Oncolytics Biotech (ONCY) - 2022 Q3 - Quarterly Report

Condensed Interim Consolidated Financial Statements Statements of Financial Position The company's total assets decreased to $39.0 million, driven by lower cash, while liabilities increased and shareholders' equity declined Consolidated Statements of Financial Position (unaudited) | As at | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total current assets | $38,205,271 | $44,903,899 | | Total assets | $38,958,977 | $45,880,191 | | Total current liabilities | $3,666,145 | $2,689,838 | | Total liabilities | $10,562,350 | $9,781,206 | | Total shareholders' equity | $28,396,627 | $36,098,985 | | Total liabilities and shareholders' equity | $38,958,977 | $45,880,191 | Statements of Loss and Comprehensive Loss The company's net loss for the nine-month period improved to $16.3 million from $18.6 million year-over-year due to lower expenses and a foreign exchange gain Statement of Loss Highlights (Nine Months Ended September 30) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Research and development expenses | $10,590,464 | $9,240,900 | | General and administrative expenses | $7,825,659 | $9,539,188 | | Foreign exchange gain | $1,939,468 | $190,164 | | Net loss | ($16,280,513) | ($18,553,023) | | Net comprehensive loss | ($15,945,620) | ($18,546,798) | | Basic and diluted loss per common share | ($0.28) | ($0.35) | Statements of Changes in Equity Shareholders' equity decreased to $28.4 million, primarily driven by a net comprehensive loss partially offset by proceeds from financing activities - Total shareholders' equity decreased by $7.7 million during the first nine months of 2022, from $36.1 million to $28.4 million[7] - The decrease was primarily due to a net comprehensive loss of $15.9 million[7] - Financing activities, mainly from the "At the Market" Agreement, contributed $7.2 million to share capital[7] - Equity warrants with a book value of $3.6 million expired and were transferred to Contributed Surplus[7] Statements of Cash Flows Cash and cash equivalents decreased by $11.1 million to $32.4 million, reflecting cash used in operations partially offset by financing inflows Cash Flow Summary (Nine Months Ended September 30) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Cash used in operating activities | ($17,416,436) | ($16,098,335) | | Cash used in investing activities | ($55,740) | ($211,236) | | Cash provided by financing activities | $6,334,841 | $33,067,387 | | (Decrease) increase in cash | ($11,137,335) | $16,757,816 | | Cash and cash equivalents, end of period | $32,362,063 | $48,087,369 | Notes to Condensed Interim Consolidated Financial Statements Note 1: Nature of Operations The company is a clinical-stage biopharmaceutical firm with a significant accumulated deficit but believes its current cash position is sufficient for the next year - The company is a clinical-stage biopharmaceutical firm developing pelareorep, an intravenously delivered immunotherapeutic agent for cancer[10] - Primary focus is advancing its program in HR+/HER2- metastatic breast cancer to a phase 3 study[10] - The company has an accumulated deficit of $409,696,122 as of September 30, 2022, and has historically funded operations through equity issuance[11] - As of September 30, 2022, the company had cash and cash equivalents of $32,362,063, which is believed to be sufficient to fund operations for at least the next twelve months[12] Note 5: Share Capital Share capital increased to $398.1 million due to share issuance via its ATM equity agreements, while a significant number of warrants expired Share Capital Reconciliation | Description | Number of Shares | Amount | | :--- | :--- | :--- | | As at December 31, 2021 | 55,043,789 | $391,348,183 | | Issued pursuant to ATM agreement | 3,613,760 | $7,159,552 | | Issued pursuant to stock option/incentive plan | 48,893 | $117,958 | | Share issue costs | — | ($557,389) | | As at September 30, 2022 | 58,706,442 | $398,068,304 | - The company utilized three separate "At the Market" (ATM) equity distribution agreements to raise capital, with the most recent one for up to US$65 million established in June 2022[27] - Equity warrants for 16,443,500 common shares expired on June 1, 2022, and their value of $3,617,570 was transferred from Warrants to Contributed Surplus[28][29] Note 6: Share-Based Compensation Share-based compensation expense decreased to $1.6 million year-over-year, with approximately 5.3 million stock options outstanding at period end Stock Option Activity (Nine Months Ended Sept 30) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Outstanding, beginning of period | 5,334,420 | 3,764,055 | | Granted | 292,500 | 1,267,500 | | Forfeited/Expired/Exercised | (327,189) | (189,594) | | Outstanding, end of period | 5,299,731 | 4,841,961 | - Total share-based compensation expense for the nine months ended September 30, 2022, was $1,629,016, compared to $2,697,238 for the same period in 2021[34] Note 8: Commitments The company has future commitments of approximately $16.8 million for clinical trials and manufacturing, plus lease obligations - The company is committed to payments of approximately $16,800,000 over the next three years for clinical trials, manufacturing, and science programs[36] - Commitments include the jointly funded BRACELET-1 phase 2 clinical trial with Pfizer[37] Total Undiscounted Lease Liability (as at Sept 30, 2022) | Period | Amount | | :--- | :--- | | Less than one year | $340,272 | | One to five years | $211,244 | | Total | $551,516 | Note 9: Capital Disclosures The company manages capital primarily through equity issuance, renewing its $150 million base shelf prospectus and a US$65 million ATM agreement - The company's objective is to maintain a strong statement of financial position to support its clinical trial program, manufacturing, and other costs[41] - Funding is primarily managed through the issuance of additional common shares and warrants[44] - In June 2022, the company renewed its Base Shelf prospectus to qualify for the distribution of up to $150,000,000 of securities until July 2024[45][46] - The Base Shelf allowed the company to enter into a US$65,000,000 ATM equity distribution agreement in June 2022[47] Note 10: Financial Instruments The company is exposed to various financial risks, with a primary foreign exchange risk related to its net U.S. dollar position of US$20.0 million - The company is exposed to credit risk, interest rate risk, foreign exchange risk, and liquidity risk[49][51][53][56] - Foreign exchange risk is primarily from the U.S. dollar. A $0.01 increase in the USD against the CAD would have decreased the net comprehensive loss in 2022 by approximately $188,000[53] Significant Balances in Foreign Currencies (Sept 30, 2022) | Currency | Amount | | :--- | :--- | | U.S. dollars | | | Cash and cash equivalents | $21,377,467 | | Accounts payable and accrued liabilities | ($1,345,402) | | Net U.S. dollar position | $20,032,065 | | Euro | | | Accounts payable and accrued liabilities | (€705,472) | Note 12: Components of Expenses R&D expenses increased to $10.6 million due to higher trial costs, while G&A expenses decreased to $7.8 million on lower public company costs Components of Expenses (Nine Months Ended September 30) | Expense Category | 2022 | 2021 | | :--- | :--- | :--- | | Research and development | $10,590,464 | $9,240,900 | | Clinical trial expenses | $3,674,955 | $2,576,886 | | Personnel-related expenses (R&D) | $3,592,412 | $2,906,119 | | General and administrative | $7,825,659 | $9,539,188 | | Public company related expenses | $4,787,000 | $6,066,646 | | Share-based compensation (G&A) | $718,043 | $1,226,669 | Note 13: Related Party Transactions Key management personnel compensation decreased to $3.5 million from $4.2 million year-over-year, driven by lower share-based compensation Compensation of Key Management Personnel (Nine Months Ended September 30) | Compensation Type | 2022 | 2021 | | :--- | :--- | :--- | | Compensation and short-term benefits | $2,405,350 | $2,320,516 | | Share-based compensation | $1,128,096 | $1,869,090 | | Total | $3,533,446 | $4,189,606 |