Oncolytics Biotech (ONCY) - 2022 Q2 - Quarterly Report

Condensed Interim Consolidated Financial Statements This section presents the company's financial position, performance, equity changes, and cash flows for the interim period, highlighting key financial trends and balances Condensed Interim Consolidated Statements of Financial Position As of June 30, 2022, total assets decreased to $40.2 million from $45.9 million at year-end 2021, primarily due to reduced cash and cash equivalents Key Financial Position Data (in CAD) | Financial Item | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $33,689,255 | $41,262,044 | | Total current assets | $39,407,457 | $44,903,899 | | Total assets | $40,239,327 | $45,880,191 | | Liabilities & Equity | | | | Total current liabilities | $2,544,030 | $2,689,838 | | Total liabilities | $9,466,409 | $9,781,206 | | Total shareholders' equity | $30,772,918 | $36,098,985 | | Total liabilities and shareholders' equity | $40,239,327 | $45,880,191 | Condensed Interim Consolidated Statements of Loss and Comprehensive Loss For the six months ended June 30, 2022, net loss improved to $11.9 million from $13.7 million in the prior year, driven by lower operating expenses and foreign exchange gains Six Months Ended June 30 (in CAD) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Research and development expenses | $6,911,968 | $5,962,195 | | Operating expenses | $5,444,246 | $6,662,876 | | Foreign exchange gain (loss) | $413,954 | $(1,021,906) | | Net loss | $(11,873,330) | $(13,680,881) | | Net comprehensive loss | $(11,807,827) | $(13,769,563) | | Basic and diluted loss per common share | $(0.21) | $(0.26) | Condensed Interim Consolidated Statements of Changes in Equity Shareholders' equity decreased to $30.8 million from $36.1 million at year-end 2021, primarily due to the net loss, partially offset by ATM proceeds Reconciliation of Shareholders' Equity for Six Months Ended June 30, 2022 (in CAD) | Item | Amount | | :--- | :--- | | Equity at December 31, 2021 | $36,098,985 | | Net loss and other comprehensive income | $(11,807,827) | | Issued pursuant to "At the Market" Agreement | $5,819,149 | | Share-based compensation | $1,129,092 | | Share issue costs | $(478,564) | | Other equity changes | $12,083 | | Equity at June 30, 2022 | $30,772,918 | Condensed Interim Consolidated Statements of Cash Flows Net cash decreased by $8.0 million for the six months ended June 30, 2022, with $13.2 million used in operations and $5.2 million provided by financing activities Cash Flow Summary for Six Months Ended June 30 (in CAD) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Cash used in operating activities | $(13,169,334) | $(12,365,339) | | Cash used in investing activities | $(47,166) | $(6,598) | | Cash provided by financing activities | $5,170,164 | $33,147,057 | | (Decrease) increase in cash | $(8,046,336) | $20,775,120 | | Cash and cash equivalents, end of period | $33,689,255 | $50,799,432 | Notes to Condensed Interim Consolidated Financial Statements This section provides detailed disclosures and explanations supporting the condensed interim consolidated financial statements, covering accounting policies, significant estimates, and financial instrument risks Note 1: Incorporation and Nature of Operations Oncolytics Biotech Inc. is a development-stage biopharmaceutical company focused on cancer immunotherapies, with pelareorep as its lead product - The company is a development-stage biopharmaceutical firm focused on cancer immunotherapies, with its lead product being pelareorep, designed for combination treatments[12] - Management has considered potential impacts from COVID-19 and the conflict in Ukraine, noting no material impact as of June 30, 2022, though future periods could be affected[13] Note 5: Share Capital Issued share capital increased due to 2.77 million shares issued via ATM agreements, raising $5.8 million, and a new US$65 million ATM agreement was established - The company sold 2,774,685 common shares through its ATM agreements in the first six months of 2022, raising gross proceeds of $5,819,149[22][23] - A new ATM equity distribution agreement was established on