Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-37619

EDESA BIOTECH, INC.

(Exact name of registrant as specified in its charter)

British Columbia, Canada		N/A
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
100 Spy Court, Markham, ON, Canada L3R 5H6		(289) 800-9600
(Address of principal executive offices and zip code)		(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol

Name of each exchange

on which registered

Common Shares, without par value

EDSA

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of August 9, 2023, the registrant had 21,093,654 common shares issued and outstanding.

EDESA BIOTECH, INC.

QUARTERLY REPORT ON FORM 10-Q

Quarter Ended June 30, 2023

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		Page
PART I	FINANCIAL STATEMENTS	3

Item 1.	Financial Statements (Unaudited)	3
	Condensed Interim Consolidated Balance Sheets – June 30, 2023 and September 30, 2022	3
	Condensed Interim Consolidated Statements of Operations – Three and Nine Months Ended June 30, 2023 and 2022	4
	Condensed Interim Consolidated Statements of Cash Flows – Nine Months Ended June 30, 2023 and 2022	5
	Condensed Interim Consolidated Statements of Changes in Shareholders' Equity – Three and Nine Months Ended June 30, 2023 and 2022	6
	Notes to Condensed Interim Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	18

Item 4.	Controls and Procedures	18

PART II	OTHER INFORMATION	19

Item 1.	Legal Proceedings	19

Item 1A.	Risk Factors	19

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19

Item 3.	Defaults Upon Senior Securities	19

Item 4.	Mine Safety Disclosures	19

Item 5.	Other Information	19

Item 6.	Exhibits	22

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PART 1 – FINANCIAL INFORMATION

Item 1. Financial Statements

Edesa Biotech, Inc.

Condensed Interim Consolidated Balance Sheets

	June 30, 2023			September 30, 2022

Assets:

Current assets:
Cash and cash equivalents	$	6,457,170		$	7,090,919
Accounts and other receivable		42,866			1,255,451
Prepaid expenses and other current assets		414,045			745,543

Total current assets		6,914,081			9,091,913

Non-current assets:
Property and equipment, net		9,918			12,694
Long-term deposits		177,825			171,464
Intangible asset, net		2,205,313			2,281,192
Right-of-use assets		112,387			18,465

Total assets	$	9,419,524		$	11,575,728

Liabilities and shareholders' equity:

Current liabilities:
Accounts payable and accrued liabilities	$	1,454,120		$	2,121,802
Short-term right-of-use lease liabilities		74,846			18,975

Total current liabilities		1,528,966			2,140,777

Non-current liabilities:

Long-term payables		-			43,662
Long-term right-of-use lease liabilities		40,075			-

Total liabilities		1,569,041			2,184,439

Commitments (Note 5)

Shareholders' equity:
Capital shares
Authorized unlimited common and preferred shares without par value
Issued and outstanding:
20,866,772 common shares (September 30, 2022 - 16,662,014)		46,141,187			42,473,099
Additional paid-in capital		12,598,108			11,176,345
Accumulated other comprehensive loss		(190,187	)		(213,602	)
Accumulated deficit		(50,698,625	)		(44,044,553	)

Total shareholders' equity		7,850,483			9,391,289

Total liabilities and shareholders' equity	$	9,419,524		$	11,575,728

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

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Edesa Biotech, Inc.

Condensed Interim Consolidated Statements of Operations

	Three Months Ended						Nine Months Ended
	June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022

Expenses:
Research and development	$	1,025,622		$	4,547,543		$	3,841,150		$	11,541,404
General and administrative		1,038,587			1,249,982			3,011,945			3,993,075

Loss from operations		(2,064,209	)		(5,797,525	)		(6,853,095	)		(15,534,479	)

Other income (loss):
Reimbursement grant income		-			-			-			780,257
Interest income		82,754			17,518			217,901			27,386
Foreign exchange loss		(3,451	)		(7,013	)		(18,078	)		(7,377	)

		79,303			10,505			199,823			800,266

Loss before income taxes		(1,984,906	)		(5,787,020	)		(6,653,272	)		(14,734,213	)

Income tax expense		-			-			800			800

Net loss		(1,984,906	)		(5,787,020	)		(6,654,072	)		(14,735,013	)

Exchange differences on translation		39,839			34,559			23,415			79,474

Net comprehensive loss	$	(1,945,067	)	$	(5,752,461	)	$	(6,630,657	)	$	(14,655,539	)

Weighted average number of common shares		20,514,766			15,462,287			19,619,548			14,227,538

Loss per common share - basic and diluted	$	(0.10	)	$	(0.37	)	$	(0.34	)	$	(1.04	)

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

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Edesa Biotech, Inc.

Condensed Interim Consolidated Statements of Cash Flows

	Nine Months Ended
	June 30, 2023			June 30, 2022

Cash flows from operating activities:
Net loss	$	(6,654,072	)	$	(14,735,013	)
Adjustments for:
Depreciation and amortization		137,501			89,228
Share-based compensation		729,380			1,804,670
Changes in working capital items:
Accounts and other receivable		1,149,129			1,900,776
Prepaid expenses and other current assets		339,031			(28,858	)
Accounts payable and accrued liabilities		(869,430	)		4,318,102

Net cash used in operating activities		(5,168,461	)		(6,651,095	)

Cash flows from investing activities:
Purchase of property and equipment		-			(5,697	)

Net cash used in investing activities		-			(5,697	)

Cash flows from financing activities:
Proceeds from issuance of common shares and warrants		3,861,245			11,957,567
Proceeds from exercise of warrants		770,531			-
Payments for issuance costs of common shares and warrants		(214,130	)		(327,653	)

Net cash provided by financing activities		4,417,646			11,629,914

Effect of exchange rate changes on cash and cash equivalents		117,066			(3,669	)

Net change in cash and cash equivalents		(633,749	)		4,969,453
Cash and cash equivalents, beginning of period		7,090,919			7,839,259

Cash and cash equivalents, end of period	$	6,457,170		$	12,808,712

Supplemental Disclosure of Noncash Financing Activities:
Issuance costs withheld from gross proceeds from issuance of common shares and warrants	$	-		$	393,461
Fair value of placement agent warrants		-			408,059

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

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Edesa Biotech, Inc.

Condensed Interim Consolidated Statements of Changes in Shareholders' Equity

	Shares #		Common Shares			Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Shareholders' Equity
Three Months Ended June 30, 2023
Balance - March 31, 2023		20,058,665	$	45,453,733		$	12,489,949		$	(230,026	)	$	(48,713,719	)	$	8,999,937

Issuance of common shares and warrants in equity offering		808,107		833,749			-			-			-			833,749
Issuance costs		-		(146,295	)		-			-			-			(146,295	)
Share-based compensation		-		-			108,159			-			-			108,159
Net loss and comprehensive loss		-		-			-			39,839			(1,984,906	)		(1,945,067	)

Balance - June 30, 2023		20,866,772	$	46,141,187		$	12,598,108		$	(190,187	)	$	(50,698,625	)	$	7,850,483

Three Months Ended June 3, 2022
Balance - March 31, 2022		15,462,287	$	40,264,080		$	12,364,302		$	(160,347	)	$	(35,443,622	)	$	17,024,413

Share-based compensation		-		-			565,384			-			-			565,384
Net loss and comprehensive loss		-		-			-			34,559			(5,787,020	)		(5,752,461	)

Balance - June 30, 2022		15,462,287	$	40,264,080		$	12,929,686		$	(125,788	)	$	(41,230,642	)	$	11,837,336

Nine Months Ended June 30, 2023
Balance - September 30, 2022		16,662,014	$	42,473,099		$	11,176,345		$	(213,602	)	$	(44,044,553	)	$	9,391,289

Issuance of common shares and warrants in equity offering		3,499,444		2,916,418			944,827			-			-			3,861,245
Issuance of common shares upon exercise of warrants		705,314		994,618			(224,087	)		-			-			770,531
Issuance costs				(242,948	)		(28,357	)		-			-			(271,305	)
Share-based compensation							729,380			-			-			729,380
Net loss and comprehensive loss		-		-			-			23,415			(6,654,072	)		(6,630,657	)

Balance - June 30, 2023		20,866,772	$	46,141,187		$	12,598,108		$	(190,187	)	$	(50,698,625	)	$	7,850,483

Nine Months Ended June 30, 2022
Balance - September 30, 2021		13,295,403	$	34,887,721		$	4,871,461		$	(205,262	)	$	(26,495,629	)	$	13,058,291

Issuance of common shares and warrants in equity offering		2,166,884		6,239,180			6,702,293			-			-			12,941,473
Issuance costs including fair value of placement agent warrants		-		(862,821	)		(448,738	)		-			-			(1,311,559	)
Share-based compensation		-		-			1,804,670			-			-			1,804,670
Net loss and comprehensive loss		-		-			-			79,474			(14,735,013	)		(14,655,539	)

Balance - June 30, 2022		15,462,287	$	40,264,080		$	12,929,686		$	(125,788	)	$	(41,230,642	)	$	11,837,336

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

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Edesa Biotech, Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Unaudited)

1. Nature of Operations

Edesa Biotech, Inc. (the Company or Edesa) is a biopharmaceutical company focused on acquiring, developing and commercializing clinical-stage drugs for inflammatory and immune-related diseases with clear unmet medical needs. The Company is organized under the laws of British Columbia, Canada and is headquartered in Markham, Ontario. It operates under its wholly owned subsidiaries, Edesa Biotech Research, Inc., an Ontario, Canada corporation, and Edesa Biotech USA, Inc., a California, USA corporation.

The Company’s common shares trade on The Nasdaq Capital Market in the United States under the symbol “EDSA”.

2. Basis of Presentation

The accompanying unaudited condensed interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q. They do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with U.S. GAAP for complete financial statements. These unaudited condensed interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended September 30, 2022, which was filed with the Securities and Exchange Commission (SEC) on December 16, 2022.

