Forward-Looking Statements
Certain statements and information in this MD&A contain forward-looking statements or forward-looking information under applicable securities legislation that may not be based on historical fact, including, without limitation, statements containing the words “may,” “might,” “will,” “likely,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “objective,” “goal,” “outlook,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “forecast,” “estimate,” “potential,” “target,” “seek,” “contemplate,” “continue,” “design,” and “ongoing,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words and similar expressions. Forward-looking statements include estimates, plans, expectations, opinions, forecasts, projections, targets, guidance or other statements that are not statements of fact. Such forward-looking statements are made as of the date of this MD&A.
Forward-looking statements are necessarily based on estimates and assumptions made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as factors that we believe are appropriate. Forward-looking statements in this MD&A include, but are not limited to, statements relating to:
| • | the Company’s business strategies and objectives, including current and future plans, expectations and intentions; |
| • | the Company’s intent to use capital resources previously identified for EP-104IAR to continue the development of EP-104GI; |
| • | the Company’s intention to evaluate funding alternatives for the continued development of EP-104IAR, including potential partnership opportunities; |
| • | the Company’s ability to obtain sufficient funding for its operations, including funding for research, development and commercial activities; |
| • | the Company’s projected operating expenses and capital expenditures; |
| • | the Company’s ability to achieve profitability; |
| • | projected revenues, future trends, opportunities and growth in the Company’s industry and the drug development markets; |
| • | the Company’s ability to maintain and enhance its competitive advantages and technological advantages; |
| • | the entry into commercial partnerships and commercialization of our technology; |
| • | the Company’s ability to enter into definitive agreements with its contract research organizations (“CROs”); |
| • | the Company’s ability to enter into co-development and/or collaborative partnerships; |
| • | the Company’s clinical development programs and activities and the estimated timing thereof; |
| • | the timing, status and results of clinical trials, including with respect to patient recruitment and data readout, including the Company’s belief that its planned clinical trials will support a future New Drug Application (“NDA”) submission for EP-104IAR; |
| • | the success of regulatory submissions; |
| • | the obtaining of potential regulatory approval; |
| • | the hiring of additional research and development team members; |
| • | the potential for the Company’s technology to impact the drug delivery process; |
| • | the development of additional intellectual property, ability to patent or otherwise protect such developed intellectual property and licenses with third parties for intellectual property; |
| • | the ability of patents and notices of allowance to provide protection over intellectual property in applicable jurisdictions; |
| • | the Company’s ability to protect, expand upon and exploit its existing intellectual property; |
| • | the entry into sponsored research agreements and the benefits therefrom; |
| • | the competitive advantages of the Company and its technology; |
| • | the planned development and future success of the Company’s product candidates and results gathered from studies thereof; |
| • | the development of products from the Company’s competitors; |
| • | the application of regulations and standards to the Company’s future products and services or research and development activities; |
| • | the Company’s retention of funds or payment of dividends; |
| • | the translation of the Company’s technologies and expansion of its offerings into clinical applications; |
| • | the potential benefits to patients from Eupraxia’s platforms; |
| • | the value of the strategic relationship to Eupraxia’s clients and investors; |
| • | the Company’s engagement with legal and regulatory authorities in various jurisdictions; |
| • | the Company’s anticipated use of proceeds from the Offering (as defined herein) and its existing cash and cash equivalents and the related estimated cash runway; |
| • | the sufficiency of the Company’s existing cash and cash equivalents to fund its future operating expenses and capital expenditure requirements; |
| • | the issuance of common shares of the Company (the “Common Shares”) upon conversion of the Preferred Shares (as defined herein); |
| • | the demand and commercial viability of the Company’s technology; and |
| • | the demand and market acceptance for product candidates developed by the Company and for which it receives marketing authorization. |
Forward-looking statements and information involve significant risks, assumptions, uncertainties and other factors that may cause actual future results or anticipated events to differ materially from those expressed or implied in any forward-looking statements or information and, accordingly, should not be read as guarantees of future performance or results. These risks and factors include, but are not limited to:
| • | we have a limited operating history and have no products approved for commercial sale, which may make it difficult for you to evaluate our current business and predict our future success and viability; |
