enGene Holdings Inc
For the period ended Jul 31, 2024. Filed Sep 10, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jul 31, 2024 · Filed Sep 10, 2024
ENGN$1.75+4.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-04-30; filed 2024-06-14.
0000950170-24-073330
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-07-31; filed 2024-09-10.
0000950170-24-105180
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 178 previous paragraphs and 178 current paragraphs.
127 unchanged; 41 reworded; 8 added; 8 removed; 2 previous and 2 current paragraphs rearranged.
Tables are not compared: 6 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
a $0.7 million decrease in professional fees driven by the hiring of internal accounting and finance team and higher costs in 2023 due to higher accounting and finance consulting fees as well as audit related fees to support the SPAC transaction.
Current report
Increases were offset by a $3.0 million change in fair value of warrant and convertible debenture liabilities during the three months ended July 31, 2023 as they are no longer applicable to the current period as the associated instruments were settled upon the close of the Reverse Recapitalization.
Current report
Comparison of the nine months ended July 31, 2024 and 2023
Current report
Net cash used in operating activities for the nine months ended July 31, 2024 was $28.7 million and was primarily due to our net loss of $39.8 million, partially offset by adjustments for non-cash charges totaling $5.0 million. Further changes were driven by the receipt of a $2.1 million refundable investment tax credit and a $4.0 million increase in net working capital adjustments.
Current report
Former CEO Transition Agreement
Current report
On February 13, 2024, the Company (through its subsidiary, enGene USA, Inc.) entered into a Transition and Modification Agreement (the "Transition Agreement") with the Company's former Chief Executive Officer, Jason Hanson, which amended and modified the Employment Agreement, dated November 8, 2023, between Mr. Hanson and enGene USA (the “Hanson Employment Agreement”). On July 23, 2024, the Company (through its subsidiary, enGene USA, Inc.) and Mr. Hanson entered into the Amendment to Transition and Modification Agreement (the “TMA Amendment”), which further amended the Hanson Transition Agreement. Under the terms of the Hanson Employment Agreement as amended by the Transition Agreement and TMA Amendment (the “Amended Employment Agreement”) Mr. Hanson is entitled to:
Current report
payment of a 2024 target annual bonus in the amount of $390,000, less applicable taxes and withholdings;
Current report
Mr. Hanson’s resignation was effective as of July 19, 2024 in connection with the Company’s appointment of a new chief executive officer. On July 20, 2024, enGene appointed Ronald H. W. Cooper as Chief Executive Officer of the Company and as director of the Company's Board.
Removed paragraphs (8)
Previous report
a $0.3 million increase in early research and platform expansion work is a result of the Company’s effort to perform exploratory work on the platform; and
Previous report
a $0.3 million increase in early research and platform expansion work is a result of the Company’s effort to perform exploratory work on the platform; and
Previous report
Comparison of the six months ended April 30, 2024 and 2023
Previous report
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 report
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 report
CEO Transition Agreement
Previous report
On February 13, 2024, we entered into a Transition and Modified Employment Agreement (the "Transition Agreement") with the Company's Chief Executive Officer, Jason Hanson, which amends and modifies the CEO's Employment Agreement dated November 8, 2023 (the “Amended Employment Agreement”). As part of the Transition Agreement, Mr. Hanson was entitled to receive his full 2023 cash bonus on or before March 15, 2024. Under the terms of the Amended Employment Agreement, upon Mr. Hanson’s voluntary resignation or death or disability and subject to execution and non-revocation of a customary release, Mr. Hanson will be entitled to:
Previous report
payment of a prorated portion of his 2024 target annual bonus;
Reworded paragraphs (41)
Previous wording
enGene is a clinical-stage biotechnology company mainstreaming genetic medicines through the delivery of therapeutics to mucosal tissues and other organs, with the goal of creating new ways to address diseases with high clinical needs. enGene’s lead program is EG-70 for patients with non-muscle invasive bladder cancer (NMIBC) with carcinoma in situ (Cis) who are unresponsive or naïve to treatment with Bacillus Calmette-Guérin (BCG) – a disease with a high clinical burden. EG-70 is being evaluated in an ongoing Phase 2 pivotal study. EG-70 was developed using enGene’s proprietary Dually Derivatized Oligochitosan (DDX) platform, which enables penetration of mucosal tissues and delivery of a wide range of sizes and types of cargo, including DNA and various forms of RNA.