June 17, 2022, allowing the company to issue shares with an aggregate offering value of up to US$65 million[23] - Equity warrants for 16,443,500 shares expired on June 1, 2022, leading to the reclassification of their $3.6 million value from 'Warrants' to 'Contributed surplus'[24][25] Note 6: Share-Based Compensation As of June 30, 2022, 5.23 million stock options were outstanding, and total share-based compensation expense for the six months was $1.13 million, a decrease from the prior year Stock Option Activity (Six Months Ended June 30) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Outstanding, beginning of period | 5,334,420 | 3,764,055 | | Granted | 222,500 | 1,172,500 | | Forfeited/Expired/Exercised | (323,589) | (149,911) | | Outstanding, end of period | 5,233,331 | 4,786,644 | - Share-based compensation expense was $1,129,092 for the six months ended June 30, 2022, compared to $1,690,318 for the same period in 2021[30] Note 8: Commitments The company has financial commitments totaling $17.7 million over the next three years, primarily for clinical trials, manufacturing, and translational science programs - The company is committed to payments of $17,683,381 over the next three years for activities related to clinical trials, manufacturing, and science programs[32] - A significant commitment is the co-development agreement with Pfizer for the BRACELET-1 Phase 2 clinical trial, which is jointly funded[33] Undiscounted Lease Liability as at June 30, 2022 (in CAD) | Period | Amount | | :--- | :--- | | Less than one year | $386,669 | | One to five years | $244,077 | | Total | $630,746 | Note 9: Capital Disclosures The company manages capital by securing cash for development activities, primarily through equity issuance, and renewed its shelf prospectus to raise up to $150 million until July 2024 - The primary objective of capital management is to obtain cash resources to support planned activities, mainly through issuing additional common shares[37][40] - On June 16, 2022, the company renewed its Base Shelf prospectus, qualifying for the distribution of up to $150,000,000 of securities in Canada and/or the U.S. until July 2024[41][43] - The Base Shelf allowed the company to enter into a US$65,000,000 ATM equity distribution agreement in June 2022 to assist in achieving its capital objectives[44] Note 10: Financial Instruments The company's primary financial risk is foreign exchange, with a net US$24.0 million position, where a $0.01 USD/CAD increase would decrease net comprehensive loss by $256,000 - The company is primarily exposed to foreign exchange risk from the U.S. dollar, as a portion of financial assets and liabilities are denominated in USD[50] Significant Balances in Foreign Currencies (USD) at June 30, 2022 | Item | Amount | | :--- | :--- | | Cash and cash equivalents | $24,828,157 | | Accounts payable and accrued liabilities | $(844,588) | | Net Position | $23,983,569 | - Liquidity risk is managed through the capital structure, primarily by raising funds via equity as outlined in Note 9[53] Note 12: Other Expenses and Adjustments This note details research and development and operating expenses, including $2.4 million in R&D employee compensation and $1.1 million in operating employee compensation for H1 2022 Expense Breakdown for Six Months Ended June 30 (in CAD) | Expense Component | 2022 | 2021 | | :--- | :--- | :--- | | Research and development: | | | | Employee compensation and benefits | $2,364,705 | $1,885,259 | | Share-based compensation | $637,273 | $958,948 | | Operating expenses: | | | | Employee compensation and benefits | $1,148,339 | $1,047,950 | | Share-based compensation | $491,819 | $731,370 | Note 13: Related Party Transactions Total compensation for key management personnel decreased to $2.4 million for the six months ended June 30, 2022, primarily due to lower share-based compensation Key Management Personnel Compensation for Six Months Ended June 30 (in CAD) | Compensation Type | 2022 | 2021 | | :--- | :--- | :--- | | Compensation and short-term benefits | $1,593,069 | $1,556,565 | | Share-based compensation | $769,072 | $1,167,071 | | Total | $2,362,141 | $2,723,636 |