enGene Holdings Inc

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. See the sections titled “Special Note Regarding Forward-Looking Statements” and “Risk Factors” for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described in or implied by these forward-looking statements.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. See the sections titled “Special Note Regarding Forward-Looking Statements” and “Risk Factors” in our Annual Report on Form 10-K for the year ended October 31, 2023 and elsewhere in this Quarterly Report on Form 10-Q and in our other filings made with the SEC for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described in or implied by such forward-looking statements.

Previous wording

We have never been profitable and have incurred net losses since inception. Our net loss was $10.7 million and $7.4 million for the three months ended January 31, 2024, and 2023, respectively. We expect to continue to incur operating losses for at least the next several years as we advance the ongoing pivotal-stage LEGEND study of EG-70 in BCG-unresponsive NMIBC to completion; execute on our plan to file our Biologics License Application in the first quarter of 2026; and pursue potential pipeline expansion via additional EG-70 development opportunities and advance our preclinical program EG-i08 and other compounds.

Current wording

We have never been profitable and have incurred net losses since inception. Our net loss was $15.0 million and $25.7 million for the three and six months ended April 30, 2024, respectively, and $5.3 million and $12.7 million for the three and six months ended April 30, 2023, respectively. We expect to continue to incur operating losses for at least the next several years as we advance the ongoing pivotal-stage LEGEND study of EG-70 in BCG-unresponsive NMIBC to completion; execute on our plan to file our Biologics License Application mid-2026; and pursue potential pipeline expansion via additional EG-70 development opportunities and other compounds.

Previous wording

As of January 31, 2024, we had $85.6 million in cash and cash equivalents. On February 13, 2024, the Company entered into subscription agreements (the “2024 Subscription Agreements”) for the private placement (the “Private Placement Financing”) of 20,000,000 common shares of the Company, at a price of $10.00 per share, for aggregate gross proceeds of $200 million, before deducting offering expenses of approximately $12.5 million. The Private Placement Financing closed on February 20, 2024. We believe that our existing cash and cash equivalents as of January 31, 2024, together with the net proceeds of $187.5 million received from the Private Placement Financing, will be sufficient to fund our operating expenses, debt obligations, and capital expenditure requirements into 2027. While we have historically been successful in securing financing, raising additional funds is dependent on a number of factors outside of our control, and as such there is no assurance that we will be able to do so in the future. Refer to“Liquidity and Capital Resources”sections below.

Current wording

As of April 30, 2024, we had $264.8 million in cash and cash equivalents. We believe that our existing cash and cash equivalents as of April 30, 2024 will be sufficient to fund our operating expenses, debt obligations, and capital expenditure requirements for at least the next 12 months from the issuance date of the condensed consolidated financial statements. While we have historically been successful in securing financing, raising additional funds is dependent on a number of factors outside of our control, and as such there is no assurance that we will be able to do so in the future. Refer to“Liquidity and Capital Resources”section below.

Previous wording

On October 31, 2023, the Company, Forbion European Acquisition Corporation (“FEAC”), and enGene Inc., a corporation incorporated under the laws of Canada (now known as “enGene Inc” or “Old enGene”), consummated the merger (the “Reverse Recapitalization”) pursuant to a business combination agreement, dated as of May 16, 2023 (the “Merger Agreement”). a corporation incorporated under the laws of Canada (now known as “enGene Inc” or “Old enGene”), consummated the merger (the “Reverse Recapitalization”) pursuant to a business combination agreement, dated as of May 16, 2023 (the “Merger Agreement”).

Current wording

On October 31, 2023, the Company, Forbion European Acquisition Corporation (“FEAC”), and enGene Inc., a corporation incorporated under the laws of Canada (now known as “enGene Inc” or “Old enGene”), consummated the merger (the “Reverse Recapitalization”) pursuant to a business combination agreement, dated as of May 16, 2023 (the “Merger Agreement”).