Current wording
enGene is a clinical-stage biotechnology company mainstreaming genetic medicines through the delivery of therapeutics to mucosal tissues and other organs, with the goal of creating new ways to address diseases with high clinical needs. enGene’s lead program is detalimogene voraplasmid, or detalimogene, formerly referred to as EG-70, for patients with non-muscle invasive bladder cancer (NMIBC) with carcinoma in situ (Cis) who are unresponsive or naïve to treatment with Bacillus Calmette-Guérin (BCG) – a disease with a high clinical burden. Detalimogene is being evaluated in an ongoing Phase 2 pivotal study. Detalimogene was developed using enGene’s proprietary Dually Derivatized Oligochitosan (DDX) platform, which enables penetration of mucosal tissues and delivery of a wide range of sizes and types of cargo, including DNA and various forms of RNA.
Previous wording
On June 13, 2024, enGene announced plans to explore additional applications of EG-70 within the bladder by expanding the Phase 2 LEGEND study to include a third cohort targeting high-risk BCG-unresponsive papillary-only NMIBC patients and plans to modify the second cohort to separately analyze responses between BCG-naïve patients and BCG-exposed patients. The planned third cohort of patients with BCG-unresponsive, papillary-only Ta/T1 disease is expected to enroll 70 to 100 patients and begin enrollment in the fourth quarter of 2024. The planned modification of the second cohort, for which enrollment has been temporarily paused, is designed to allow separate analysis of responses between BCG-naïve patients and BCG-exposed patients and enGene expects to resume enrollment in both groups in the fourth quarter of 2024. As a result of the prioritization of these potential new indications in bladder cancer, enGene deprioritized pre-clinical development of EG-i08 for cystic fibrosis.
Current wording
On June 13, 2024, enGene announced plans to explore additional applications of detalimogene within the bladder by expanding the Phase 2 LEGEND study to include a third cohort targeting high-risk BCG-unresponsive papillary-only NMIBC patients, as well as plans to modify the second cohort to separately analyze responses between BCG-naïve patients and BCG-exposed patients. The planned third cohort of patients with BCG-unresponsive, papillary-only Ta/T1 disease is expected to enroll 50 to 100 patients and to begin enrollment in the fourth quarter of 2024. The planned modification of the second cohort, for which enrollment has been temporarily paused, is designed to allow separate analysis of responses between BCG-naïve patients, and BCG-exposed patients and enGene expects to resume enrollment in both groups in the fourth quarter of 2024. As a result of the prioritization of these potential new indications in bladder cancer, enGene deprioritized pre-clinical development of EG-i08 for cystic fibrosis.
Previous 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.
Current wording
We have never been profitable and have incurred net losses since inception. Our net loss was $14.1 million and $39.8 million for the three and nine months ended July 31, 2024, respectively, and $4.7 million and $17.4 million for the three and nine months ended July 31, 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 detalimogene 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 detalimogene development opportunities and other compounds.
Previous 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.
Current wording
As of July 31, 2024, we had $257.7 million in cash and cash equivalents. We believe that our existing cash and cash equivalents as of July 31, 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 included within this Quarterly Report on
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 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, detalimogene 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
A significant portion of our research and development costs to date have been third-party costs, which we track on an individual product candidate basis after a clinical product candidate has been identified. Currently, our main clinical product candidate is EG-70. Our indirect research and development costs are primarily personnel-related costs, facilities and other costs. Employees and infrastructure are not directly tied to any one program and are deployed across our programs. As such, we do not track these costs on a specific program basis. We utilize third party contractors for our research and development activities and CDMOs for our manufacturing activities and we do not have our own laboratory or manufacturing facilities.
Current wording
A significant portion of our research and development costs to date have been third-party costs, which we track on an individual product candidate basis after a clinical product candidate has been identified. Currently, our main clinical product candidate is detalimogene. Our indirect research and development costs are primarily personnel-related costs, facilities and other costs. Employees and infrastructure are not directly tied to any one program and are deployed across our programs. As such, we do not track these costs on a specific program basis. We utilize third party contractors for our research and development activities and CDMOs for our manufacturing activities and we do not have our own laboratory or manufacturing facilities.