The accompanying unaudited condensed interim consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated on consolidation. All adjustments (consisting of normal recurring adjustments and accruals) considered necessary for a fair presentation of the results of operations for the periods presented have been included in the interim periods. Operating results for the three and nine months ended June 30, 2023 are not necessarily indicative of the results that may be expected for other interim periods or the fiscal year ending September 30, 2023.

Use of estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period or year. Actual results could differ from those estimates. Areas where significant judgment is involved in making estimates are valuation of accounts and other receivable; valuation and useful lives of property and equipment; intangible assets; right-of-use assets; deferred income taxes; the determination of fair value of share-based compensation; the determination of fair value of warrants in order to allocate proceeds from equity issuances; and forecasting future cash flows for assessing the going concern assumption.

Functional and reporting currencies

The consolidated financial statements of the Company are presented in U.S. dollars, unless otherwise stated, which is the Company’s and its wholly owned subsidiary’s, Edesa Biotech USA, Inc., functional currency. The functional currency of the Company’s wholly owned subsidiary, Edesa Biotech Research, Inc., as determined by management, is Canadian dollars.

3. Intangible Assets

Acquired License

In April 2020, the Company entered into a license agreement with a pharmaceutical development company to obtain exclusive world-wide rights to know-how, patents and data relating to certain monoclonal antibodies (the Constructs), including sublicensing rights. Unless earlier terminated, the term of the license agreement will remain in effect for 25 years from the date of first commercial sale of licensed products containing the Constructs. Subsequently, the license agreement will automatically renew for five-year periods unless either party terminates the agreement in accordance with its terms.

Under the license agreement, the Company is exclusively responsible, at its expense, for the research, development manufacture, marketing, distribution and commercialization of the Constructs and licensed products and to obtain all necessary licenses and rights. The Company is required to use commercially reasonable efforts to develop and commercialize the Constructs in accordance with the terms of a development plan established by the parties.

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The Company has determined that the license has multiple alternative future uses in research and development projects and sublicensing in other countries or for other disease indications. The value of the acquired license is recorded as an intangible asset with amortization over the estimated useful life of 25 years and evaluation for impairment at the end of each reporting period.

The required upfront license payment of $2.5 million was paid by issuance of Series A-1 Convertible Preferred Shares, which have been fully converted to common shares. The value of the license includes acquisition legal costs. See Note 5 for license commitments.

Intangible assets, net consisted of the following:

	June 30, 2023			September 30, 2022

The Constructs	$	2,529,483		$	2,529,483

Less: accumulated amortization		(324,170	)		(248,291	)

Total intangible assets, net	$	2,205,313		$	2,281,192

Amortization expense amounted to $0.03 million for each of the three months ended June 30, 2023 and 2022 and $0.08 million for each of the nine months ended June 30, 2023 and 2022.

Total estimated future amortization of intangible assets for each fiscal year is as follows:

Year Ending
September 30, 2023	$	25,293
September 30, 2024		101,172
September 30, 2025		101,172
September 30, 2026		101,172
September 30, 2027		101,172
Thereafter		1,775,332

	$	2,205,313

4. Right-of-Use Lease with Related Party

The Company leases a facility used for executive offices from a related company. The original lease expired in December 2022, and the Company executed a two-year extension through December 2024.

The components of right-of-use lease cost were as follows:

	Three Months Ended				Nine Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Right-of-use lease cost, included in general and administrative on the Statements of Operations	$	21,188	$	20,105	$	61,530	$	60,713

Lease terms and discount rates were as follows:

	June 30, 2023			September 30, 2022
Remaining lease term (months):		18			3
Estimated incremental borrowing rate:		9.2	%		6.5	%

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The future minimum lease payments under right-of-use leases at June 30, 2023 were as follows:

Year Ending
September 30, 2023	$	20,422
September 30, 2024		81,689
September 30, 2025		20,422

Total lease payments		122,533
Less imputed interest		7,612

Present value of right-of-use lease liabilities		114,921
Present value included in current liabilities		74,846

Present value included in long-term liabilities	$	40,075

Cash flow information was as follows:

	Nine Months Ended
	June 30, 2023		June 30, 2022
Cash paid for amounts included in the measurement of right-of-use lease liabilities, included in accounts payable and accrued liabilities on the Statements of Cash Flow.	$	59,045	$	60,714

5. Commitments

Research and other commitments

The Company has commitments for contracted research organizations who perform clinical trials for the Company’s ongoing clinical studies and other service providers. Approximate aggregate future contractual payments at June 30, 2023 are as follows:

Year Ending
September 30, 2023	$	466,000
September 30, 2024		1,369,000
September 30, 2025		49,000
September 30, 2026		36,000
September 30, 2027		11,000

	$	1,931,000

License and royalty commitments

In April 2020, through its Ontario subsidiary, the Company entered into a license agreement with a third party to obtain exclusive world-wide rights to certain know-how, patents and data relating to the Constructs, including sublicensing rights. An intangible asset for the acquired license has been recognized. See Note 3 for intangible assets. Under the license agreement, the Company is committed to payments of up to an aggregate amount of $356 million contingent upon meeting certain milestones outlined in the license agreement, primarily relating to future potential commercial approval and sales milestones. The Company also has a commitment to pay royalties based on any net sales of products containing the Constructs in the countries where the Company directly commercializes the products containing the Constructs and a percentage of any sublicensing revenue received by the Company and its affiliates in the countries where it does not directly commercialize the products containing the Constructs. No milestone, royalty or sublicensing payments were made to the third party during the three and nine months ended June 30, 2023 and 2022.

In connection with this license agreement and pursuant to a purchase agreement entered into in April 2020, the Company acquired drug substance of one of the Constructs for an aggregate purchase price of $5.0 million, payable in two installments. The Company recorded expense of $2.5 million for the second installment during the three and nine months ended June 30, 2022. No expense was recorded during the three and nine months ended June 30, 2023.

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In 2016, through its Ontario subsidiary, the Company entered into a license agreement with a third party to obtain exclusive rights to certain know- how, patents and data relating to a pharmaceutical product. The Company will use the exclusive rights to develop the product for therapeutic, prophylactic and diagnostic uses in topical dermal applications and anorectal applications. No intangible assets have been recognized under the license agreement with the third party. Under the license agreement, the Company is committed to payments of various amounts to the third party upon meeting certain milestones outlined in the license agreement, up to an aggregate amount of $18.4 million after deducting $0.04 million that is included in the commitments table above for the year ending September 30, 2023. Upon divestiture of substantially all of the assets of the Company, the Company would pay the third party a percentage of the valuation of the licensed technology sold as determined by an external objective expert. The Company also has a commitment to pay the third party a royalty based on net sales of the product in countries where the Company, or an affiliate, directly commercializes the product and a percentage of sublicensing revenue received by the Company and its affiliates in the countries where it does not directly commercialize the product. Milestone payments totaling $0.04 million and $0.16 million were made to the third party during the three and nine months ended June 30, 2023, respectively. No milestones were met during the three and nine months ended June 30, 2022. No royalty or sublicensing payments were made to the third party during the three and nine months ended June 30, 2023 and 2022.

In March 2021, through its Ontario subsidiary, the Company entered into a license agreement with the inventor of the same pharmaceutical product to acquire global rights for all fields of use beyond those named under the 2016 license agreement. Milestone payments of $0.03 million were made under the 2021 agreement during the nine months ended June 30, 2022. No milestones were met during the three and nine months ended June 30, 2023 or the three months ended June 30, 2022. The Company is committed to remaining milestone payments of up to an aggregate amount of $68.9 million, primarily relating to future potential commercial approval and sales milestones. In addition, if the Company fails to file an investigational new drug application or foreign equivalent (IND) for the product within a certain period of time following the date of the agreement, the Company is required to remit to the inventor a fixed or prorated license fee annually as long as the requirement to file an IND remains unfulfilled.

6. Capital Shares

Equity Distribution Agreements

On March 27, 2023, the Company entered into an equity distribution agreement with Canaccord Genuity LLC (Canaccord), as sales agent, pursuant to which the Company may offer and sell, from time to time, common shares through an at-the-market equity offering program for up to $20 million in gross proceeds, subject to certain offering limitations that currently allow the Company to offer and sell common shares having an aggregate gross sales price of up to $8.37 million. The Company has no obligation to sell any of the common shares and may at any time suspend sales or terminate the equity distribution agreement in accordance with its terms. During the three months ended June 30, 2023, the Company sold a total of 808,107 common shares pursuant to the agreement for net proceeds of $0.69 million after deducting commissions and costs.

From November 22, 2021 until terminated on March 21, 2022, the Company had an equity distribution agreement for an at-the-market equity offering program with another sales agent. During the nine months ended June 30, 2022, the Company sold a total of 626,884 common shares pursuant to the agreement for net proceeds of $2.62 million.

Equity offerings

On November 2, 2022, the Company completed a private placement of units consisting of 2,691,337 common shares, Class A warrants to purchase up to an aggregate of 1,345,665 common shares and Class B warrants to purchase up to an aggregate of 1,345,665 common shares. Net proceeds from the offering were $2.91 million, which were allocated between the relative fair values of the common shares (using a fair value of $2.69 million) and the common share purchase warrants (using a total fair value of $1.22 million). The warrants became exercisable December 23, 2022. The Class A warrants have an exercise price of $1.50 per share and will expire on December 23, 2025. The Class B warrants have an exercise price of $1.00 per share and will expire on December 23, 2023. The warrants are considered contracts on the Company’s own shares and are classified as equity.

On March 24, 2022, the Company completed a registered direct offering of 1,540,000 common shares, no par value, and pre-funded warrants to purchase up to an aggregate of 1,199,727 common shares. In a concurrent private placement, the Company issued common share purchase warrants to purchase an aggregate of up to 2,739,727 common shares. Net proceeds from the offering were $9.01 million, which were allocated between the relative fair values of the common shares and pre-funded warrants (using a total fair value of $5.87 million) and the common share purchase warrants (using a total fair value of $4.13 million). The common share purchase warrants were immediately exercisable at an exercise price of $3.52 per share and will expire on September 24, 2027. The pre-funded warrants were immediately exercisable at an exercise price of $0.0001 per share and do not expire. The warrants are considered contracts on the Company’s own shares and are classified as equity. In connection with the offering, the Company issued warrants to purchase an aggregate of 191,780 common shares to certain affiliated designees of the placement agent as part of the placement agent’s compensation. The placement agent warrants are exercisable on or after March 24, 2022, at an exercise price of $4.5625 per share, and will expire on March 21, 2027 with a fair value of $0.41 million.