Previous wording

The transaction was accounted for as a “reverse recapitalization” in accordance with accounting principles generally accepted in the United States (“GAAP”). Under this method of accounting, FEAC was treated as the “acquired” company for financial reporting purposes. This determination is primarily based on the fact that subsequent to the Reverse Recapitalization, senior management of Old enGene continues as senior management of the combined company; Old enGene identifies a majority of the members of the board of directors of the combined company; the name of the combined company is enGene Holdings Inc. and it utilizes Old enGene’s current headquarters, and Old enGene’s operations comprise the ongoing operations of the combined company. Accordingly, for accounting purposes, the Company is considered to be a continuation of Old enGene, with the net identifiable assets of FEAC deemed to have been acquired by Old enGene in exchange for Old enGene common shares accompanied by a recapitalization, with no goodwill or intangible assets recorded. The number of redeemable convertible preferred shares, number of common shares, net loss per common share, the number of warrants to purchase common shares, and the number of stock options and the related exercise prices of the stock options issued and outstanding prior to the Reverse Recapitalization, have been retrospectively restated to reflect an exchange ratio of approximately 0.18048 (the “Exchange Ratio”) established in the Merger Agreement. Operations prior to the Reverse Recapitalization are those of Old enGene.

Current wording

The transaction was accounted for as a “reverse recapitalization” in accordance with accounting principles generally accepted in the United States (“GAAP”). Under this method of accounting, FEAC was treated as the “acquired” company for financial reporting purposes. This determination is and was primarily based on the fact that subsequent to the Reverse Recapitalization, senior management of Old enGene continues as senior management of the combined company; Old enGene identifies a majority of the members of the board of directors of the combined company; the name of the combined company is enGene Holdings Inc. and it utilizes Old enGene’s current headquarters, and Old enGene’s operations comprise the ongoing operations of the combined company. Accordingly, for accounting purposes, the Company is considered to be a continuation of Old enGene, with the net identifiable assets of FEAC deemed to have been acquired by Old enGene in exchange for Old enGene common shares accompanied by a recapitalization, with no goodwill or intangible assets recorded. The number of redeemable convertible preferred shares, number of common shares, net loss per common share, the number of warrants to purchase common shares, and the number of stock options and the related exercise prices of the stock options issued and outstanding prior to the Reverse Recapitalization, have been retrospectively restated to reflect an exchange ratio of approximately 0.18048 (the “Exchange Ratio”) established in the Merger Agreement. Operations prior to the Reverse Recapitalization are those of Old enGene.

Previous wording

We do not have any product candidates approved for sale, have not generated any revenue since our inception and do not expect to generate any revenue from the sale of products or from other sources in the near future, if at all. We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for a product candidate, if ever. If our development efforts for our current lead product candidate, EG-70, EG-i08 or additional product candidates that we may develop in the future are successful and result in marketing approval or if we enter into collaboration or license agreements with third parties, we may generate revenue in the future from a combination of product sales or payments from such collaboration or license agreements.

Current wording

We do not have any product candidates approved for sale, have not generated any revenue since our inception and do not expect to generate any revenue from the sale of products or from other sources in the near future, if at all. We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for a product candidate, if ever. If our development efforts for our current lead product candidate, EG-70 or additional product candidates that we may develop in the future are successful and result in marketing approval or if we enter into collaboration or license agreements with third parties, we may generate revenue in the future from a combination of product sales or payments from such collaboration or license agreements.

Previous wording

Comparison of the Three Months ended January 31, 2024 and 2023

Current wording

Comparison of the three and six months ended April 30, 2024 and 2023

Previous wording

Research and development expenses increased by $2.0 million from $3.7 million for the three months ended January 31, 2023 to $6 million for the three-months ended January 31, 2024. This increase was attributable to the following:

Current wording

Research and development expenses increased by $6.6 million from $3.2 million for the three months ended April 30, 2023 to $9.9 million for the three months ended April 30, 2024. This increase was attributable to the following:

Previous wording

a $1.2 million increase in personnel-related costs as the Company hired a number of key personnel to ramp up its clinical operation, quality, medical affair and manufacturing functions to support our pivotal-stage LEGEND study of EG-70 in BCG-unresponsive NMIBC;

Current wording

a $1.6 million increase in personnel-related costs as the Company hired a number of key personnel to ramp up its clinical operation, quality, medical affair and manufacturing functions to support our pivotal-stage LEGEND study of EG-70 in BCG-unresponsive NMIBC.

