Requirements](index=59&type=page&id=Post-Approval%20Requirements) After FDA approval, drug products are subject to continuous regulation, including recordkeeping, periodic reporting, advertising restrictions, and adverse event reporting. Manufacturers must comply with cGMP, and the FDA can impose sanctions, including product withdrawal, if regulatory standards are not maintained - Ongoing Regulation: Recordkeeping, periodic reporting, product sampling, distribution, advertising, and adverse event reporting[190](index=190&type=chunk) - Manufacturing Compliance: Establishments must register with FDA and state agencies and comply with cGMP requirements[191](index=191&type=chunk) - Sanctions: Non-compliance can lead to product withdrawal, fines, clinical holds, refusal of new approvals, or civil/criminal penalties[192](index=192&type=chunk)[197](index=197&type=chunk) [Orphan Designation and Exclusivity](index=61&type=page&id=Orphan%20Designation%20and%20Exclusivity) The FDA may grant orphan drug designation for products treating rare diseases (fewer than 200,000 U.S. patients). If approved, this designation provides seven years of market exclusivity for the specific indication, preventing approval of other applications for the same product, with limited exceptions - Definition: Drug intended to treat a rare disease or condition (fewer than **200,000** individuals in the U.S.)[195](index=195&type=chunk) - Exclusivity: **Seven years** of market exclusivity if it receives the first FDA approval for the designated indication[196](index=196&type=chunk) - Limitations: Does not shorten regulatory review, and competitors can get approval for different products or indications[195](index=195&type=chunk)[196](index=196&type=chunk) [Selected Quarterly Financial Information](index=62&type=page&id=Selected%20Quarterly%20Financial%20Information) ESSA Pharma Inc. has consistently incurred net losses since inception and expects this trend to continue as it winds down programs and evaluates strategic options. The company's comprehensive losses and cash/short-term investments have fluctuated over the past eight quarters | Metric | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :------------------------------------ | :------------- | :---------------- | :----------------- | :------------ | | Research and development expense | $3,484,442 | $5,474,147 | $4,187,950 | $5,464,123 | | General and administration | $3,897,235 | $4,210,719 | $3,506,628 | $3,174,195 | | Comprehensive loss | $(6,392,609) | $(8,540,697) | $(6,318,117) | $(7,233,091) | | Basic and diluted loss per share | $(0.14) | $(0.19) | $(0.14) | $(0.16) | | Cash and cash equivalents | $86,308,345 | $93,310,889 | $103,709,537 | $85,985,140 | | Short-term investments | $27,564,067 | $27,242,430 | $23,050,582 | $44,709,312 | | Total assets | $115,415,420 | $122,634,340 | $128,112,003 | $132,666,307 | | Working capital | $113,452,776 | $118,418,042 | $124,258,528 | $128,515,998 | - The company has never been profitable and expects to incur losses for the foreseeable future[198](index=198&type=chunk) - Comprehensive loss for Q1 2025 was **$(6.39) million**, an improvement from **$(8.99) million** in Q1 2024[198](index=198&type=chunk) [Results of Operations for the Six Months Ended March 31, 2025 and 2024](index=63&type=section&id=Results%20of%20Operations%20for%20the%20Six%20Months%20Ended%20March%2031,%202025%20and%202024) For the six months ended March 31, 2025, ESSA reported a comprehensive loss of $6.37 million, an improvement from $8.99 million in the prior year, primarily due to reduced research and development expenses following the wind-down of clinical trials and preclinical work - No revenue generated in either period[199](index=199&type=chunk) - Comprehensive loss for six months ended March 31, 2025: **$(6,374,787)** vs. **$(8,989,535)** in 2024[199](index=199&type=chunk) - Variations in expenses and net loss primarily resulted from the wind-down of clinical trials and cessation of preclinical work[199](index=199&type=chunk) [Research and Development Expenditures](index=63&type=page&id=Research%20and%20Development%20Expenditures) Research and development expenses decreased to $8.96 million for the six months ended March 31, 2025, from $11.55 million in the prior year, reflecting the wind-down of masofaniten (EPI-7386) clinical trials and cessation of preclinical work. Clinical costs increased in the short term due