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Black-Scholes option valuation model

The Company uses the Black-Scholes option valuation model to determine the fair value of share-based compensation for share options and compensation warrants granted and the fair value of warrants issued. Option valuation models require the input of highly subjective assumptions including the expected price volatility. The Company calculates expected volatility based on historical volatility of the Company’s share price. When there is insufficient data available, the Company uses a peer group that is publicly traded to calculate expected volatility. The Company adopted interest-free rates by reference to the U.S. treasury yield rates. The Company calculated the fair value of share options granted based on the expected life of 5 years considering expected forfeitures during the option term of 10 years. Expected life of warrants is based on warrant terms. The Company did not and is not expected to declare any dividends. Changes in the subjective input assumptions can materially affect the fair value estimates, and therefore the existing models do not necessarily provide a reliable single measure of the fair value of the Company’s warrants and share options.

Warrants

A summary of the Company’s warrants activity is as follows:

	Number of Warrant Shares (#)			Weighted Average Exercise Price
Nine Months Ended June 30, 2023
Balance - September 30, 2022		3,651,953		$	4.00

Issued		2,691,330			1.25
Exercised		(705,314	)		1.09
Expired		(28,124	)		15.90

Balance - June 30, 2023		5,609,845		$	2.99

Nine Months Ended June 30, 2022
Balance - September 30, 2021		720,446		$	5.69

Issued		2,931,507			3.59

Balance - June 30, 2022		3,651,953		$	4.00

The weighted average contractual life remaining on the outstanding warrants at June 30, 2023 is 34 months.

The following table summarizes information about the warrants outstanding at June 30, 2023:

Number of Warrants (#)		Exercise Prices		Expiry Dates
	563,685	$	4.80	July 2023
	770,786	$	1.00	December 2023
	7,484	$	4.81	June 2024
	11,778	$	3.20	January 2025
	1,215,230	$	1.50	December 2025
	109,375	$	8.00	February 2026
	191,780	$	4.56	March 2027
	2,739,727	$	3.52	September 2027
	5,609,845

The fair value of warrants granted during the nine months ended June 30, 2023 was estimated using the Black-Scholes option valuation model using the following assumptions:

	Nine Months Ended June 30, 2023						Nine Months Ended June 30, 2022
	Class A Warrants			Class B Warrants			Common Warrants			Placement Agent Warrants

Risk free interest rate		4.54	%		4.76	%		2.37	%		2.37	%
Expected life	3.14 years			1.14 years			5.5 years			5 years
Expected share price volatility		90.73	%		89.70	%		87.09	%		87.09	%
Expected dividend yield		0.00	%		0.00	%		0.00	%		0.00	%

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Pre-funded Warrants

A summary of the Company’s pre-funded warrants activity is as follows:

	Number of Pre-funded Warrant Shares (#)
Nine Months Ended June 30, 2022
Balance - September 30, 2021		-

Issued		1,199,727

Balance - June 30, 2022		1,199,727

There were no pre-funded warrants during the nine months ended June 30, 2023.

Share Options

The Company adopted an Equity Incentive Compensation Plan in 2019 (the 2019 Plan) administered by the independent members of the Board of Directors, which amended and restated prior plans. Options, restricted shares and restricted share units are eligible for grant under the 2019 Plan. At June 30, 2023, the total number of shares available for issuance is 1,557,766 including shares available for the exercise of outstanding options under the 2019 Plan. The remaining number of options available for grant at June 30, 2023 is 1,557,766.

The Company’s 2019 Plan allows options to be granted to directors, officers, employees and certain external consultants and advisers. Under the 2019 Plan, the option term is not to exceed 10 years and the exercise price of each option is determined by the independent members of the Board of Directors.

Options granted for directors normally have monthly vesting in equal proportions over 12 months beginning on the grant date. Options granted for employees normally have monthly vesting in equal proportions over 36 months beginning on the grant date. Options granted for new employees normally have monthly vesting in equal proportions over 36 months beginning on the monthly anniversary of the grant date following 90 days of employment.

Options have been granted under the 2019 Plan allowing the holders to purchase common shares of the Company as follows:

	Number of Options (#)			Weighted Average Exercise Price		Weighted Average Grant Date Fair Value
Nine Months Ended June 30, 2023
Balance - September 30, 2022		2,203,699		$	4.66	$	3.42

Granted		332,950			1.43		1.07
Forfeited		(88,226	)		3.28		2.34
Expired		(238	)		304.08		304.08

Balance - June 30, 2023		2,448,185		$	4.23	$	3.11

Nine Months Ended June 30, 2022
Balance - September 30, 2021		1,776,219		$	5.06	$	3.79

Granted		500,083			3.66		2.48
Exercised		(26,954	)		6.56		4.97
Expired		(45,649	)		8.05		6.48

Balance - June 30, 2022		2,203,699		$	4.66	$	3.42

During the nine months ended June 30, 2023, the independent members of the Board of Directors granted 332,950 employee and new employee options pursuant to the 2019 Plan. During the nine months ended June 30, 2022, the independent members of the Board of Directors granted 415,083 employee options and 85,000 director options. The options have a term of 10 years and an exercise price equal to the Nasdaq closing price on the grant date.

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The weighted average contractual life remaining on the outstanding options at June 30, 2023 is 90 months.

The following table summarizes information about the options under the 2019 Plan outstanding and exercisable at June 30, 2023:

Number of Options (#)		Exercisable at June 30, 2023 (#)		Range of Exercise Prices		Expiry Dates
	3,499		3,499	$	35.28 - 93.24	Sep 2023-Mar 2025
	296,403		296,403	C$	2.16	Aug 2027-Dec 2028
	323,976		323,976	$	3.16	Feb 2030
	397,000		363,829	$	7.44 - 8.07	Sep 2030-Oct 2030
	653,326		525,001	$	5.25 - 5.74	Jan 2031-Sep 2031
	481,365		279,177	$	2.94 - 3.71	Feb 2032-Mar 2032
	292,616		43,990	$	0.96 - 1.43	Dec 2032-Feb 2033
	2,448,185		1,835,875

The fair value of options granted during the nine months ended June 30, 2023 and 2022 was estimated using the Black-Scholes option valuation model using the following assumptions:


	Nine Months Ended
	June 30, 2023			June 30, 2022

Risk free interest rate	3.62%-4.18%			1.71% - 2.54%
Expected life	5 years			5 years
Expected share price volatility	95.3%-97.34%			85.91% - 86.59%
Expected dividend yield		0.00	%		0.00	%

The Company recorded $0.11 million and $0.57 million of share-based compensation expenses for the three months ended June 30, 2023 and 2022, respectively and $0.73 million and $1.80 million for the nine months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023, the Company had $0.46 million of unrecognized share-based compensation expense, which is expected to be recognized over a period of 31 months.

7. Reimbursement Grant Income and Receivable

Reimbursement grant income for the Company’s federal grant with the Canadian government’s Strategic Innovation Fund (SIF) is recorded based on the claim period of eligible costs. At June 30, 2023, the grant program is complete and all grant reimbursements have been received.

8. Financial Instruments

(a) Fair values

The Company uses the fair value measurement framework for valuing financial assets and liabilities measured on a recurring basis in situations where other accounting pronouncements either permit or require fair value measurements.

The Company follows the fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs are inputs that reflect assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

There are three levels of inputs that may be used to measure fair value:

·	Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
·	Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets and liabilities in markets that are not active.
·	Level 3 - Unobservable inputs for the asset or liability that are supported by little or no market activity.

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The carrying value of certain financial instruments such as cash and cash equivalents, accounts and other receivable, accounts payable and accrued liabilities approximates fair value due to the short-term nature of such instruments. The fair value of lease obligations on right-of-use assets approximates carrying value due to a fixed lease rate, which represents market rate.

(b) Interest rate and credit risk

Interest rate risk is the risk that the value of a financial instrument might be adversely affected by a change in interest rates. The Company does not believe that the results of operations or cash flows would be affected to any significant degree by a significant change in market interest rates, relative to interest rates on cash and cash equivalents due to the short-term nature of these balances.

The Company is also exposed to credit risk at period end from the carrying value of its cash and cash equivalents and accounts and other receivable. The Company manages this risk by maintaining bank accounts with Canadian Chartered Banks, U.S. banks believed to be credit worthy and money market mutual funds of U.S. government securities. The Company’s cash is not subject to any external restrictions. The Company assesses the collectability of accounts receivable through a review of the current aging and terms, as well as an analysis of historical collection rates, general economic conditions and credit status of government agencies. Credit risk for the HST refunds receivable are not considered significant since amounts are due from the Canada Revenue Agency.

(c) Foreign exchange risk

The Company and its Canadian subsidiary have balances in Canadian dollars that give rise to exposure to foreign exchange (FX) risk relating to the impact of translating certain non-U.S. dollar balance sheet accounts as these statements are presented in U.S. dollars. A strengthening U.S. dollar will lead to a FX loss while a weakening U.S. dollar will lead to a FX gain. The Company has not entered into any agreements or purchased any instruments to hedge possible currency risks. At June 30, 2023, the Company and its Canadian subsidiary had assets denominated in Canadian dollars of approximately C$3.3 million and the U.S. dollar exchange rate at this date was equal to 1.3250 Canadian dollars. Based on the exposure at June 30, 2023, a 10% annual change in the Canadian/U.S. exchange rate would impact the Company’s loss and other comprehensive loss by approximately $0.3 million.

(d) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty raising liquid funds to meet commitments as they fall due. In meeting its liquidity requirements, the Company closely monitors its forecasted cash requirements with expected cash drawdown.