Previous wording

General and administrative expenses increased by $4.2 million from $1.0 million for the three months ended January 31, 2023 to $5.1 million for the three months ended January 31, 2024. This increase was primarily attributable to the following:

Current wording

General and administrative expenses increased by $5.9 million from $1.5 million for the three months ended April 30, 2023 to $7.5 million for the three months ended April 30, 2024. This increase was primarily attributable to the following:

Previous wording

a $0.4 million increase in personnel-related expenses driven by the hires of key general and administrative personnel necessary to support the operation of a public company.

Current wording

a $2.7 million increase in personnel-related expenses driven by the hires of key general and administrative personnel necessary to support the operation of a public company as well as an increase in stock based compensation expense;

Previous wording

a $3.2 million increase in third-party legal, accounting and finance consulting and audit related fees to support the Reverse Recapitalization and associated regulatory reporting requirements as well as the costs to implement the necessary general and administration systems and software applications to support the operation of a public company;

Current wording

a $1.4 million increase in third-party accounting and finance consulting and audit related fees to support the associated financial reporting requirements and the 2024 PIPE Financing as well as the costs to implement the necessary general and administration systems and software applications to support the operation of a public company;

Previous wording

a $0.6 million increase in other expenses driven by directors and officers insurance expense as a result of operating as a public company; and,

Current wording

a $0.6 million increase in other expenses driven by directors and officers insurance expense as a result of operating as a public company.

Previous wording

Other (income) expenses, net decreased by approximately $2.8 million from expense of $2.8 million for the three months ended January 31, 2023 to income of $32 thousand for the three months ended January 31, 2024. $2.1 million of the decrease is mainly due to prior period $1.2 million change in fair value of warrant liabilities, $0.3 million change in fair value of convertible debenture liabilities and $0.6 million interest expense associated with the conversion and repayments of our convertible debentures that were no longer applicable to current period as the associated instruments were settled upon the close of the Reverse Recapitalization. Further, there is also a $0.9 million increase in interest income earned in current period from larger cash balances and a $0.4 million loss on extinguishment of debt.

Current wording

Other (income) expenses, net varied by approximately $5.7 million from expense of $3.3 million for the six months ended April 30, 2023 to income of $2.4 million for the six months ended April 30, 2024, primarily due to a $3.7 million increase in interest income earned in the current period from larger cash balances arising from the 2024 PIPE Financing. In addition, $1.5 million change in fair value of warrant liabilities, $0.3 million change in fair value of convertible debenture liabilities and $1.1 million interest expense associated with the conversion and repayments of our convertible debentures were no longer applicable to the current period as the associated instruments were settled upon the close of the Reverse Recapitalization. Further, there is also a $0.4 million loss on extinguishment of debt.

Previous wording

As of January 31, 2024, we had cash and cash equivalents of approximately $85.6 million, which includes the $50 million debt facility provided in connection with the Amended Loan Agreement (as defined below), of which we have drawn $22.5 million. On February 20, 2024, the Company closed the Private Placement Financing resulting in net proceeds to the Company of $187.5 million. Based on our current operating plans, we expect our cash and cash equivalents will be sufficient to fundthe Company’s operating expenses and debt obligations requirements for at least the next 12 months from the issuance date of the condensed consolidated financial statements, without giving effect to any potential milestone debt tranches we may be eligible to drawdown further under our debt facility with Hercules Capital. Our current operating plan is based on various assumptions. If we use our capital resources sooner than expected, we will evaluate further reductions in expense or obtaining additional financing. This may include pursuing a combination of public or private equity offerings, debt financings, collaborations, strategic alliances or licensing arrangements with third parties. There can be no assurance that such financing will be available in sufficient amounts or on acceptable terms, if at all, and some could be dilutive to existing stockholders. If we are unable to obtain additional funding on a timely basis, we may be forced to significantly curtail, delay, or discontinue one or more of our planned research or development programs or be unable to expand our operations.