| • | we will require substantial additional financing to achieve our goals and a failure to obtain this necessary capital when needed could force us to delay, limit, reduce or terminate our product development or commercialization efforts, if any of our product candidates receive marketing authorization; |
| • | we are substantially dependent on the success of our lead product candidates EP-104GI, which is currently being studied in an open label Phase 1b/2a clinical study, and EP-104IAR, for which we are evaluating funding alternatives for the continued development, including potential partnership opportunities. If we are unable to complete development of, obtain approval for and commercialize EP-104GI or EP-104IAR, alone or through a potential partnership, in a timely manner, our business will be harmed; |
| • | if we breach any of the agreements under which we license rights to our product candidates or technology from third parties, we could lose license rights that are important to our business. Our current license agreement may not provide an adequate remedy for its breach by the licensor; |
| • | adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect our current and projected business operations and our financial condition and results of operations; |
| • | clinical trials are expensive, time consuming and difficult to design and implement and may fail to demonstrate adequate safety and efficacy of our product candidates. Furthermore, the results of previous preclinical studies and clinical trials may not be predictive of future results, and the results of our current and planned clinical trials may not satisfy the requirements of the U.S. Food and Drug Administration (the “FDA”) or comparable non-U.S. regulatory authorities or provide the basis for regulatory approval; |
| • | our lead product candidates may not be successful for their intended use; |
| • | our current and future product candidates will require regulatory approval, which is costly, and we may not be able to obtain it and we may fail to obtain regulatory approvals or only obtain approvals for limited uses or indications; |
| • | the clinical trials of our product candidates may not demonstrate safety and efficacy to the satisfaction of the FDA, European Medicine Agency (“EMA”) or other comparable foreign regulatory authorities or otherwise produce positive results; |
| • | we completely rely on third parties to provide supplies and inputs required for our product candidates and, if these third parties fail to fulfill their contractual obligations, we may be unable to pursue further development of our product candidates and our business could be substantially harmed; |
| • | we rely on CROs to provide clinical and non-clinical research services; if such CROs do not successfully carry out their contractual duties including to comply with applicable laws and regulations or meet expected deadlines, our business could be substantially harmed; |
| • | the manufacture of drugs is complex and our third-party manufacturers may encounter difficulties in production. If any of our third-party manufacturers encounter such difficulties, our ability to provide adequate supply of our product candidates for clinical trials or our products for patients, if approved, could be delayed or prevented; |
| • | our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor or other third party will discover them or that our trade secrets will be misappropriated or disclosed; |
| • | the outcome of preclinical testing and early clinical trials may not be predictive of the success of later clinical trials, and the results of our clinical trials may not satisfy the requirements of the FDA, EMA or other comparable foreign regulatory authorities. Terminating the development of any of our product candidates could materially harm our business and the market price of our Common Shares; |
| • | interim, initial, “top-line”, and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data; |
| • | any safety concerns observed in any one of our clinical trials in our targeted indications could limit the prospects for regulatory approval of our product candidates in those and other indications, which could seriously harm our business; |
| • | our current or future product candidates may cause significant adverse events, toxicities or other undesirable adverse effects when used alone or in combination with other products that may result in a safety profile that could inhibit regulatory approval, prevent market acceptance, limit their commercial potential, if approved, or result in significant negative consequences; |
| • | where appropriate and applicable, we may seek approval from the FDA or comparable foreign regulatory authorities through the use of expedited approval pathways, such as Fast Track designation or Breakthrough Therapy designation. Even if we receive a designation that would allow for expedited review, we can provide no assurance that we will be able to obtain FDA approval sooner or at all; |
| • | if we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our drug candidates, if approved, we may be unable to generate any product revenue; |
| • | we have a novel technology with uncertain market acceptance if any of our product candidates are approved; |
| • | if we experience delays or difficulties in the enrollment and/or maintenance of patients in clinical trials, our clinical development activities could be delayed or otherwise adversely affected; |
| • | clinical drug development is a lengthy, expensive, and inherently uncertain process, and we may experience delays in completing, or ultimately be unable to successfully complete the clinical trials needed for regulatory approval; |