9. Loss per Share

The Company had securities outstanding which could potentially dilute basic earnings per share in the future but were excluded from the computation of diluted loss per share in the periods presented, as their effect would have been anti-dilutive.

10. Related Party Transactions

During each of three and nine months ended June 30, 2023 and 2022, the Company paid cash of $0.02 million and $0.06 million, respectively, for a right of use lease from a company controlled by the Company’s CEO. These transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by both parties. On December 31, 2022, the Company executed a two-year lease extension through December 31, 2024 in accordance with the terms of the original lease agreement.

11. Subsequent Events

Subsequent to June 30, 2023, equity sales under the Company’s at-the-market offering program have resulted in the issuance of 226,882 common shares and receipt of net cash proceeds of $0.19 million after deducting sales agent commissions.

Subsequent to the quarter end, the Company granted 497,000 share options to employees and directors and 326,200 restricted shares units to certain employees in lieu of cash-based incentive compensation and to one employee for payment of past consulting services.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following management’s discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed interim consolidated financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q as of June 30, 2023 and our audited consolidated financial statements for the year ended September 30, 2022 included in our Annual Report on Form 10-K, as amended, filed with the Securities and Exchange Commission (the “SEC”) on December 16, 2022.

This Quarterly Report on Form 10-Q contains forward-looking statements. When used in this report, the words “expects,” “anticipates,” “suggests,” “believes,” “intends,” “estimates,” “plans,” “projects,” “continue,” “ongoing,” “potential,” “expect,” “predict,” “believe,” “intend,” “may,” “will,” “should,” “could,” “would” and similar expressions are intended to identify forward-looking statements. You should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including the risks described in our Annual Report on Form 10-K for the year ended September 30, 2022 and other reports we file with the Securities and Exchange Commission. Although we believe the expectations reflected in the forward-looking statements are reasonable, they relate only to events as of the date on which the statements are made. We do not intend to update any of the forward-looking statements after the date of this report to conform these statements to actual results or to changes in our expectations, except as required by law.

The discussion and analysis of our financial condition and results of operations are based on our unaudited condensed interim consolidated financial statements as of June 30, 2023 and September 30, 2022, and for the three and nine months ended June 30, 2023 and 2022 included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which we have prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate such estimates and judgments, including those described in greater detail below. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Overview

We are a biopharmaceutical company developing innovative ways to treat inflammatory and immune-related diseases.

Our approach is to acquire, develop and commercialize drug candidates based on mechanisms of action that have demonstrated proof-of-concept in human subjects. We prioritize our efforts on disease indications where there is compelling scientific rationale, no approved therapies or where there are unmet medical needs, and where there are large addressable market opportunities, among other factors. We have multiple late-stage product candidates in our development pipeline.

Our most advanced drug candidate is EB05 (paridiprubart), a monoclonal antibody developed for acute and chronic disease indications that involve dysregulated innate immunity responses. EB05 inhibits toll-like receptor 4 (TLR4), a key immune signaling protein and an important mediator of inflammation. We are currently evaluating EB05 as a potential treatment for Acute Respiratory Distress Syndrome (ARDS), a life-threatening form of respiratory failure. In September 2022, we reported final results from the Phase 2 part of a Phase 2/Phase 3 study of EB05 in ARDS patients who were hospitalized for Covid-19-related respiratory disease. Among the findings, EB05 demonstrated statistically significant mortality reductions in critically ill hospitalized patients treated with EB05 plus Standard of Care treatment (SOC). Based in part of these findings, the U.S. Food and Drug Administration (FDA) granted us a Fast Track designation. We are currently enrolling patients in the Phase 3 part of the EB05 study.

In addition to EB05, we are developing product candidates for a number of chronic dermatological and inflammatory conditions. We recently reported preliminary, topline results from a Phase 2b clinical study evaluating multiple concentrations of our drug candidate, EB01, as a monotherapy for moderate-to-severe chronic Allergic Contact Dermatitis (ACD), a common occupational skin condition. Among the preliminary findings, 1.0% EB01 (daniluromer) cream demonstrated statistically significant improvement over placebo for the primary endpoint and a key secondary endpoint. We are preparing for an End of Phase 2 meeting with FDA following full analysis. In January 2023, Health Canada approved our clinical trial application (CTA) for our EB06 monoclonal antibody candidate to conduct a future Phase 2 study in vitiligo, a common autoimmune disorder that causes skin to lose its color in patches. We are also preparing an investigational new drug application (IND) in the United States for our EB07 (paridiprubart) product candidate to conduct a future Phase 2 study in systemic sclerosis (SSc), an autoimmune rheumatic disorder that causes fibrosis (scarring/hardening) of skin and internal organs.

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Recent Developments

EB05 (paridiprubart)

In June 2023, we announced positive findings from an in vitro study of paridiprubart against a panel of respiratory pathogens. The research results demonstrated that inflammation signaling from multiple pathogens, including Influenza A, coronavirus and a common bacterium (H. influenzae), was inhibited by paridiprubart. Based on these findings and our clinical experience with paridiprubart, we believe that our drug candidate could provide an effective treatment for ARDS caused by, among others, coronaviruses, pandemic influenza and harmful bacteria. The in vitro study was conducted in collaboration with the University of Toronto under a grant from the Government of Canada's Strategic Innovation Fund.

In March 2023, we announced that the company and the FDA agreed on the primary endpoint and population for the Phase 3 part of a Phase 2/3 study evaluating our monoclonal antibody candidate, EB05, as a therapy for hospitalized Covid-19 patients with ARDS. Under the amended protocol design, Edesa will evaluate a single cohort of severely ill patients on invasive mechanical ventilation, both with and without additional organ support such as extracorporeal membrane oxygenation (ECMO). Edesa plans to enroll approximately 600 evaluable hospitalized subjects. The primary endpoint will be the mortality rate at 28 days. Last year, Canadian regulators approved a similar Phase 3 study of EB05 in Covid-19-induced ARDS among two separate cohorts of patients, and we are evaluating potential future harmonization of the Canadian protocol with the U.S. protocol. With recruitment open in both the U.S. and Canada, we discontinued recruitment at secondary sites, which were located in Poland and Colombia.

In April 2023, we announced the World Health Organization and the United States Adopted Name (USAN) Council have adopted the international nonproprietary name “paridiprubart” for our anti-TLR4 monoclonal antibody candidate.

Based on current hospitalization trends and our recruitment experience, we believe that Covid-19-related hospitalization patterns have become more predictable and seasonal in nature, similar to those of influenza, with increased hospitalizations and deaths anticipated in the fall/winter and among populations and geographies with low booster/vaccination rates. As a result, we believe that the pace of future enrollment will be more closely linked to the number and location of investigational sites we activate rather than the unpredictable waves of the pandemic. Subject to funding, we plan to increase the number of investigational centers from 23 to up to 60 hospitals in the U.S. and Canada. We have the flexibility to adjust the timing of these and other clinical trial expenditures to manage our working capital.

In addition to Covid-19 induced ARDS, we are also exploring various approaches to evaluate our EB05 (paridiprubart) drug candidate in a general ARDS population, including, among other potential options, participating in a government-sponsored platform study, amending our current Phase 3 study protocol to include non-Covid-19 ARDS patients and initiating a separate study or cohort. Given the broader pool of patients, we believe a harmonized or general ARDS study could increase efficiency and expedite development timelines as well as validate the broader potential utility of paridiprubart. Any changes we make to our clinical study protocol may impact how previously enrolled subjects are categorized and/or included in the study’s results.

EB01 (daniluromer)

In June 2023, we announced the assignment of the name "daniluromer" to the active pharmaceutical ingredient in our EB01 drug candidate, a topical formulation of daniluromer that we are developing as a treatment for Allergic Contact Dermatitis. We expect daniluromer to be published in an upcoming World Health Organization (WHO) list of recommended international nonproprietary names. The WHO, under its International Nonproprietary Names program, provides a globally recognized system for selecting unique names to identify pharmaceutically active substances.

Significant Accounting Policies and Estimates

See Note 3 to our financial statements included in our Annual Report on Form 10-K for the year ended September 30, 2022 for a discussion of our significant accounting policies and estimates. There have been no material changes to such critical accounting policies or estimates.

Results of Operations

Comparison of the Three Months Ended June 30, 2023 and 2022

Total operating expenses decreased by $3.74 million to $2.06 million for the three months ended June 30, 2023 compared to $5.80 million for the same period last year:

	·	Research and development expenses decreased by $3.52 million to $1.03 million for the three months ended June 30, 2023 compared to $4.55 million for the same period last year primarily due to decreased external research expenses related to our ongoing clinical studies and manufacturing of our investigational drugs. In the comparative period, the Company purchased bulk drug product of EB05 for its clinical study for $2.54 million.

	·	General and administrative expenses decreased by $0.21 million to $1.04 million for the three months ended June 30, 2023 compared to $1.25 million for the same period last year primarily due to decreased non-cash share-based compensation.

Total other income increased by $0.07 million to $0.08 million for the three months ended June 30, 2023 compared to $0.01 million for the same period last year primarily due to an increase in interest earned on cash balances.

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For the three months ended June 30, 2023, our net loss was $1.98 million, or $0.10 per common share, compared to a net loss of $5.79 million, or $0.37 per common share, for the three months ended June 30, 2022.

Comparison of the Nine Months Ended June 30, 2023 and 2022

Total operating expenses decreased by $8.68 million to $6.85 million for the nine months ended June 30, 2023 compared to $15.53 million for the same period last year:

	·	Research and development expenses decreased by $7.70 million to $3.84 million for the nine months ended June 30, 2023 compared to $11.54 million for the same period last year primarily due to decreased external research expenses related to our ongoing clinical studies and manufacturing of our investigational drugs, and a decrease in non-cash share-based compensation.

	·	General and administrative expenses decreased by $0.98 million to $3.01 million for the nine months ended June 30, 2023 compared to $3.99 million for the same period last year primarily due to decreased personnel expenses and non-cash share-based compensation.