to site closures, while preclinical costs, manufacturing, and legal patent fees declined | Expense Category | Six months ended March 31, 2025 | Six months ended March 31, 2024 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Clinical | $4,977,449 | $4,840,408 | | Salaries and benefits | $1,482,507 | $1,453,212 | | Share-based payments | $1,281,213 | $985,382 | | Manufacturing | $570,749 | $755,888 | | Legal patents and license fees | $273,888 | $520,219 | | Preclinical and data analysis | $172,820 | $2,399,556 | | **Total R&D Expense** | **$8,958,589** | **$11,554,751** | - Overall R&D expense decreased by **$2.59 million** (**22.4%**) year-over-year[199](index=199&type=chunk) - Preclinical and data analysis costs significantly decreased from **$2.4 million** to **$0.17 million** due to discontinuation of work[201](index=201&type=chunk) [General and Administration Expenditures](index=65&type=page&id=General%20and%20Administration%20Expenditures) General and administration expenses increased to $8.11 million for the six months ended March 31, 2025, from $6.53 million in the prior year. This increase was primarily driven by higher share-based payments and professional fees, despite a decrease in salaries and benefits | Expense Category | Six months ended March 31, 2025 | Six months ended March 31, 2024 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Salaries and benefits | $2,756,432 | $3,214,310 | | Share-based payments | $2,592,827 | $950,637 | | Professional fees | $1,213,972 | $873,993 | | Insurance | $710,773 | $696,009 | | Director fees | $369,373 | $208,000 | | **Total G&A Expense** | **$8,107,954** | **$6,533,370** | - Share-based payments, a non-cash expense, increased significantly from **$0.95 million** to **$2.59 million**[206](index=206&type=chunk) - Professional fees increased by **$0.34 million** due to legal and accounting services, including costs for a shareholder lawsuit[207](index=207&type=chunk) - Salaries and benefits decreased by **$0.46 million** due to reduced executive compensation and headcount[207](index=207&type=chunk) [Three months ended March 31, 2025 and 2024](index=67&type=page&id=Three%20months%20ended%20March%2031,%202025%20and%202024) For the three months ended March 31, 2025, the comprehensive loss was $6.39 million, an improvement from $8.99 million in the prior year. This was driven by a significant reduction in R&D expenses, particularly clinical and preclinical costs, while general and administration expenses remained relatively stable - Comprehensive loss for Q1 2025: **$(6,392,609)** vs. **$(8,990,284)** for Q1 2024[210](index=210&type=chunk) - R&D expenses decreased to **$3.48 million** in Q1 2025 from **$6.18 million** in Q1 2024, reflecting the wind-down of masofaniten (EPI-7386) studies[211](index=211&type=chunk) - G&A expenses were **$1.97 million** in Q1 2025, slightly up from **$1.87 million** in Q1 2024, with increases in professional fees and director fees offset by lower salaries and benefits[212](index=212&type=chunk) [Liquidity and Capital Resources](index=67&type=page&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2025, ESSA had working capital of $113.45 million and available cash reserves and short-term investments of $113.87 million, which management believes is sufficient for over twelve months of planned expenditures. Future cash requirements may vary due to strategic opportunities or costs associated with discontinuing clinical trials, potentially requiring additional financing | Metric | March 31, 2025 | September 30, 2024 | | :------------------------------------ | :------------- | :----------------- | | Working capital | $113,452,776 | $124,258,528 | | Cash reserves and short-term investments | $113,872,412 | $126,760,119 | | Current liabilities | $1,714,627 | $3,301,027 | - Management believes current capital is sufficient for over **twelve months**[213](index=213&type=chunk) - Future cash requirements are uncertain and may necessitate additional financing through collaborations, equity issuance, or other sources[214](index=214&type=chunk) [Critical Accounting Policies and Estimates](index=67&type=page&id=Critical%20Accounting%20Policies%20and%20Estimates) The preparation of financial statements requires management to make significant estimates and assumptions, particularly regarding the valuation of equity instruments. These estimates are continually evaluated, and actual results may