| • | the FDA, EMA and other comparable foreign regulatory authorities may not accept data from trials conducted in locations outside of their jurisdiction; |
| • | obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval of our product candidates in other jurisdictions; |
| • | if the market opportunity for any product candidate that we or our strategic partners develop is smaller than we believe, our revenue may be adversely affected and our business may suffer; |
| • | even if our product candidates receive regulatory approval, we will be subject to significant post marketing regulatory requirements and oversight; |
| • | FDA’s and other regulatory authorities’ policies may change, and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates; |
| • | the FDA and other regulatory agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses and failure to comply could subject us to enforcement action; |
| • | disruptions at the FDA and other government agencies caused by actions taken by the current U.S. presidential administration or through legislative or judicial action, funding shortages or global health concerns could hinder their ability to hire and retain key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved or commercialized in a timely manner or at all, or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business; |
| • | we rely on key personnel; |
| • | we may not be able to successfully execute our business strategy; |
| • | we are in a highly competitive industry which is continuously evolving with technological changes; |
| • | our future success will depend on our ability to continually enhance and develop our product candidates; |
| • | we may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success; |
| • | changes in methods of product candidate manufacturing or formulation may result in additional costs or delay; |
| • | if we are unable to differentiate EP-104 from existing therapies or if the FDA or other applicable regulatory authorities approve additional, and potentially less costly, therapies that compete with EP-104, our ability to successfully commercialize EP-104GI or EP-104IAR would be adversely affected; |
| • | there is uncertainty regarding U.S. tariffs and support for existing treaty and trade relationships, including with Canada, and implementation of new legislative or regulatory policies by the U.S. government could impose additional costs on the Company, result in delayed timelines, or otherwise negatively impact the Company, which could have a material adverse impact on the Company’s business; |
| • | a variety of risks associated with potential international business relationships could materially adversely affect our business; |
| • | collaboration arrangements we may enter into in the future may not be successful; |
| • | provisions of any future debt instruments may restrict our ability to pursue our business strategies; |
| • | we may acquire businesses or products, or form strategic alliances in the future, and we may not realize the benefits of such acquisitions or alliances; |
| • | we have traditionally relied on key collaborations and grants; |
| • | we are subject to evolving global laws and regulations relating to privacy, data protection and information security, which may require us to incur substantial compliance costs, and any failure or perceived failure by us to comply with such laws and regulations may harm our business and operations; |
| • | our business and operations could suffer in the event of an actual or perceived information security incident such as a cybersecurity breach, system failure, or other compromise of our systems or those of a third-party or other contractor or vendor; |
| • | we may fail to manage our growth successfully, which may adversely impact our operating results; |
| • | guidelines and recommendations published by various organizations can reduce the use of proceeds that we may commercialize; |
| • | we use hazardous chemicals and biological materials in our business. Any claims relating to improper handling, storage or disposal of these materials could be time consuming and costly; |
| • | if product liability lawsuits are brought against us, then we may incur substantial liabilities and may be required to limit commercialization of EP-104, if approved, for any indication, and any other future products; |
| • | our employees, independent contractors, principal investigators, consultants, commercial partners and vendors may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading, which could significantly harm our business; |
| • | we may be subject to securities litigation, which is expensive and could divert management attention; |
| • | our directors and executive officers may be affiliated with other biotech companies and may have conflicts of interest; |
| • | our business may be affected by macroeconomic conditions; |
| • | our business may be affected by global geopolitical risks; |
| • | we may be responsible for corruption and anti-bribery law violations; |
| • | we are subject to foreign exchange risks; |
| • | we are subject to taxation risks and changing rules by different tax authorities; |
| • | we are subject to a number of risks and hazards and may not be sufficiently insured for all of them; |
| • | we devote significant resources to regulatory compliance as a public entity; |
| • | changes in accounting standards from International Financial Reporting Standards (“IFRS”) to U.S. GAAP can be difficult to predict and could adversely impact how we record and report our financial condition and results of operations; |