Total other income decreased by $0.60 million to $0.20 million for the nine months ended June 30, 2023 compared to $0.80 million for the same period last year primarily due to a decrease in grant income associated with the completion of clinical study activities under our federal reimbursement grant with the Canadian government’s Strategic Innovation Fund.

For the nine months ended June 30, 2023, our net loss was $6.65 million, or $0.34 per common share, compared to a net loss of $14.74 million, or $1.04 per common share, for the nine months ended June 30, 2022.

Capital Expenditures

Our capital expenditures primarily consist of computer and office equipment. There were no significant capital expenditures for the three and nine months ended June 30, 2023 and 2022.

Liquidity and Capital Resources

As a clinical-stage company we have not generated significant revenue, and we expect to incur operating losses as we continue our efforts to acquire, develop, seek regulatory approval for and commercialize product candidates and execute on our strategic initiatives. Our operations have historically been funded through issuances of common shares, exercises of common share purchase warrants, convertible preferred shares, convertible loans, government grants and tax incentives. For the nine-month periods ended June 30, 2023 and 2022, we reported net losses of $6.65 million and $14.74 million, respectively.

On March 27, 2023, we entered into an equity distribution agreement with Canaccord Genuity LLC (Canaccord), as sales agent, pursuant to which the Company may offer and sell, from time to time, common shares through an at-the-market equity offering program for up to $20 million in gross cash proceeds, subject to certain offering limitations that currently allow the Company to offer and sell common shares having an aggregate gross sales price of up to $8.37 million. Canaccord will use commercially reasonable efforts to sell the common shares from time to time, based upon our instructions. We have no obligation to sell any of the common shares and may at any time suspend sales under the equity distribution agreement or terminate the equity distribution agreement in accordance with its terms. The total amount of cash that may be generated under this equity distribution agreement is uncertain and depends on a variety of factors, including market conditions and the trading price of our common shares. For the three months ended June 30, 2023, we sold a total of 808,107 common shares pursuant to the agreement. After deducting commissions and costs, net proceeds totaled $0.69 million. Subsequent to the quarter end, sales under the agreement have resulted in the issuance of 226,882 common shares and receipt of net cash proceeds of $0.19 million after deducting sales agent commissions.

In November 2022, we completed a private placement of units consisting of 2,691,337 common shares, three-year warrants to purchase up to an aggregate of 1,345,665 common shares (Class A warrants) and twelve-month warrants to purchase up to an aggregate of 1,345,665 common shares (Class B warrants). The gross proceeds from this offering are approximately $3.03 million, before offering expenses. During the nine months ended June 30, 2023, 705,314 shares have been issued upon the exercise of Class A and Class B warrants, with proceeds to the Company of $0.77 million.

In March 2022, we completed a registered direct offering of 1,540,000 common shares, no par value, and pre-funded warrants to purchase up to an aggregate of 1,199,727 common shares. In a concurrent private placement, we issued common share purchase warrants to purchase an aggregate of up to 2,739,727 common shares. After deducting the placement agent fees and offering expenses, net proceeds to the Company were approximately $9.01 million.

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From November 2021 to March 2022, we sold a total of 626,884 common shares under an “at-the-market” equity distribution program which resulted in net proceeds of $2.62 million after deducting commissions and direct costs.

Under our contribution agreement with the Canadian government’s Strategic Innovation Fund (SIF), we were eligible to receive cash reimbursements up to C$14.05 million (approximately $11 million USD) in the aggregate for certain research and development expenses related to our EB05 clinical development program. For the years ended September 30, 2022 and 2021, we recorded grant income of $0.78 million and $10.34 million respectively. All grant reimbursements were received by December 31, 2022.

At June 30, 2023, we had cash and cash equivalents of $6.46 million, working capital of $5.39 million, shareholders’ equity of $7.85 million and an accumulated deficit of $50.70 million. We plan to finance company operations over the course of the next twelve months with cash and cash equivalents on hand and equity sales under the at-the-market offering program. Management has flexibility to adjust this timeline by making changes to planned expenditures related to, among other factors, the size and timing of clinical trial expenditures and manufacturing campaigns, staffing levels, and the acquisition or in-licensing of new product candidates. To help fund our operations and meet our obligations in the future, we plan to seek additional financing through the sale of equity, government grants, debt financings or other capital sources, including potential future licensing, collaboration or similar arrangements with third parties or other strategic transactions. There is no assurance that adequate funding will be available to us or, if available, that such funding will be available on terms that we or our shareholders view as favorable. Market volatility, inflation, interest rates, government policies and concerns related to the war in Ukraine and the Covid-19 pandemic may have a significant impact on the availability of funding sources and the terms at which any funding may be available.

Research and Development

Our primary business is the development of innovative therapeutics for inflammatory and immune-related diseases with clear unmet medical needs. We focus our resources on research and development activities, including the conduct of clinical studies and product development, and expense such costs as they are incurred. Our research and development expenses have primarily consisted of employee-related expenses, including salaries, benefits, taxes, travel and share-based compensation expense for personnel in research and development functions; expenses related to process development and production of product candidates paid to contract manufacturing organizations and contract testing organizations, including the cost of acquiring, developing, and manufacturing research material; costs associated with clinical activities, including expenses for contract research organizations; and clinical trials and activities related to regulatory filings for our product candidates, including regulatory consultants.

Research and development expenses, which have historically varied based on the level of activity in our clinical programs, are significantly influenced by study initiation expenses and patient recruitment rates, and as a result are expected to continue to fluctuate, sometimes substantially. Our research and development costs were $3.84 million and $11.54 million for the nine months ended June 30, 2023 and 2022, respectively. The decrease was due primarily to decreased external research expenses related to our ongoing clinical studies and manufacturing of our investigational drugs.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company and are not required to provide disclosure under this item.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining disclosure controls and procedures to provide reasonable assurance that material information related to our Company, including our consolidated subsidiaries, is made known to senior management, including our Chief Executive Officer and Chief Financial Officer, by others within those entities on a timely basis so that appropriate decisions can be made regarding public disclosure.

We carried out an evaluation, under the supervision and with the participation of our management, including our Principal Executive Officer and our Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Securities and Exchange Act of 1934, as amended) as of June 30, 2023. Our Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures, as of June 30, 2023, were effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may be involved in legal proceedings, claims and litigation arising in the ordinary course of business. We are not currently a party to any material legal proceedings or claims outside the ordinary course of business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Item 1A. Risk Factors.

There have been no material changes to the risk factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended September 30, 2022, filed with the Securities and Exchange Commission on December 16, 2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Amended and Restated Employment Agreement with Pardeep Nijhawan

On August 4, 2023, the Company entered into an amended and restated employment agreement with Pardeep Nijhawan, the Company’s Chief Executive Officer (the “Nijhawan Employment Agreement”).

Pursuant to the Nijhawan Employment Agreement, Dr. Nijhawan serves as the Company’s Chief Executive Officer as well as Chief Executive Officer of each of the Company’s subsidiaries, Edesa Biotech Research, Inc. and Edesa Biotech USA, Inc. and a director of Edesa Biotech Research, Inc. Dr. Nijhawan’s employment will continue for an indefinite term until terminated in accordance with the Nijhawan Employment Agreement.

Pursuant to the Nijhawan Employment Agreement, Dr. Nijhawan is entitled to a base salary of $357,700 per year and is eligible to receive a target annual bonus of 40% of his base salary, subject to the achievement of corporate and personal targets as determined by the Company and the Board of Directors. Dr. Nijhawan’s base salary is subject to annual review by the Board of Directors. Dr. Nijhawan is also entitled to an automobile allowance of $2,701.50 per month and is eligible to participate in the Company’s group insured benefits program, as may be in effect from time-to-time for employees generally, and executive employees specifically. Dr. Nijhawan is eligible for equity-based awards pursuant to the Company’s Equity Incentive Compensation Plan, as determined by the Board of Directors or Compensation Committee, commensurate with Dr. Nijhawan’s position and any business milestones that may be established by the Company.

If Dr. Nijhawan’s employment is terminated for “Cause” (as such term is defined in the Nijhawan Employment Agreement), subject to applicable law, Dr. Nijhawan is entitled to his base salary and vacation pay earned through the date of termination, and all of Dr. Nijhawan’s non-vested equity-based awards will be automatically extinguished. All vested equity-based awards shall be subject to the terms of the Company’s Equity Incentive Compensation Plan.

If Dr. Nijhawan is terminated without “Cause”, subject to Dr. Nijhawan signing a general release of claims, Dr. Nijhawan is entitled to: (i) a lump sum payment equal to Dr. Nijhawan’s then current base salary for 12 months plus one additional month for every completed year of service since August 1, 2017 (the “Nijhawan Severance Period”) which shall not exceed 24 months, inclusive of, and not in addition to, his notice and severance entitlements, if any, pursuant to applicable law, (ii) a lump sum payment of the annual bonus to which Dr. Nijhawan is entitled for the calendar year immediately preceding the date of termination, if such bonus has not already been paid, (iii) a lump sum payment equal to Dr. Nijhawan’s annual bonus entitlement, prorated over Dr. Nijhawan’s length of service in the calendar year in which his employment is terminated, calculated in accordance with the terms of the Nijhawan Employment Agreement, (iv) payment of Dr. Nijhawan’s annual bonus entitlement during the full Nijhawan Severance Period, calculated in accordance with the terms of the Nijhawan Employment Agreement, (v) continuation of Dr. Nijhawan’s benefits and car allowance and any other benefit required to be maintained by law in accordance with the terms of the Nijhawan Employment Agreement, and (vi) subject to applicable law, all vested equity-based awards granted to Dr. Nijhawan shall be exercisable in accordance with the terms of the applicable Equity Incentive Compensation Plan.