Current wording

As of April 30, 2024, we had cash and cash equivalents of approximately $264.8 million. Based on our current operating plans, we expect our cash and cash equivalents will be sufficient to fundthe Company’s operating expenses and debt obligations requirements for at least the next 12 months from the issuance date of the condensed consolidated financial statements, without giving effect to any potential milestone debt tranches we may be eligible to drawdown further under our debt facility with Hercules Capital. Our current operating plan is based on various assumptions. If we use our capital resources sooner than expected, we will evaluate further reductions in expense or obtaining additional financing. This may include pursuing a combination of public or private equity offerings, debt financings, collaborations, strategic alliances or licensing arrangements with third parties. There can be no assurance that such financing will be available in sufficient amounts or on acceptable terms, if at all, and some could be dilutive to existing stockholders. If we are unable to obtain additional funding on a timely basis, we may be forced to significantly curtail, delay, or discontinue one or more of our planned research or development programs or be unable to expand our operations.

Previous wording

We have incurred losses and have experienced negative operating cash flows for all periods presented. During the three months ended January 31, 2024, we incurred a loss of $10.7 million and used $7.4 million of cash in operations. We will continue to incur research and development and selling, general and administrative expenses and we expect to continue to generate operating losses and negative operating cash flows for the next few years.

Current wording

We have incurred losses and have experienced negative operating cash flows for all periods presented. During the three and six months ended April 30, 2024, we incurred a loss of $15.0 million and $25.7 million, respectively, and used $21.5 million of cash in operations. We will continue to incur research and development and selling, general and administrative expenses and we expect to continue to generate operating losses and negative operating cash flows for the next few years.

Previous wording

Net cash used in operating activities for the three months ended January 31, 2024 was $7.4 million and was primarily due to our net loss of $10.7 million, partially offset by adjustments for non-cash charges totaling $0.7 million. The non-cash charges consisted of non-cash interest expense of $0.2 million, a loss on extinguishment of debt of $0.4 million, share based compensation expense of $0.3 million, $0.1 million of unrealized foreign currency losses and depreciation of property and equipment of $0.1 million. Further there were changes in operating assets and liabilities of $2.4 million, which driven by a $1.2 million increase in prepaid expenses and other assets, and offset by a $1.2 million decrease in the investment tax credit receivable, and a $2.4 million increase in accounts payable, accrued expenses and other liabilities.

Current wording

Net cash used in operating activities for the six months ended April 30, 2024 was $21.5 million and was primarily due to our net loss of $25.7 million, partially offset by adjustments for non-cash charges totaling $3.2 million. The non-cash charges consisted of non-cash interest expense of $0.4 million, a loss on extinguishment of debt of $0.4 million, share based compensation expense of $2.2 million and depreciation of property and equipment of $0.2 million. Further there were changes in operating assets and liabilities of $0.9 million, which were driven by a $1.1 million increase in the investment tax credit receivable and $2.6 million increase in accrued expenses and other liabilities, and offset by a $2.1 million decrease in the prepaid expenses and other assets, and a $0.7 million decrease in accounts payable.

Previous wording

Net cash used in operating activities for the three months ended January 31, 2023 was $6.2 million and was primarily due to our net loss of $7.4 million, partially offset by adjustments for non-cash charges totaling $2.6 million. The non-cash charges consisted of non-cash interest expense of $1.2 million, changes in fair value of warrant liabilities of $1.2 million, and changes in fair value of derivative liabilities of $0.3 million, and unrealized foreign currency gains of $0.1 million. Further there were changes in operating assets and liabilities of $1.5 million, which was primarily associated with a $1.1 million net decrease in accrued expenses and accounts payable, and a $0.4 million decrease in the investment tax credit receivable.

Current wording

Net cash used in operating activities for the six months ended April 30, 2023 was $10.7 million and was primarily due to our net loss of $12.7 million, partially offset by adjustments for non-cash charges totaling $3.2 million which was primarily driven by non-cash interest expense of $1.7 million and changes in fair value of convertible debenture embedded derivative liabilities and warrant liabilities of $1.2 million, share-based compensation expense of $0.1 million, and depreciation of property and equipment of $0.1 million. Further there were changes in operating assets and liabilities of $1.1 million, which was primarily associated with a $2.3 million decrease in accrued expenses and other liabilities, a $2.0 million increase in accounts payable, $0.7 million increase in the investment tax credit receivable, and a $0.2 million increase in prepaid expenses and other assets.

