ESSA Pharma (US:EPIX)2025-08-13 10:59markdown [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)