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In the event that Dr. Nijhawan is terminated or constructively terminated, which includes a material change in Dr. Nijhawan’s title, responsibilities, authority or status or a material reduction of his compensation, without “Cause” upon or within a 12-month period following a “Change of Control” (as such term is defined in the Nijhawan Employment Agreement), Dr. Nijhawan is entitled to (i) a change of control payment equal to 24 months of the value of Dr. Nijhawan’s then current base salary as of the date of termination, (ii) a lump sum payment of the annual bonus to which Dr. Nijhawan is entitled for the calendar year immediately preceding the date of termination, if such bonus has not already been paid, (iii) a lump sum payment equal to Dr. Nijhawan’s annual bonus entitlement, prorated over Dr. Nijhawan’s length of service in the calendar year in which his employment is terminated, calculated in accordance with the terms of the Nijhawan Employment Agreement, (iv) payment of Dr. Nijhawan’s annual bonus entitlement during the full Nijhawan Severance Period, calculated in accordance with the terms of the Nijhawan Employment Agreement, (v) continuation of Dr. Nijhawan’s benefits and car allowance and any other benefit required to be maintained by law in accordance with the terms of the Nijhawan Employment Agreement, and (vi) subject to applicable law, all vested equity-based awards granted to Dr. Nijhawan shall be exercisable in accordance with the terms of the applicable Equity Incentive Compensation Plan.

Dr. Nijhawan may resign from his employment at any time by providing the Company with a minimum of 60 days advance notice, in writing. Dr. Nijhawan’s notice may be waived by the Company, subject only to providing Dr. Nijhawan with payment of his base salary and continuation of benefits until the end of the notice period. If Dr. Nijhawan resigns from his employment, subject to applicable law, (i) all non-vested equity based awards held by Dr. Nijhawan shall be automatically extinguished and (ii) Dr. Nijhawan shall not be entitled to any bonus or pro rata bonus payment not already awarded on or before the date of termination. All vested equity-based awards shall be subject to the terms of the applicable Equity Incentive Compensation Plan.

During the term of Dr. Nijhawan’s employment and for 12 months following the cessation of Dr. Nijhawan’s employment, Dr. Nijhawan is prohibited from competing with the business of the Company in North America. In addition, for 24 months following the cessation of Dr. Nijhawan’s employment, Dr. Nijhawan is prohibited from soliciting customers or prospective customers for any purpose competitive with the business of the Company, encouraging any customer to cease doing business with the Company and soliciting the employment or engagement of certain of Company’s employees.

Amended and Restated Employment Agreement with Michael Brooks

On August 4, 2023, the Company entered into an amended and restated employment agreement with Michael Brooks, the Company’s President (the “Brooks Employment Agreement”).

Pursuant to the Brooks Employment Agreement, Dr. Brooks serves as the Company’s President as well as President and a director of the Company’s subsidiary, Edesa Biotech Research, Inc. Dr. Brooks’ employment will continue for an indefinite term until terminated in accordance with the Brooks Employment Agreement.

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Pursuant to the Brooks Employment Agreement, Dr. Brooks is entitled to a base salary of $335,340 per year and is eligible to receive a target annual bonus of 40% of his base salary, subject to the achievement of corporate and personal targets as determined by the Company and the Board of Directors. Dr. Brooks’ base salary is subject to annual review by the Board of Directors. Dr. Brooks is also entitled to an automobile allowance of $2,000 per month and is eligible to participate in the Company’s group insured benefits program, as may be in effect from time-to-time for employees generally, and executive employees specifically. Dr. Brooks is eligible for equity-based awards pursuant to the Company’s Equity Incentive Compensation Plan, as determined by the Board of Directors or Compensation Committee, commensurate with Dr. Brooks’ position and any business milestones that may be established by the Company.

If Dr. Brooks’ employment is terminated for “Cause” (as such term is defined in the Brooks Employment Agreement), subject to applicable law, Dr. Brooks is entitled to his base salary and vacation pay earned through the date of termination, and all of Dr. Brooks’ non-vested equity-based awards will be automatically extinguished. All vested equity-based awards shall be subject to the terms of the Company’s Equity Incentive Compensation Plan.

If Dr. Brooks is terminated without “Cause”, subject to Dr. Brooks signing a general release of claims, Dr. Brooks is entitled to: (i) a lump sum payment equal to Dr. Brooks’ then current base salary for 12 months plus one additional month for every completed year of service since September 1, 2015 (the “Brooks Severance Period”) which shall not exceed 24 months, inclusive of, and not in addition to, his notice and severance entitlements, if any, pursuant to applicable law, (ii) a lump sum payment of the annual bonus to which Dr. Brooks is entitled for the calendar year immediately preceding the date of termination, if such bonus has not already been paid, (iii) a lump sum payment equal to Dr. Brooks’ annual bonus entitlement, prorated over Dr. Brooks’ length of service in the calendar year in which his employment is terminated, calculated in accordance with the terms of the Brooks Employment Agreement, (iv) payment of Dr. Brooks’ annual bonus entitlement during the full Brooks Severance Period, calculated in accordance with the terms of the Brooks Employment Agreement, (v) continuation of Dr. Brooks’ benefits and car allowance and any other benefit required to be maintained by law in accordance with the terms of the Brooks Employment Agreement, and (vi) subject to applicable law, all vested equity-based awards granted to Dr. Brooks shall be exercisable in accordance with the terms of the applicable Equity Incentive Compensation Plan.

In the event that Dr. Brooks is terminated or constructively terminated, which includes a material change in Dr. Brooks’ title, responsibilities, authority or status or a material reduction of the Employee’s compensation, without cause upon or within a 12-month period following a “Change of Control” (as such term is defined in the Brooks Employment Agreement), Dr. Brooks is entitled to (i) a change of control payment equal to 24 months of the value of Dr. Brooks’ then current base salary as of the date of termination, (ii) a lump sum payment of the annual bonus to which Dr. Brooks is entitled for the calendar year immediately preceding the date of termination, if such bonus has not already been paid, (iii) a lump sum payment equal to Dr. Brooks’ annual bonus entitlement, prorated over Dr. Brooks’ length of service in the calendar year in which his employment is terminated, calculated in accordance with the terms of the Brooks Employment Agreement, (iv) payment of Dr. Brooks’ annual bonus entitlement during the full Brooks Severance Period, calculated in accordance with the terms of the Brooks Employment Agreement, (v) continuation of Dr. Brooks’ benefits and car allowance and any other benefit required to be maintained by law in accordance with the terms of the Brooks Employment Agreement, and (vi) subject to applicable law, all vested equity-based awards granted to Dr. Brooks shall be exercisable in accordance with the terms of the applicable Equity Incentive Compensation Plan.

Dr. Brooks may resign from his employment at any time by providing the Company with a minimum of 60 days advance notice, in writing. Dr. Brooks’ notice may be waived by the Company, subject only to providing Dr. Brooks with payment of his base salary and continuation of benefits until the end of the notice period. If Dr. Brooks resigns from his employment, subject to applicable law, (i) all non-vested equity based awards held by Dr. Brooks shall be automatically extinguished and (ii) Dr. Brooks shall not be entitled to any bonus or pro rata bonus payment not already awarded on or before the date of termination. All vested equity-based awards shall be subject to the terms of the applicable Equity Incentive Compensation Plan.

During the term of Dr. Brooks’ employment and for 12 months following the cessation of Dr. Brooks’ employment, Dr. Brooks is prohibited from competing with the business of the Company in North America. In addition, for 24 months following the cessation of Dr. Brooks’ employment, Dr. Brooks is prohibited from soliciting customers or prospective customers for any purpose competitive with the business of the Company, encouraging any customer to cease doing business with the Company and soliciting the employment or engagement of certain of Company’s employees.

The descriptions of the Nijhawan Employment Agreement and Brooks Employment Agreement do not purport to be complete and are qualified in their entireties by reference to the full texts of the Nijhawan Employment Agreement and Brooks Employment Agreement, which have been filed as Exhibits 10.3 and 10.4 to this Quarterly Report and are incorporated herein by reference.

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Item 6. Exhibits

EXHIBIT INDEX

Exhibit No.		Description
10.1 +		Amendment No. 2 to Edesa Biotech, Inc. 2019 Equity Incentive Compensation Plan (included as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on May 24, 2023, and incorporated herein by reference).

10.2 +		Employment Agreement by and between the Company and Stephen Lemieux, dated June 26, 2023 (included as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on June 27, and incorporated herein by reference).

10.3 +		Amended and Restated Employment Agreement, by and between the Company and Pardeep Nijhawan, dated August 4, 2023 (filed herewith).

10.4 +		Amended and Restated Employment Agreement, by and between the Company and Michael Brooks, dated August 4, 2023 (filed herewith).

31.1		Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

31.2		Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32.1*		Certification of the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32.2*		Certification of the Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Label Linkbase Document

101.PRE		XBRL Taxonomy Presentation Linkbase Document

* The information in this exhibit is furnished and deemed not filed with the Securities and Exchange Commission for purposes of section 18 of the Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of Edesa Biotech, Inc. under the Securities Act of 1933, as amended, or the Exchange Act of 1934, as amended, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

+ Management contract or compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	EDESA BIOTECH, INC.