| • | in the past, we have had to restate our previously issued consolidated financial statements and as part of that process identified a material weakness in our disclosure controls and procedures and internal control over financial reporting as of December 31, 2022. If we are unable to develop and maintain effective disclosure controls and procedures and internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and may adversely affect our business, financial condition and results of operations; |
| • | our success depends on our ability to protect our intellectual property and our proprietary technologies; |
| • | if the scope of any patent protection we obtain is not sufficiently broad, or if we lose any of our patent protection, our ability to prevent our competitors from commercializing similar or identical product candidates would be adversely affected; |
| • | intellectual property rights do not necessarily address all potential threats to our competitive advantage; |
| • | our patent rights may prove to be an inadequate barrier to competition; |
| • | our commercial success depends significantly on our ability to operate without infringing the patents and other proprietary rights of third parties. Claims by third parties that we infringe their proprietary rights may result in liability for damages or prevent or delay our developmental and commercialization efforts; |
| • | we may not be successful in obtaining or maintaining necessary rights to our product candidates through acquisitions and in-licenses; |
| • | we may be involved in lawsuits to protect or enforce our patents or our future licensors’ patents, which could be expensive, time consuming, and unsuccessful. Further, our issued patents or our current or future licensors’ patents could be found invalid or unenforceable if challenged in court or before administrative bodies in the United States or abroad; |
| • | intellectual property litigation may lead to unfavorable publicity that harms our reputation and causes the market price of our Common Shares to decline; |
| • | derivation proceedings may be necessary to determine priority of inventions, and an unfavorable outcome may require us to cease using the related technology or to attempt to license rights from the prevailing party; |
| • | we may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent, which might adversely affect our ability to develop and market our products and product candidates; |
| • | changes in U.S. patent law, or laws in other countries, or their interpretation could diminish the value of patents in general, thereby impairing our ability to protect our product candidates; |
| • | we may be subject to claims challenging the inventorship or ownership of our patents, the patents we license, and other intellectual property; |
| • | patent terms may be inadequate to protect our competitive position on our product candidates, if approved, for an adequate amount of time; |
| • | we may not be able to protect or enforce our intellectual property rights throughout the world; |
| • | obtaining and maintaining our patent protection depends on compliance with various procedural, documentary submission, fee payment and other requirements imposed by regulations and governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements; |
| • | if our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected; |
| • | if we are unable to protect the confidentiality of our trade secrets, the value of our technology could be materially adversely affected, harming our business and competitive position; |
| • | we may be subject to claims that we or our employees, independent contractors, or consultants have wrongfully used or disclosed alleged confidential information or trade secrets; |
| • | we may be subject to claims that we have wrongfully hired an employee from a competitor or that we or our employees, independent contractors, or consultants have wrongfully used or disclosed alleged confidential information or trade secrets of their former employers; |
| • | we may be subject to claims challenging the inventorship of our patents and other intellectual property; |
| • | our rights to develop and commercialize our technology and product candidates may be subject, in part, to the terms and conditions of any future licenses granted to us by others; |
| • | if we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties or otherwise experience disruptions to our business relationships with our future licensors, we could lose license rights that are important to our business; |
| • | the patent protection and patent prosecution for some of our product candidates may be dependent on third parties; |
| • | coverage and reimbursement may be limited or unavailable in certain market segments for our product candidates, if approved, which could make it difficult for us to sell any product candidates or therapies, if approved, profitably; |
| • | our relationships with healthcare providers and physicians and third-party payors will be subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings; |
| • | our employees, independent contractors, consultants, commercial collaborators, principal investigators, CROs, suppliers and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements; |
| • | our research and development activities could be affected or delayed as a result of possible restrictions on animal testing; |
| • | ongoing healthcare legislative and regulatory reform measures may have a material adverse effect on our business and results of operations; |