Previous wording

Net cash used in investing activities for each of the three months ended January 31, 2024, and 2023 was $0.5 million and $13 thousand, respectively, consisting of purchases of property and equipment.

Current wording

Net cash used in investing activities for each of the six months ended April 30, 2024 and 2023 was $0.7 million and $23 thousand, respectively, consisting of purchases of property and equipment.

Previous wording

Net cash provided by financing activities for the three months ended year ended January 31, 2024 was $12.0 million, resulting from proceeds of $22.5 million received from the Term Loan, which was offset by $9.4 million in principal repayments of the Prior Term Loan, $0.4 million in debt issuance costs paid as part of the Term Loan, and $0.6 million of SPAC transaction costs paid during the three months ended January 31, 2024.

Current wording

Net cash provided by financing activities for the six months ended April 30, 2024 was $205.5 million, resulting from proceeds of $6.0 million from exercise of common share warrants, $200.0 million received from the 2024 PIPE financing, which was partially offset by $12.4 million of issuance costs associated with the 2024 PIPE financing, $22.5 million received from the Term Loan, which was offset by $9.4 million in principal repayments of the Prior Term Loan, $0.6 million in debt issuance costs paid as part of the Term Loan, and $0.6 million of SPAC transaction costs paid during the six months ended April 30, 2024.

Previous wording

Cash flows from financing activities for the three months ended January 31, 2023 was related to the payment of transaction costs associated with the Reverse Recapitalization.

Current wording

Cash flows from financing activities for the six months ended April 30, 2023 was $7.8 million, resulting from proceeds of $8.0 million received from he issuance of the April 2023 Notes, partially offset by the payment of Reverse Recapitalization and PIPE financing transaction costs of $0.1 million and payment of issuance costs associated with the April 2023 Notes of $0.1 million.

Previous wording

The Prior Term Loan was to mature on July 1, 2025, with no option for extension (the “Prior Term Loan Maturity Date”).

Current wording

The Prior Term Loan were scheduled to mature on July 1, 2025, with no option for extension (the “Prior Term Loan Maturity Date”).

Previous wording

The Amended Loan Agreement provides for a term loan facility of up to $50.0 million available in multiple tranches (the "Term Loan”), as follows: (i) an initial term loan advance (the "Tranche 1 Advance”) that was made on the Hercules Closing Date of $22.5 million, approximately $8.6 million of which was applied to refinance in full the term loans outstanding under the Prior Term Loan, (ii) subject to the achievement of the specified interim milestone (the "Interim Milestone”) and satisfaction of certain other conditions precedent, our right to request that the Lenders make additional term loan advances to us in an aggregate principal amount of up to $7.5 million from the achievement of the Interim Milestone through the earlier of (x) 60 days following the Interim Milestone and (y) March 31, 2025, and (iii) an uncommitted tranche subject to the Lenders’ investment committee approval and satisfaction of certain other conditions precedent (including payment of a 0.75% facility charge on the amount borrowed), pursuant to which we may request from time to time up to and including the Amortization Date (defined below) that the Lenders make additional term loan advances to us in an aggregate principal amount of up to $20.0 million. We are required to pay upon the earlier of January 1, 2028 ( the “Maturity Date”) or payment in full of the Term Loans, an end of term fee equal to 5.50% of the aggregate principal amount of the Term Loans (the "End of Term Charge"). We are also required to pay on July 1, 2025 or, if earlier, the date we prepay the Term Loans, $0.7 million representing the Prior Term Loan End of Term Charge (the Prior Term Loan End of Term Charge and End of Term Charge, collectively the "End of Term Charges").