Previous wording
Research and development activities are central to our business model. Currently, the Company’s sole laboratory facility is located in Montreal, Quebec, Canada, and as such, a portion of the Company’s research and development and other operating expenses are incurred in Canada and denominated in the Canadian dollar. We expect that our research and development expenses will continue to increase for the foreseeable future as we progress our ongoing Phase 1/2 clinical trial for EG-70, continue to discover and develop additional product candidates, expand our headcount and maintain, expand and enforce our intellectual property portfolio. If EG-70 or any future product candidates enter into later stages of clinical development, they will generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. There are numerous factors associated with the successful development and commercialization of any product candidates we may develop in the future, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development. Additionally, future commercial and regulatory factors beyond our control will impact our clinical development program and plans.
Current wording
Research and development activities are central to our business model. Currently, the Company’s sole laboratory facility is located in Montreal, Quebec, Canada, and as such, a portion of the Company’s research and development and other operating expenses are incurred in Canada and denominated in the Canadian dollar. We expect that our research and development expenses will continue to increase for the foreseeable future as we progress our ongoing Phase 1/2 clinical trial for detalimogene, continue to discover and develop additional product candidates, expand our headcount and maintain, expand and enforce our intellectual property portfolio. If detalimogene or any future product candidates enter into later stages of clinical development, they will generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. There are numerous factors associated with the successful development and commercialization of any product candidates we may develop in the future, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development. Additionally, future commercial and regulatory factors beyond our control will impact our clinical development program and plans.
Previous wording
Comparison of the three and six months ended April 30, 2024 and 2023
Current wording
Comparison of the three and nine months ended July 31, 2024 and 2023
Previous 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:
Current wording
Research and development expenses increased by $7.6 million from $3.9 million for the three months ended July 31, 2023 to $11.5 million for the three months ended July 31, 2024. This increase was attributable to the following:
Previous wording
a $4.8 million increase in EG-70 direct expense is a result of our increasing clinical and manufacturing activities to advance our LEGEND study of EG-70 in BCG-unresponsive NMIBC, as well as in preparation for our Biologics License Application submission;
Current wording
a $7.0 million increase in detalimogene direct expense is a result of our increasing clinical and manufacturing activities to advance our LEGEND study of detalimogene in BCG-unresponsive NMIBC, as well as in preparation for our Biologics License Application submission; and
Previous 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.
Current wording
a $0.8 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 detalimogene in BCG-unresponsive NMIBC.
Previous wording
Research and development expenses increased by $8.6 million from $6.9 million for the six months ended April 30, 2023 to $15.5 million for the six months ended April 30, 2024. This increase was attributable to the following:
Current wording
Research and development expenses increased by $16.3 million from $10.8 million for the nine months ended July 31, 2023 to $27.0 million for the nine months ended July 31, 2024. This increase was attributable to the following:
Previous wording
a $5.6 million increase in EG-70 direct expense is a result of our increasing clinical and manufacturing activities to advance our LEGEND study of EG-70 in BCG-unresponsive NMIBC, as well as in preparation for our Biologics License Application submission;
Current wording
a $12.7 million increase in detalimogene direct expense is a result of our increasing clinical and manufacturing activities to advance our LEGEND study of detalimogene in BCG-unresponsive NMIBC, as well as in preparation for our Biologics License Application submission; and
Previous wording
a $2.7 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 $3.4 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 detalimogene in BCG-unresponsive NMIBC.
Previous 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:
Current wording
General and administrative expenses increased by $2.9 million from $2.3 million for the three months ended July 31, 2023 to $5.2 million for the three months ended July 31, 2024. This increase was primarily attributable to the following:
Previous 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;
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, former CEO transition fees, as well as a $0.6 million increase in stock-based compensation expense; and
Previous wording
a $1.2 million increase in other expenses driven by directors and officers insurance expense as a result of operating as a public company.
