Kintara Therapeutics(KTRA) - 2021 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements Unaudited interim financials show a net loss of $24.9 million and a going concern uncertainty due to merger costs Condensed Consolidated Interim Balance Sheet (in thousands) | | Dec 31, 2020 | June 30, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $17,158 | $2,392 | | Total current assets | $17,717 | $2,851 | | Total assets | $20,489 | $2,938 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $2,727 | $2,675 | | Total liabilities | $2,904 | $2,675 | | Total stockholders' equity | $17,585 | $263 | | Total liabilities and stockholders' equity | $20,489 | $2,938 | Condensed Consolidated Interim Statements of Operations (in thousands, except per share amounts) | | Six months ended Dec 31, 2020 | Six months ended Dec 31, 2019 | | :--- | :--- | :--- | | Research and development | $3,941 | $1,434 | | General and administrative | $4,329 | $1,967 | | Merger costs | $500 | $— | | In-process research and development | $16,094 | $— | | Net loss for the period | $24,931 | $3,346 | | Net loss attributable to common stockholders | $28,125 | $3,355 | | Basic and fully diluted loss per share | $1.34 | $0.35 | Condensed Consolidated Interim Statements of Cash Flows (in thousands) | | Six months ended Dec 31, 2020 | Six months ended Dec 31, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | ($9,541) | ($3,977) | | Net cash provided by investing activities | $972 | $— | | Net cash provided by financing activities | $23,335 | $6,606 | | Decrease in cash and cash equivalents | $14,766 | $2,629 | - On August 19, 2020, the company completed its merger with Adgero Biopharmaceuticals, resulting in a significant one-time expense of $16.1 million for acquired in-process research and development (IPR&D)[25][42][48] - Management notes that recurring losses ($24.9M) and negative cash flow from operations ($9.5M) raise substantial doubt about the company's ability to continue as a going concern[31][32] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) The company discusses its financial condition, product pipeline, and increased operating expenses following the Adgero merger Background and Recent Highlights The company details its merger with Adgero, subsequent rebranding, and initiation of the GBM AGILE trial - Completed a merger with Adgero Biopharmaceuticals on August 19, 2020, and subsequently changed its name to Kintara Therapeutics, Inc. (KTRA)[118][119] - Raised net proceeds of approximately $21.6 million from a private placement of Series C Preferred Stock in conjunction with the merger[124] - In January 2021, initiated patient recruitment for the VAL-083 arm of the GBM AGILE registrational Phase 2/3 clinical trial[126] Product Pipeline The pipeline features two late-stage candidates, VAL-083 for GBM and REM-001 for CMBC, with promising clinical data - The two lead candidates are VAL-083 for glioblastoma multiforme (GBM) and REM-001 for cutaneous metastatic breast cancer (CMBC)[122] - VAL-083 is being evaluated in the GBM AGILE Study, an adaptive platform trial intended to serve as the basis for an NDA submission[136][137] VAL-083 Phase 2 GBM Study Results vs. Historical Controls | Study Population | Metric | Result | Historical Control | Source Chunk | | :--- | :--- | :--- | :--- | :--- | | Newly-Diagnosed MGMT-unmethylated (SYSUCC) | Median PFS | 8.7 months | 5.3 - 6.9 months | [153] | | Recurrent MGMT-unmethylated (MDACC) | Median OS | 8.5 months | 7.2 months (lomustine) | [157] | | Newly-Diagnosed Adjuvant (MDACC) | Median PFS | 10.0 months | 5.3 - 6.9 months | [160] | - REM-001 Therapy, acquired from Adgero, showed a complete response in approximately 80% of evaluable tumor sites in prior studies[183][217] Results of Operations Net loss increased to $24.9 million from $3.3 million YoY, driven by a $16.1 million IPR&D charge Comparison of Results of Operations (Six Months Ended Dec 31, in thousands) | Item | 2020 | 2019 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $3,941 | $1,434 | $2,507 | 175% | | General and administrative | $4,329 | $1,967 | $2,362 | 120% | | Merger costs | $500 | $0 | $500 | N/A | | In-process R&D | $16,094 | $0 | $16,094 | N/A | | Net loss | $24,931 | $3,346 | $21,585 | 645% | - The significant increase in net loss was primarily due to a $16.1 million non-recurring expense for acquired in-process research and development from the Adgero merger[249] - Research and development expenses increased by 175% YoY, driven by costs for the GCAR GBM AGILE Study and development for REM-001[241][242] - General and administrative expenses rose by 120% YoY, mainly due to higher non-cash compensation, personnel costs, and insurance premiums[245][246] Liquidity and Capital Resources The company holds $17.2 million in cash but has substantial doubt about its ability to continue as a going concern Cash and Liquidity (in thousands) | Metric | Dec 31, 2020 | June 30, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $17,158 | $2,392 | | Working capital | $14,990 | $176 | - Net cash used in operating activities for the six months was $9.5 million, a 140% increase from the prior-year period[251][252] - Financing activities provided $23.3 million in cash, primarily from $21.6 million in net proceeds from the Series C Preferred Stock private placement[251][254] - Management has concluded there is substantial doubt about the company's ability to continue as a going concern, with cash expected to fund operations into Q4 2021[116][257][258] Quantitative and Qualitative Disclosures About Market Risk This disclosure is not required as the company qualifies as a smaller reporting company - As a smaller reporting company, this section is not required[265] Controls and Procedures Disclosure controls and procedures were deemed not effective due to a previously identified material weakness - Management concluded that disclosure controls and procedures were not effective due to a material weakness in internal control over financial reporting[266] - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[267] PART II - OTHER INFORMATION Legal Proceedings The company is not currently a party to any legal proceedings - The company is not party to any legal proceedings[270] Risk Factors No new or materially changed risk factors were reported for the period - No new risk factors are reported in this section[271] Unregistered Sales of Equity Securities and Use of Proceeds The company issued unregistered common stock as dividends and stock purchase warrants for services - Issued 3,479 shares of common stock as dividends on outstanding Series B Preferred Stock[272] - Issued 50,000 stock purchase warrants for services with an exercise price of $1.824 per share[272] Defaults Upon Senior Securities The company reports no defaults upon its senior securities - None[274] Mine Safety Disclosures This section is not applicable to the company's operations - Not applicable[275] Other Information The Board approved retention bonuses totaling $97,250 and a change to an unlimited vacation policy - On February 11, 2021, the Board approved retention bonuses for John Liatos ($56,000) and Steve Rychnovsky ($41,250)[276] - On February 11, 2021, the Board approved the modification of the company's vacation policy to an unlimited policy[277] Exhibits This section lists all exhibits filed with the report, including SOX certifications and XBRL data - Lists exhibits filed with the report, including officer certifications pursuant to the Sarbanes-Oxley Act and XBRL data files[279]