Current wording

The Amended Loan Agreement provides for a term loan facility of up to $50.0 million available in multiple tranches (the "Term Loan”), as follows: (i) an initial term loan advance (the "Tranche 1 Advance”) that was made on the Hercules Closing Date of $22.5 million, approximately $8.6 million of which was applied to refinance in full the term loans outstanding under the Prior Loan Agreement, (ii) subject to the achievement of the specified interim milestone (the "Interim Milestone”) and satisfaction of certain other conditions precedent, our right to request that the Lenders make additional term loan advances to us in an aggregate principal amount of up to $7.5 million from the achievement of the Interim Milestone through the earlier of (x) 60 days following the Interim Milestone and (y) March 31, 2025, and (iii) an uncommitted tranche subject to the Lenders’ investment committee approval and satisfaction of certain other conditions precedent (including payment of a 0.75% facility charge on the amount borrowed), pursuant to which we may request from time to time up to and including the Amortization Date (defined below) that the Lenders make additional term loan advances to us in an aggregate principal amount of up to $20.0 million. We are required to pay upon the earlier of January 1, 2028 ( the “Maturity Date”) or payment in full of the Term Loans, an end of term fee equal to 5.50% of the aggregate principal amount of the Term Loans (the "End of Term Charge"). We are also required to pay on July 1, 2025 or, if earlier, the date we prepay the Term Loans, $0.7 million representing the Prior Term Loan End of Term Charge (the Prior Term Loan End of Term Charge and End of Term Charge, collectively the "End of Term Charges").

Previous wording

We accounted for the Amended Loan Agreement as an extinguishment of the Prior Term Loan. As a result of the extinguishment, we recorded a loss of $0.4 million as a component within other income and expense in our consolidated statement of operations during the three months ended January 31, 2024, which represented the reacquisition price of the debt, including fees and the initial fair value of the warrants to the lender, and the carrying value of the Prior Term Loan at the time of extinguishment.

Current wording

We accounted for the Amended Loan Agreement as an extinguishment of the Prior Term Loan. As a result of the extinguishment, we recorded a loss of $0.4 million as a component within other income and expense in our consolidated statement of operations during the three and six months ended April 30, 2024, which represented the reacquisition price of the debt, including fees and the initial fair value of the warrants to the lender, and the carrying value of the Prior Term Loan at the time of extinguishment.

Previous wording

During the three months ended January 31, 2024, and 2023, we recognized $0.6 million and $0.4 million of interest expense, respectively, related to the term loans, of which $0.1 million and $34 was related to the amortization of the debt discounts, respectively.

Current wording

During the three and six months ended April 30, 2024, we recognized $0.7 million and $1.3 million of interest expense, respectively, related to the term loans, of which $0.1 million and $0.3 million was related to the amortization of the debt discounts, respectively. During the three and six months ended April 30, 2023, we recognized $0.4 million and $0.9 million of interest expense, respectively, related to the term loans, of which $0.1 million and $0.2 million was related to the amortization of the debt discounts, respectively.

Previous wording

The Hercules term loan is our only outstanding debt instrument at January 31, 2024.

Current wording

The Hercules Term Loan is our only outstanding debt instrument as of April 30, 2024.

Previous wording

Based on our current operating plan, we believe that our cash available following the Amended Loan Agreement and the 2024 PIPE Financing is sufficient to fund our operations for twelve months from the date of issuance of our financial statements. We could use our available capital resources sooner than we currently expect. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy.

Current wording

Based on our current operating plan, we believe that our existing cash and cash equivalents as of April 30, 2024 will be sufficient to fund our operating expenses, debt obligations, and capital expenditure requirements for at least the next 12 months from the issuance date of the condensed consolidated financial statements. We could use our available capital resources sooner than we currently expect. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy.

Previous wording

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings or other capital sources, which could include collaborations, strategic alliances or licensing arrangements. Adequate additional financing, if available, may not be available to us on acceptable terms, or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our existing shareholders may be diluted, and the terms of these securities may include liquidation or other preferences that could adversely affect the rights of such shareholders. Debt financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, that could adversely impact our ability to conduct our business. If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research program or product candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and disruptions to and volatilityin the credit and financial markets in the United States and worldwide. Because of the numerous risks and uncertainties associated with product development, there is no assurance that we will ever be profitable or generate positive cash flow from operating activities.

Current wording

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings or other capital sources, which could include collaborations, strategic alliances or licensing arrangements. Adequate additional financing may not be available to us on acceptable terms, or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our existing shareholders may be diluted, and the terms of these securities may include liquidation or other preferences that could adversely affect the rights of such shareholders. Debt financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, that could adversely impact our ability to conduct our business. If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research program or product candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and disruptions to and volatilityin the credit and financial markets in the United States and worldwide. Because of the numerous risks and uncertainties associated with product development, there is no assurance that we will ever be profitable or generate positive cash flow from operating activities.