Date: August 9, 2023	By:	/s/ Stephen Lemieux
		Stephen Lemieux, Chief Financial Officer
		(Principal Financial Officer and Duly Authorized Officer)

nullnullnullnullnullnull

Cover - shares	9 Months Ended
Cover - shares	Jun. 30, 2023	Aug. 09, 2023
Cover [Abstract]
Entity Registrant Name	EDESA BIOTECH, INC.
Entity Central Index Key	0001540159
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--09-30
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Jun. 30, 2023
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2023
Entity Common Stock Shares Outstanding		21,093,654
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	001-37619
Entity Interactive Data Current	Yes
Entity Address Address Line 1	100 Spy Court
Entity Address City Or Town	Markham
Entity Incorporation State Country Code	Z4
Entity Address Postal Zip Code	L3R 5H6
City Area Code	289
Local Phone Number	800-9600
Security 12b Title	Common Shares, without par value
Trading Symbol	EDSA
Security Exchange Name	NASDAQ
Entity Address Country	CA

Condensed Interim Consolidated Balance Sheets - USD ($)	Jun. 30, 2023	Sep. 30, 2022
Current assets:
Cash and cash equivalents	$ 6,457,170	$ 7,090,919
Accounts and other receivable	42,866	1,255,451
Prepaid expenses and other current assets	414,045	745,543
Total current assets	6,914,081	9,091,913
Non-current assets:
Property and equipment, net	9,918	12,694
Long-term deposits	177,825	171,464
Intangible asset, net	2,205,313	2,281,192
Right-of-use assets	112,387	18,465
Total assets	9,419,524	11,575,728
Current liabilities:
Accounts payable and accrued liabilities	1,454,120	2,121,802
Short-term right-of-use lease liabilities	74,846	18,975
Total current liabilities	1,528,966	2,140,777
Non-current liabilities:
Long-term payables	0	43,662
Long-term right-of-use lease liabilities	40,075	0
Total liabilities	1,569,041	2,184,439
Shareholders' equity:
Capital shares Authorized unlimited common and preferred shares without par value Issued and outstanding: 20,866,772 common shares (September 30, 2022 - 16,662,014)	46,141,187	42,473,099
Additional paid-in capital	12,598,108	11,176,345
Accumulated other comprehensive loss	(190,187)	(213,602)
Accumulated deficit	(50,698,625)	(44,044,553)
Total shareholders' equity	7,850,483	9,391,289
Total liabilities and shareholders' equity	$ 9,419,524	$ 11,575,728

Condensed Interim Consolidated Balance Sheets (Parenthetical) - shares	Jun. 30, 2023	Sep. 30, 2022
Condensed Interim Consolidated Balance Sheets
Capital Shares, Issued	20,866,772	16,662,014
Capital Shares, Outstanding	20,866,772	16,662,014

Condensed Interim Consolidated Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Expenses:
Research and development	$ 1,025,622	$ 4,547,543	$ 3,841,150	$ 11,541,404
General and administrative	1,038,587	1,249,982	3,011,945	3,993,075
Loss from operations	(2,064,209)	(5,797,525)	(6,853,095)	(15,534,479)
Other income (loss):
Reimbursement grant income	0	0	0	780,257
Interest income	82,754	17,518	217,901	27,386
Foreign exchange loss	(3,451)	(7,013)	(18,078)	(7,377)
Total income (loss)	79,303	10,505	199,823	800,266
Loss before income taxes	(1,984,906)	(5,787,020)	(6,653,272)	(14,734,213)
Income tax expense	0	0	800	800
Net loss	(1,984,906)	(5,787,020)	(6,654,072)	(14,735,013)
Exchange differences on translation	39,839	34,559	23,415	79,474
Net comprehensive loss	$ (1,945,067)	$ (5,752,461)	$ (6,630,657)	$ (14,655,539)
Weighted average number of common shares	20,514,766	15,462,287	19,619,548	14,227,538
Loss per common share - basic and diluted	$ (0.10)	$ (0.37)	$ (0.34)	$ (1.04)

Condensed Interim Consolidated Statements of Cash Flows - USD ($)	9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash flows from operating activities:
Net loss	$ (6,654,072)	$ (14,735,013)
Adjustments for:
Depreciation and amortization	137,501	89,228
Share-based compensation	729,380	1,804,670
Changes in working capital items:
Accounts and other receivable	1,149,129	1,900,776
Prepaid expenses and other current assets	339,031	(28,858)
Accounts payable and accrued liabilities	(869,430)	4,318,102
Net cash used in operating activities	(5,168,461)	(6,651,095)
Cash flows from investing activities:
Purchase of property and equipment	0	(5,697)
Net cash used in investing activities	0	(5,697)
Cash flows from financing activities:
Proceeds from issuance of common shares and warrants	3,861,245	11,957,567
Proceeds from exercise of warrants	770,531	0
Payments for issuance costs of common shares and warrants	(214,130)	(327,653)
Net cash provided by financing activities	4,417,646	11,629,914
Effect of exchange rate changes on cash and cash equivalents	117,066	(3,669)
Net change in cash and cash equivalents	(633,749)	4,969,453
Cash and cash equivalents, beginning of period	7,090,919	7,839,259
Cash and cash equivalents, end of period	6,457,170	12,808,712
Supplemental Disclosure of Noncash Financing Activities:
Issuance costs withheld from gross proceeds from issuance of common shares and warrants	0	393,461
Fair value of placement agent warrants	$ 0	$ 408,059

Condensed Interim Consolidated Statements of Changes in Shareholders' Equity - USD ($)	Total	Common Shares	Additional Paid-In Capital	Accumulated other comprehensive loss	Retained Earnings (Accumulated Deficit)
Balance, shares at Sep. 30, 2021		13,295,403
Balance, amount at Sep. 30, 2021	$ 13,058,291	$ 34,887,721	$ 4,871,461	$ (205,262)	$ (26,495,629)
Issuance of common shares and warrants in equity offering, shares		2,166,884
Issuance of common shares and warrants in equity offering, amount	12,941,473	$ 6,239,180	6,702,293	0	0
Issuance costs including fair value of placement agent warrants, amount	(1,311,559)	(862,821)	(448,738)	0	0
Share-based compensation	1,804,670	0	1,804,670	0	0
Net loss and comprehensive loss	(14,655,539)	$ 0	0	79,474	(14,735,013)
Balance, shares at Jun. 30, 2022		15,462,287
Balance, amount at Jun. 30, 2022	11,837,336	$ 40,264,080	12,929,686	(125,788)	(41,230,642)
Balance, shares at Mar. 31, 2022		15,462,287
Balance, amount at Mar. 31, 2022	17,024,413	$ 40,264,080	12,364,302	(160,347)	(35,443,622)
Share-based compensation	565,384	0	565,384	0	0
Net loss and comprehensive loss	(5,752,461)	$ 0	0	34,559	(5,787,020)
Balance, shares at Jun. 30, 2022		15,462,287
Balance, amount at Jun. 30, 2022	11,837,336	$ 40,264,080	12,929,686	(125,788)	(41,230,642)
Balance, shares at Sep. 30, 2022		16,662,014
Balance, amount at Sep. 30, 2022	9,391,289	$ 42,473,099	11,176,345	(213,602)	(44,044,553)
Issuance of common shares and warrants in equity offering, shares		3,499,444
Issuance of common shares and warrants in equity offering, amount	3,861,245	$ 2,916,418	944,827	0	0
Share-based compensation	729,380		729,380	0	0
Net loss and comprehensive loss	(6,630,657)	$ 0	0	23,415	(6,654,072)
Issuance of common shares upon exercise of warrants, shares		705,314
Issuance of common shares upon exercise of warrants, amount	770,531	$ 994,618	(224,087)	0	0
Issuance costs	(271,305)	$ (242,948)	(28,357)	0	0
Balance, shares at Jun. 30, 2023		20,866,772
Balance, amount at Jun. 30, 2023	7,850,483	$ 46,141,187	12,598,108	(190,187)	(50,698,625)
Balance, shares at Mar. 31, 2023		20,058,665
Balance, amount at Mar. 31, 2023	8,999,937	$ 45,453,733	12,489,949	(230,026)	(48,713,719)
Issuance of common shares and warrants in equity offering, shares		808,107
Issuance of common shares and warrants in equity offering, amount	833,749	$ 833,749	0	0	0
Share-based compensation	108,159	0	108,159	0	0
Net loss and comprehensive loss	(1,945,067)	0	0	39,839	(1,984,906)
Issuance costs, amount	(146,295)	$ (146,295)	0	0	0
Balance, shares at Jun. 30, 2023		20,866,772
Balance, amount at Jun. 30, 2023	$ 7,850,483	$ 46,141,187	$ 12,598,108	$ (190,187)	$ (50,698,625)

Nature of Operations

9 Months Ended

Jun. 30, 2023

Nature of Operations

Nature of Operations

1. Nature of Operations

The Company’s common shares trade on The Nasdaq Capital Market in the United States under the symbol “EDSA”.

Basis of presentation

9 Months Ended

Jun. 30, 2023

Basis of presentation

Basis Of Presentation

2. Basis of Presentation

Use of estimates

Functional and reporting currencies

Intangible Assets

9 Months Ended

Jun. 30, 2023

Intangible Assets

Intangible Assets

3. Intangible Assets

Acquired License

Intangible assets, net consisted of the following:

	June 30, 2023			September 30, 2022

The Constructs	$	2,529,483		$	2,529,483

Less: accumulated amortization		(324,170	)		(248,291	)

Total intangible assets, net	$	2,205,313		$	2,281,192

Amortization expense amounted to $0.03 million for each of the three months ended June 30, 2023 and 2022 and $0.08 million for each of the nine months ended June 30, 2023 and 2022.

Total estimated future amortization of intangible assets for each fiscal year is as follows:

Year Ending
September 30, 2023	$	25,293
September 30, 2024		101,172
September 30, 2025		101,172
September 30, 2026		101,172
September 30, 2027		101,172
Thereafter		1,775,332

	$	2,205,313

Right of Use Lease with Related Party

9 Months Ended

Jun. 30, 2023

Right of Use Lease with Related Party

Right-of-Use Lease with Related Party

4. Right-of-Use Lease with Related Party

The Company leases a facility used for executive offices from a related company. The original lease expired in December 2022, and the Company executed a two-year extension through December 2024.