Current wording
a $1.0 million increase in other expenses driven by directors and officers insurance expense as a result of operating as a public company; offset by
Previous wording
General and administrative expenses increased by $10.1 million from $2.5 million for the six months ended April 30, 2023 to $12.6 million for the six months ended April 30, 2024 . This increase was primarily attributable to the following:
Current wording
General and administrative expenses increased by $13.0 million from $4.8 million for the nine months ended July 31, 2023 to $17.8 million for the nine months ended July 31, 2024 . This increase was primarily attributable to the following:
Previous wording
a $3.1 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;
Current wording
a $5.8 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 and former CEO transition fees as well as an increase in stock-based compensation expense of $2.3 million, which includes the former CEO's option modification of $1.0 million;
Previous wording
a $3.1 million increase in third-party accounting and finance consulting as well as audit related fees to support the SPAC transaction, the 2024 PIPE Financing and associated financial 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 $2.4 million increase in professional fees driven by third-party accounting and finance consulting as well as audit related fees to support the SPAC transaction, the 2024 PIPE Financing and associated financial 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;
Previous wording
a $2.7 million increase in legal fees and patent maintenance driven by the need to support regulatory reporting and compliance of a public company in both Canada and US jurisdiction; and
Current wording
a $2.6 million increase in legal fees and patent maintenance driven by support for the SPAC and PIPE Financing transactions and the need to support regulatory reporting and compliance of a public company in both Canada and US jurisdictions; and
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.
Current wording
a $2.2 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 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.
Current wording
Other income increased by approximately $1.1 million from income of $1.5 million for the three months ended July 31, 2023 to income of $2.6 million for the three months ended July 31, 2024, primarily due to a $3.0 million increase in interest income earned in the current period from larger cash balances arising from the 2024 PIPE Financing, and a $0.7 million decrease in interest expense as expense associated with the conversion and repayments of our convertible debentures were no longer applicable to the current period.
Previous wording
Other (income) expenses, net varied by approximately $2.9 million from expense of $0.5 million for the three months ended April 30, 2023 to income of $2.3 million for the three months ended April 30, 2024, primarily due to a $2.8 million increase in interest income earned in the current period from larger cash balances arising from the 2024 PIPE Financing. In addition, $0.3 million change in fair value of warrant liabilities, $0.6 million change in fair value of convertible debenture liabilities and $0.4 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 a $0.1 million decrease in other expense primarily due to foreign exchange gains.
Current wording
Other (income) expenses, net increased by approximately $6.8 million from expense of $1.8 million for the nine months ended July 31, 2023 to income of $5.0 million for the nine months ended July 31, 2024, primarily due to a $6.7 million increase in interest income earned in the current period from larger cash balances arising from the 2024 PIPE Financing, a $1.8 million decrease in interest expense as expense associated with the conversion and repayments of our convertible debentures were no longer applicable to the current period, and a $0.5 million decrease in other expense driven by foreign exchange rate differences. Increases were offset by $1.8 million change in fair value of warrant and convertible debenture liabilities during the nine months ended July 31, 2023 as these liabilities are no longer applicable to the current period as the associated instruments were settled upon the close of the Reverse Recapitalization.
Previous 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.
Current wording
As of July 31, 2024, we had cash and cash equivalents of approximately $257.7 million. Based on our current operating plans, we expect our cash and cash equivalents as of July 31, 2024 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 included within this Quarterly Report on Form 10-Q, 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 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.
Current wording
We have incurred losses and have experienced negative operating cash flows for all periods presented. During the three and nine months ended July 31, 2024, we incurred a loss of $14.1 million and $39.8 million, respectively, and used $28.7 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 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.
Current wording
Net cash used in operating activities for the nine months ended July 31, 2023 was $18.0 million and was primarily due to our net loss of $17.4 million, partially offset by adjustments for non-cash charges totaling $2.6 million. Further changes were driven by a $1.2 million increase in the investment tax credit receivable and a $1.9 million decrease in net working capital adjustments.
Previous 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.
Current wording
Net cash used in investing activities for each of the nine months ended July 31, 2024 and 2023 was $0.7 million and $0.2 million, respectively, consisting of purchases of property and equipment.
Previous 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.
Current wording
Net cash provided by financing activities for the nine months ended July 31, 2024 was $205.6 million, primarily resulting from $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, $6.0 million from exercise of common share warrants, offset by $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 nine months ended July 31, 2024.
Previous 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.