Previous wording

Our leases are comprised of all operating leases for office and lab space. We had a month-to-month office and lab space lease located in Montreal, Quebec, Canada, which commenced in November 2021 and had an initial term of 12 months that expired on October 31, 2022. The lease includes options to renew for consecutive twelve-month periods upon landlord consent, at new lease rates. In October 2022, we entered into a lease amendment to extend the lease for an additional term of six months through April 2023, with an option to extend the lease through September 2023. In April 2023, the Company extended the lease through September 2023. In September 2023, the Company extended the lease term through November 5, 2023. The amendment resulted in $0.2 million of additional lease commitments to be paid during the extended term, inclusive of the extension through November 5, 2023.

Current wording

Our leases are comprised of all operating leases for office and lab space. We previously held a month-to-month office and lab space lease located in Montreal, Quebec, Canada, which commenced in November 2021 and had an initial term of 12 months that expired on October 31, 2022. The lease included options to renew for consecutive twelve-month periods upon landlord consent, at new lease rates. In October 2022, we entered into a lease amendment to extend the lease for an additional term of six months through April 2023, with an option to extend the lease through September 2023. In April 2023, the Company extended the lease through September 2023. In September 2023, the Company extended the lease term through November 5, 2023, at which time the Company vacated the lease. The amendment resulted in $0.2 million of additional lease commitments to be paid during the extended term, inclusive of the extension through November 5, 2023.

Previous wording

The Company does not have material capital expenditure commitments at January 31, 2024.

Current wording

The Company does not have material capital expenditure commitments as of April 30, 2024.

Previous wording

As a result of Transition Agreement, the 1,216,266 stock option awards issued to the CEO were modified to allow for an extended exercise period described above. The modification is expected to result in an incremental share-based compensation expense of approximately $1 million to be recorded upon the effective date of the Transition Agreement.

Current wording

As a result of the Transition Agreement, the 1,216,266 stock option awards issued to the CEO were modified to allow for an extended exercise period described above. The modification resulted in an incremental share-based compensation expense of approximately $1.0 million which was recorded upon the effective date of the Transition Agreement.

Previous wording

We are also a “smaller reporting company,” meaning that the market value of our common shares held by non-affiliates is less than $700.0 million and our annual revenue is less than $100.0 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our common shares held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our common shares held by non-affiliates is less than $700.0 million.

Current wording

As of the most recent calculation of our public float on April 30, 2024, we are also a “smaller reporting company,” meaning that the market value of our common shares held by non-affiliates was less than $700.0 million as of such date and our annual revenue was less than $100.0 million during our most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our common shares held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our common shares held by non-affiliates is less than $700.0 million, calculated as of the last business day of our most recently completed second fiscal quarter.

Previous wording

We have reviewed all recently issued accounting pronouncements and have determined that, other than as disclosed in Note 2 to the interim financial statements on Form 10-Q, such standards will not have a material impact on our financial statements or do not otherwise apply to our operations.

Current wording

We have reviewed all recently issued accounting pronouncements and have determined that, other than as disclosed in Note 2 to the interim financial statements of this Quarterly Report on Form 10-Q, such standards will not have a material impact on our financial statements or do not otherwise apply to our operations.

Previous wording

As of March 7, 2024, we had 43,581,331 Common Shares issued and outstanding, outstanding warrants to purchase an additional 9,032,250 Common Shares and outstanding stock options to purchase an additional 3,288,859 Common Shares. The warrants amount listed in the foregoing sentence excludes the Hercules Common Share Warrants described above under “Liquidity and Capital Resources—Cash Flows—Amended Loan and Security Agreement”.

Current wording

As of June 12, 2024, we had 44,166,159 Common Shares issued and outstanding, outstanding warrants to purchase an additional 8,449,555 Common Shares and outstanding stock options to purchase an additional 3,973,861 Common Shares. The warrants amount listed in the foregoing sentence excludes the Hercules Common Share Warrants described above under “Liquidity and Capital Resources—Cash Flows—Amended Loan and Security Agreement”.