| • | the market price of the Common Shares may be volatile; |
| • | investors may lose their entire investment; |
| • | we have no history of dividends; |
| • | our existing executive officers and directors own a significant percentage of Common Shares and may have a significant impact over matters submitted to our shareholders for approval; |
| • | future sales of Common Shares by our existing shareholders could cause our share price to decline; |
| • | we will need to raise additional financing in the future which may dilute our share capital; |
| • | if securities or industry analysts either do not publish research about us or publish inaccurate or unfavorable research about us, our business or our market, or if they adversely change their recommendations regarding our Common Shares, the trading price or trading volume of our Common Shares could decline; |
| • | the outstanding Preferred Shares, and any future issuance of preferred shares could make it difficult for another company to acquire us or could otherwise adversely affect holders of our Common Shares, which could depress the price of our Common Shares; |
| • | our constating documents permit us to issue an unlimited number of Common Shares without additional shareholder approval; |
| • | raising additional capital may cause dilution to our shareholders, restrict our operations or require us to relinquish rights to our technologies or product candidates; |
| • | we have warrants, Preferred Shares convertible into Common Shares, and shares of a subsidiary exchangeable for Common Shares outstanding, which in each case, if exercised, converted or exchanged, respectively, could cause dilution to existing shareholders; |
| • | our Common Shares may have limited liquidity; |
| • | we cannot assure you that an active market will develop for our Common Shares on the Nasdaq; |
| • | United States investors may not be able to obtain enforcement of civil liabilities against us; |
| • | as a foreign private issuer, we are subject to different U.S. securities laws and rules than a domestic U.S. issuer, which may limit the information publicly available to our U.S. shareholders; |
| • | we may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses to us; |
| • | U.S. holders of our shares may suffer adverse tax consequences if we are characterized as a passive foreign investment company; and |
| • | if a U.S. holder is treated as owning at least 10% of our Common Shares, such U.S. holder may be subject to adverse U.S. federal income tax consequences. |
Such statements reflect our current views with respect to future events, are subject to risks and uncertainties and are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Eupraxia as of the date of such statements, are inherently subject to significant medical, scientific, business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause our actual results, performance or achievements to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements. In making the forward-looking statements included in this MD&A, the Company has made various material assumptions, including but not limited to (i) the Company’s ability to attract and retain skilled staff;** (ii) future research and development plans for the Company proceeding substantially as currently envisioned; (iii) industry growth trends, including with respect to projected and actual industry sales; (iv) the Company’s ability to obtain positive results from the Company’s research and development activities, including clinical trials; (v) sufficient working capital and the Company’s ability to control costs and raise additional financing going forward; (vi) obtaining regulatory approvals and the potential benefits of our product candidates, if approved; (vii) general business and economic conditions; (viii) the Company’s ability to achieve profitability; (ix) the Company’s ability to successfully commercialize its current product candidates, if approved, enter into commercial partnerships and develop new products; (x) the availability of financing on reasonable terms; **(xi) market competition; (xii) the products and technology offered by the Company’s competitors; (xiii) the Company’s ability to protect patents and proprietary rights; and (xiv) the availability and cost of personnel, materials and supplies.
In evaluating forward-looking statements, current and prospective shareholders should specifically consider various factors, including the risks listed above and outlined herein under the headings “Credit risk”, “Liquidity risk”, “Market risk”,“Other price risk”**, “Interest rate risk” and “Currency risk” and under the heading “Risk Factors” in the short form base shelf prospectus dated February 5, 2024 (the “Shelf Prospectus”) and the AIF. Should one or more of these risks or uncertainties, or a risk that is not currently known to us materialize, or should assumptions underlying those forward-looking statements prove incorrect, actual results may vary materially from those described herein. These forward-looking statements are made as of the date of this MD&A and we do not intend, and do not assume any obligation, to update these forward-looking statements, except as required by applicable securities laws. Investors are cautioned that forward-looking statements are not guarantees of future performance and are inherently uncertain. Accordingly, investors are cautioned not to put undue reliance on forward-looking statements.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and although we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted a thorough inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.