Current wording
Net cash provided by financing activities for the nine months ended July 31, 2023 was $35.3 million, primarily resulting from proceeds of $38.0 million received from the issuance of the April 2023 and May 2023 note and warrant financings, partially offset by the payment of FEAC merger and PIPE financing transaction costs of $2.0 million.
Previous wording
On December 30, 2021, we entered into a Loan and Security Agreement (the “Prior Loan Agreement”) with Hercules Capital, Inc. (“Hercules” or “the Bank” or the “Lender”) for the issuance of a term loan facility of up to an aggregate principal amount of up to $20.0 million (the “Prior Term Loan”). The Prior Loan Agreement has remained in place after the consummation of the Reverse Recapitalization. The Prior Loan Agreement provided for (i) an initial term loan advance of $7.0 million, which closed on December 30, 2021, (ii) subject to the achievement of certain Clinical Milestones (the “Clinical Milestone”), a right of the Company to request that the Lender make additional term loan advances to us in an aggregate principal amount of up to $4.0 million from the achievement of the Clinical Milestone through June 15, 2022, which was drawn in June 2022, and (iii) subject to the achievement of certain financial milestones (the “Financial Milestone”), a right of the Company to request that the Lender make additional term loan advances to the Company in an aggregate principal amount of up to $9.0 million from achievement of the Financial Milestone through December 15, 2022, which was not achieved. We are required to pay an end of term fee (the “Prior End of Term Charge”) equal to 6.35% of the aggregate principal amount of the Term Loans advances upon repayment. The financing agreement contains negative covenants that, among other things and subject to certain exceptions, could restrict our ability to incur additional liens, incur additional indebtedness, make investments, including acquisitions, engage in fundamental changes, sell or dispose of assets that constitute collateral, including certain intellectual property, pay dividends or make any distribution or payment on or redeem, retire or purchase any equity interests, amend, modify or waive certain material agreements or organizational documents and make payments of certain subordinated indebtedness.
Current wording
On December 30, 2021, we entered into a Loan and Security Agreement (the “Prior Loan Agreement”) with Hercules Capital, Inc. (“Hercules” or “the Bank” or the “Lender”) for the issuance of a term loan facility of up to an aggregate principal amount of up to $20.0 million (the “Prior Term Loan”). The Prior Loan Agreement has remained in place after the consummation of the Reverse Recapitalization, until its amendment and restatement in December 2023, as discussed below. The Prior Loan Agreement provided for (i) an initial term loan advance of $7.0 million, which closed on December 30, 2021, (ii) subject to the achievement of certain Clinical Milestones (the “Clinical Milestone”), a right of the Company to request that the Lender make additional term loan advances to us in an aggregate principal amount of up to $4.0 million from the achievement of the Clinical Milestone through June 15, 2022, which was drawn in June 2022, and (iii) subject to the achievement of certain financial milestones (the “Financial Milestone”), a right of the Company to request that the Lender make additional term loan advances to the Company in an aggregate principal amount of up to $9.0 million from achievement of the Financial Milestone through December 15, 2022, which was not achieved. We were required to pay an end of term fee (the “Prior End of Term Charge”) equal to 6.35% of the aggregate principal amount of the Term Loans advances upon repayment. The financing agreement contained negative covenants that, among other things and subject to certain exceptions, could have restricted our ability to incur additional liens, incur additional indebtedness, make investments, including acquisitions, engage in fundamental changes, sell or dispose of assets that constitute collateral, including certain intellectual property, pay dividends or make any distribution or payment on or redeem, retire or purchase any equity interests, amend, modify or waive certain material agreements or organizational documents and make payments of certain subordinated indebtedness.
Previous wording
The Prior Term Loan were scheduled to mature on July 1, 2025, with no option for extension (the “Prior Term Loan Maturity Date”).
Current wording
The Prior Term Loan was scheduled to mature on July 1, 2025, with no option for extension (the “Prior Term Loan Maturity Date”).
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 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.
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 nine months ended July 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. No loss was recorded during the three months ended July 31, 2024.
Previous wording
As of October 31, 2023, we classified $0.6 million of the note payable as current, which represents the principal payments due and amortization of the debt discount between October 31, 2023 and the date the Prior Term Loan was amended in December 2023, as the debt was refinanced on a long-term in the subsequent period.