differ. A summary of critical accounting policies is provided in the annual consolidated financial statements - Estimates and Assumptions: Required for reported amounts of assets, liabilities, expenses, and contingencies[215](index=215&type=chunk) - Significant Area: Valuation of equity instruments issued for services[34](index=34&type=chunk) - Review: Estimates and assumptions are reviewed quarterly[35](index=35&type=chunk) [Trend Information](index=69&type=page&id=Trend%20Information) ESSA Pharma Inc. does not currently generate revenue and its financial success depends on efficiently winding down clinical trials and preclinical programs, and identifying strategic alternatives to maximize shareholder value - Revenue Status: Does not currently generate revenue[219](index=219&type=chunk) - Future Success: Dependent on efficient wind-down of programs and identification of strategic alternatives[219](index=219&type=chunk) [Off-Balance Sheet Arrangement](index=69&type=page&id=Off-Balance%20Sheet%20Arrangement) ESSA has no material undisclosed off-balance sheet arrangements that would significantly impact its financial condition or results of operations - No material undisclosed off-balance sheet arrangements[220](index=220&type=chunk) [Outstanding Share Data](index=69&type=page&id=Outstanding%20Share%20Data) As of May 7, 2025, ESSA's authorized share capital includes an unlimited number of common and preferred shares. There were 44,388,550 common shares issued and outstanding, along with 2,920,000 warrants and 9,022,151 stock options (7,887,850 exercisable) outstanding - Authorized Shares: Unlimited common and preferred shares, no par value[221](index=221&type=chunk) - Issued and Outstanding Common Shares (May 7, 2025): **44,388,550**[221](index=221&type=chunk) | Equity Instrument | Number Outstanding (May 7, 2025) | | :------------------------------------ | :------------------------------- | | Common Share Purchase Warrants | 2,920,000 | | Exercisable Stock Options | 7,887,850 | | Non-exercisable Stock Options | 1,134,301 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=70&type=page&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, ESSA Pharma Inc. is not required to provide the information typically mandated under this item - Exemption: Not required to provide this information as a smaller reporting company[223](index=223&type=chunk) [Item 4. Controls and Procedures](index=70&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, with CEO and CFO participation, evaluated the effectiveness of disclosure controls and procedures and internal control over financial reporting as of March 31, 2025, concluding they were effective at a reasonable assurance level. No material changes in internal control over financial reporting occurred during the quarter [Evaluation of Disclosure Controls and Procedures](index=70&type=page&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) As of March 31, 2025, management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level, designed to ensure timely and accurate reporting - Evaluation Date: **March 31, 2025**[224](index=224&type=chunk) - Conclusion: Disclosure controls and procedures were effective at the reasonable assurance level[225](index=225&type=chunk) - Objective: Ensure information is recorded, processed, summarized, and reported timely[224](index=224&type=chunk) [Management's Annual Report on Internal Control over Financial Reporting](index=70&type=page&id=Management's%20Annual%20Report%20on%20Internal%20Control%20over%20Financial%20Reporting) Management assessed the effectiveness of internal control over financial reporting as of March 31, 2025, using the 2013 COSO framework, and concluded that it was effective. The effectiveness of such systems is subject to inherent limitations - Assessment Date: **March 31, 2025**[227](index=227&type=chunk) - Framework: **2013 COSO framework**[227](index=227&type=chunk) - Conclusion: Internal control over financial reporting was effective[227](index=227&type=chunk) [Changes in Internal Control Over Financial Reporting](index=70&type=page&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) There were no material changes in ESSA Pharma Inc.'s internal control over financial reporting during the quarter ended March 31, 2025 - No material changes in internal control over financial reporting during the quarter ended **March 31, 2025**[228](index=228&type=chunk) [PART II. OTHER INFORMATION](index=71&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=71&type=page&id=Item%201.