Current wording
As of October 31, 2023, we classified $0.6 million of the note payable as current, which represents the principal payments due and amortization of the debt discount between October 31, 2023 and the date the Prior Term Loan was amended in December 2023, as the debt was refinanced on a long-term basis in the subsequent period.
Previous 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.
Current wording
Based on our current operating plan, we believe that our existing cash and cash equivalents as of July 31, 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 included within this Quarterly Report on Form 10-Q. 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
the initiation, timing, costs, progress and results of our planned clinical trials of EG-70;
Current wording
the initiation, timing, costs, progress and results of our planned clinical trials of detalimogene;
Previous wording
On April 10, 2020, we entered into the License Agreement with NTC pursuant to which NTC granted us a worldwide non-exclusive, royalty-bearing and sublicensable license to certain patents and know-how relating to the Nanoplasmid™ vector backbone that is used in detalamogene voraplasmid to research, develop, make, use, import, sell and offer and sell, any gene and cell therapy products incorporating the Nanoplasmid™ vector backbone (excluding any such products in the field of dermatology). Unless terminated earlier, the License Agreement will continue until no valid claim of any licensed patent exists in any country. We can voluntarily terminate the License Agreement with prior notice to NTC.
Current wording
On April 10, 2020, we entered into the License Agreement with NTC pursuant to which NTC granted us a worldwide non-exclusive, royalty-bearing and sublicensable license to certain patents and know-how relating to the Nanoplasmid™ vector backbone that is used in detalimogene voraplasmid to research, develop, make, use, import, sell and offer and sell, any gene and cell therapy products incorporating the Nanoplasmid™ vector backbone (excluding any such products in the field of dermatology). Unless terminated earlier, the License Agreement will continue until no valid claim of any licensed patent exists in any country. We can voluntarily terminate the License Agreement with prior notice to NTC.
Previous wording
Pursuant to the Amended Employment Agreement, (a) upon the termination of Mr. Hanson’s employment by the Company without Cause (as defined in the Amended Employment Agreement) or by Mr. Hanson for Good Reason (as defined in the Amended Employment Agreement), in addition to the above severance benefits, Mr. Hanson will also be entitled to 12 months’ base salary continuation or, if such even occurs during a change of control period (as described in the Amended Employment Agreement), 18 months’ base salary continuation.
Current wording
Pursuant to the Amended Employment Agreement, (a) upon the termination of Mr. Hanson’s employment by the Company without Cause (as defined in the Amended Employment Agreement) or by Mr. Hanson for Good Reason (as defined in the Amended Employment Agreement), in addition to the above severance benefits, Mr. Hanson would also have been entitled to 12 months’ base salary continuation or, if such event were to have occurred during a change of control period (as described in the Amended Employment Agreement), 18 months’ base salary continuation
Previous wording
The Transition Agreement further provides that, in the event Mr. Hanson resigns upon the appointment by the Company of a new chief executive officer, Mr. Hanson will be immediately engaged in a consulting role to provide transition services as a Senior Strategic Advisor to the Company for a period of at least six months following the effective date of his resignation (the “Consulting Period”) in exchange for a monthly fee of $25,000 for the initial six-month Consulting Period, and $500 per hour thereafter, provided that Mr. Hanson need not devote more than fifteen (15) hours per week to providing such transition services.
Current wording
The Transition Agreement further provided that, in the event Mr. Hanson were to resign upon the appointment by the Company of a new chief executive officer, Mr. Hanson would be immediately engaged in a consulting role to provide transition services as a Senior Strategic Advisor to the Company for a period of at least six months following the effective date of resignation (the “Consulting
Previous 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.
Current wording
Under the Transition Agreement, the 1,216,266 stock option awards issued to Mr. Hanson were modified to allow for an extended exercise period as described above. The modification resulted in an incremental share-based compensation expense of $1.0 million which was recorded upon the effective date of the Transition Agreement.
Showing the first 40 of 41 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Form 10-Q. 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.
Current report — wording carried from elsewhere
Period”) in exchange for a monthly fee of $25,000 for the initial six-month Consulting Period, and $500 per hour thereafter, provided that Mr. Hanson need not devote more than fifteen (15) hours per week to providing such transition services.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
a $1.2 million increase in legal fees and patent maintenance driven by the need to maintain regulatory compliance of a public company in both Canada and US jurisdictions ; and