%20Legal%20Proceedings) A putative class action lawsuit was filed on January 24, 2025, against ESSA Pharma Inc. and its officers, alleging securities law violations related to masofaniten (EPI-7386) clinical trials. The Company intends to vigorously defend the claims, and the outcome and potential losses are currently not estimable - Lawsuit Filed: **January 24, 2025**, a putative class action lawsuit[230](index=230&type=chunk) - Allegations: Violations of Sections **10(b)** and **20(a)** of the Exchange Act regarding masofaniten (EPI-7386) clinical trials[230](index=230&type=chunk) - Company Response: Intends to vigorously defend; outcome and potential losses are not estimable or probable[230](index=230&type=chunk) [Item 1A. Risk Factors](index=71&type=page&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended September 30, 2024 - No material changes in risk factors from the Annual Report on Form 10-K for FY2024[232](index=232&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=71&type=page&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company reported no unregistered sales of equity securities or use of proceeds during the period - None reported[233](index=233&type=chunk) [Item 3. Defaults Upon Senior Securities](index=71&type=page&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The Company reported no defaults upon senior securities during the period - None reported[234](index=234&type=chunk) [Item 4. Mine Safety Disclosures](index=71&type=page&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to ESSA Pharma Inc - Not applicable[235](index=235&type=chunk) [Item 5. Other Information](index=71&type=page&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended March 31, 2025 - No director or officer adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter[236](index=236&type=chunk) [Item 6. Exhibits](index=73&type=page&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including amended articles of incorporation, specimen common share certificate, certifications from the CEO and CFO, and Inline XBRL documents - Exhibits include Amended Articles of Incorporation, Specimen Common Share Certificate, CEO/CFO Certifications (Rule 13a-14(a) and 18 U.S.C. Section 1350), and Inline XBRL documents[239](index=239&type=chunk) [SIGNATURES](index=74&type=page&id=SIGNATURES) ```

Group 1: ESSA Pharma Inc. (NASDAQ:EPIX) - The class period for the lawsuit is from December 12, 2023, to October 31, 2024, with a lead plaintiff deadline of March 25, 2025 [2] - The complaint alleges that defendants made materially false and misleading statements regarding the efficacy of masofaniten in combination with enzalutamide for treating prostate cancer [2] - Key allegations include that the combination treatment had no clear efficacy benefit over enzalutamide alone and that the M-E Combination Study was unlikely to meet its primary endpoint [2] Group 2: Cardlytics, Inc. (NASDAQ:CDLX) - The class period for the lawsuit is from March 14, 2024, to August 7, 2024, with a lead plaintiff deadline of March 25, 2025 [3] - The lawsuit claims that defendants made false statements regarding the company's ability to increase billings in line with rising consumer engagement [3] - Allegations include that changes to Cardlytics' Ads Decision Engine led to "underdelivery" of budgets and customer billing estimates, resulting in misleading positive statements about the company's prospects [3] Group 3: Novo Nordisk A/S (NYSE:NVO) - The class period for the lawsuit is from November 2, 2022, to December 19, 2024, with a lead plaintiff deadline of March 25, 2025 [4] - The complaint alleges that defendants created a false impression of reliable information regarding the success of the phase 3 CagriSema study on obesity [4] - Key points include that the optimistic claims about achieving at least 25% weight loss were misleading and that the study's flexible protocol limited its ability to provide effective weight loss data [4] Group 4: Crocs, Inc. (NASDAQ:CROX) - The class period for the lawsuit is from November 3, 2022, to October 28, 2024, with a lead plaintiff deadline of March 24, 2025 [6] - The lawsuit alleges that defendants misrepresented the revenue growth of HEYDUDE, claiming it was driven by management's decision to stock wholesalers aggressively, regardless of retail demand [6]