The components of right-of-use lease cost were as follows:

	Three Months Ended				Nine Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Right-of-use lease cost, included in general and administrative on the Statements of Operations	$	21,188	$	20,105	$	61,530	$	60,713

Lease terms and discount rates were as follows:

	June 30, 2023			September 30, 2022
Remaining lease term (months):		18			3
Estimated incremental borrowing rate:		9.2	%		6.5	%

The future minimum lease payments under right-of-use leases at June 30, 2023 were as follows:

Year Ending
September 30, 2023	$	20,422
September 30, 2024		81,689
September 30, 2025		20,422

Total lease payments		122,533
Less imputed interest		7,612

Present value of right-of-use lease liabilities		114,921
Present value included in current liabilities		74,846

Present value included in long-term liabilities	$	40,075

Cash flow information was as follows:

	Nine Months Ended
	June 30, 2023		June 30, 2022
Cash paid for amounts included in the measurement of right-of-use lease liabilities, included in accounts payable and accrued liabilities on the Statements of Cash Flow.	$	59,045	$	60,714

Commitments

9 Months Ended

Jun. 30, 2023

Commitments (Note 5)

Commitments

5. Commitments

Research and other commitments

Year Ending
September 30, 2023	$	466,000
September 30, 2024		1,369,000
September 30, 2025		49,000
September 30, 2026		36,000
September 30, 2027		11,000

	$	1,931,000

License and royalty commitments

Capital shares

9 Months Ended

Jun. 30, 2023

Capital shares

Capital Shares

6. Capital Shares

Equity Distribution Agreements

Equity offerings

Black-Scholes option valuation model

Warrants

A summary of the Company’s warrants activity is as follows:

	Number of Warrant Shares (#)			Weighted Average Exercise Price
Nine Months Ended June 30, 2023
Balance - September 30, 2022		3,651,953		$	4.00

Issued		2,691,330			1.25
Exercised		(705,314	)		1.09
Expired		(28,124	)		15.90

Balance - June 30, 2023		5,609,845		$	2.99

Nine Months Ended June 30, 2022
Balance - September 30, 2021		720,446		$	5.69

Issued		2,931,507			3.59

Balance - June 30, 2022		3,651,953		$	4.00

The weighted average contractual life remaining on the outstanding warrants at June 30, 2023 is 34 months.

The following table summarizes information about the warrants outstanding at June 30, 2023:

Number of Warrants (#)		Exercise Prices		Expiry Dates
	563,685	$	4.80	July 2023
	770,786	$	1.00	December 2023
	7,484	$	4.81	June 2024
	11,778	$	3.20	January 2025
	1,215,230	$	1.50	December 2025
	109,375	$	8.00	February 2026
	191,780	$	4.56	March 2027
	2,739,727	$	3.52	September 2027
	5,609,845

The fair value of warrants granted during the nine months ended June 30, 2023 was estimated using the Black-Scholes option valuation model using the following assumptions:

	Nine Months Ended June 30, 2023						Nine Months Ended June 30, 2022
	Class A Warrants			Class B Warrants			Common Warrants			Placement Agent Warrants

Risk free interest rate		4.54	%		4.76	%		2.37	%		2.37	%
Expected life	3.14 years			1.14 years			5.5 years			5 years
Expected share price volatility		90.73	%		89.70	%		87.09	%		87.09	%
Expected dividend yield		0.00	%		0.00	%		0.00	%		0.00	%

Pre-funded Warrants

A summary of the Company’s pre-funded warrants activity is as follows:

	Number of Pre-funded Warrant Shares (#)
Nine Months Ended June 30, 2022
Balance - September 30, 2021		-

Issued		1,199,727

Balance - June 30, 2022		1,199,727

There were no pre-funded warrants during the nine months ended June 30, 2023.

Share Options

Options have been granted under the 2019 Plan allowing the holders to purchase common shares of the Company as follows:

	Number of Options (#)			Weighted Average Exercise Price		Weighted Average Grant Date Fair Value
Nine Months Ended June 30, 2023
Balance - September 30, 2022		2,203,699		$	4.66	$	3.42

Granted		332,950			1.43		1.07
Forfeited		(88,226	)		3.28		2.34
Expired		(238	)		304.08		304.08

Balance - June 30, 2023		2,448,185		$	4.23	$	3.11

Nine Months Ended June 30, 2022
Balance - September 30, 2021		1,776,219		$	5.06	$	3.79

Granted		500,083			3.66		2.48
Exercised		(26,954	)		6.56		4.97
Expired		(45,649	)		8.05		6.48

Balance - June 30, 2022		2,203,699		$	4.66	$	3.42

The weighted average contractual life remaining on the outstanding options at June 30, 2023 is 90 months.

The following table summarizes information about the options under the 2019 Plan outstanding and exercisable at June 30, 2023:

Number of Options (#)		Exercisable at June 30, 2023 (#)		Range of Exercise Prices		Expiry Dates
	3,499		3,499	$	35.28 - 93.24	Sep 2023-Mar 2025
	296,403		296,403	C$	2.16	Aug 2027-Dec 2028
	323,976		323,976	$	3.16	Feb 2030
	397,000		363,829	$	7.44 - 8.07	Sep 2030-Oct 2030
	653,326		525,001	$	5.25 - 5.74	Jan 2031-Sep 2031
	481,365		279,177	$	2.94 - 3.71	Feb 2032-Mar 2032
	292,616		43,990	$	0.96 - 1.43	Dec 2032-Feb 2033
	2,448,185		1,835,875

The fair value of options granted during the nine months ended June 30, 2023 and 2022 was estimated using the Black-Scholes option valuation model using the following assumptions:


	Nine Months Ended
	June 30, 2023			June 30, 2022

Risk free interest rate	3.62%-4.18%			1.71% - 2.54%
Expected life	5 years			5 years
Expected share price volatility	95.3%-97.34%			85.91% - 86.59%
Expected dividend yield		0.00	%		0.00	%

As of June 30, 2023, the Company had $0.46 million of unrecognized share-based compensation expense, which is expected to be recognized over a period of 31 months.

Reimbursement Grant Income and Receivable

9 Months Ended

Jun. 30, 2023

Reimbursement Grant Income and Receivable

Reimbursement Grant Income And Receivable

7. Reimbursement Grant Income and Receivable

Financial instruments

9 Months Ended

Jun. 30, 2023

Financial instruments

Financial Instruments

8. Financial Instruments

(a) Fair values

There are three levels of inputs that may be used to measure fair value:

·	Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
·	Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets and liabilities in markets that are not active.
·	Level 3 - Unobservable inputs for the asset or liability that are supported by little or no market activity.

(b) Interest rate and credit risk

(c) Foreign exchange risk

(d) Liquidity risk

Loss per share

9 Months Ended

Jun. 30, 2023

Loss per share

Loss Per Share

9. Loss per Share

Related party transactions

9 Months Ended

Jun. 30, 2023

Related party transactions

Related Party Transactions

10. Related Party Transactions

Subsequent Events

9 Months Ended

Jun. 30, 2023

Subsequent Events

Subsequent Events

11. Subsequent Events

Basis of preparation (Policies)	9 Months Ended
Basis of preparation (Policies)	Jun. 30, 2023
Basis of preparation (Policies)
Use Of Estimates	The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period or year. Actual results could differ from those estimates. Areas where significant judgment is involved in making estimates are valuation of accounts and other receivable; valuation and useful lives of property and equipment; intangible assets; right-of-use assets; deferred income taxes; the determination of fair value of share-based compensation; the determination of fair value of warrants in order to allocate proceeds from equity issuances; and forecasting future cash flows for assessing the going concern assumption.
Functional And Reporting Currencies	The consolidated financial statements of the Company are presented in U.S. dollars, unless otherwise stated, which is the Company’s and its wholly owned subsidiary’s, Edesa Biotech USA, Inc., functional currency. The functional currency of the Company’s wholly owned subsidiary, Edesa Biotech Research, Inc., as determined by management, is Canadian dollars.

Intangible Assets (Tables)

9 Months Ended

Jun. 30, 2023

Intangible Assets

Schdule of intangible Assets

	June 30, 2023			September 30, 2022

The Constructs	$	2,529,483		$	2,529,483

Less: accumulated amortization		(324,170	)		(248,291	)

Total intangible assets, net	$	2,205,313		$	2,281,192

Estimated Future Amortization Of Intangible Assets

Year Ending
September 30, 2023	$	25,293
September 30, 2024		101,172
September 30, 2025		101,172
September 30, 2026		101,172
September 30, 2027		101,172
Thereafter		1,775,332

	$	2,205,313

Right of use Lease with Related Party (Tables)

9 Months Ended

Jun. 30, 2023

Right of Use Lease with Related Party

Components of lease cost

	Three Months Ended				Nine Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Right-of-use lease cost, included in general and administrative on the Statements of Operations	$	21,188	$	20,105	$	61,530	$	60,713

Lease Terms And Discount Rates

	June 30, 2023			September 30, 2022
Remaining lease term (months):		18			3
Estimated incremental borrowing rate:		9.2	%		6.5	%

Future Minimum Lease Payments

Year Ending
September 30, 2023	$	20,422
September 30, 2024		81,689
September 30, 2025		20,422

Total lease payments		122,533
Less imputed interest		7,612

Present value of right-of-use lease liabilities		114,921
Present value included in current liabilities		74,846

Present value included in long-term liabilities	$	40,075

Cash Paid-lease Liabilities

	Nine Months Ended
	June 30, 2023		June 30, 2022
Cash paid for amounts included in the measurement of right-of-use lease liabilities, included in accounts payable and accrued liabilities on the Statements of Cash Flow.	$	59,045	$	60,714

Commitments (Tables)

9 Months Ended

Jun. 30, 2023

Commitments (Note 5)

Future Contractual Payments

Year Ending
September 30, 2023	$	466,000
September 30, 2024		1,369,000
September 30, 2025		49,000
September 30, 2026		36,000
September 30, 2027		11,000

	$	1,931,000

Capital Shares (Tables)

9 Months Ended

Jun. 30, 2023

Capital shares

Schdule of warrant activity

	Number of Warrant Shares (#)			Weighted Average Exercise Price
Nine Months Ended June 30, 2023
Balance - September 30, 2022		3,651,953		$	4.00

Issued		2,691,330			1.25
Exercised		(705,314	)		1.09
Expired		(28,124	)		15.90

Balance - June 30, 2023		5,609,845		$	2.99

Nine Months Ended June 30, 2022
Balance - September 30, 2021		720,446		$	5.69

Issued		2,931,507			3.59

Balance - June 30, 2022		3,651,953		$	4.00

Summary of warrants outstanding

Number of Warrants (#)		Exercise Prices		Expiry Dates
	563,685	$	4.80	July 2023
	770,786	$	1.00	December 2023
	7,484	$	4.81	June 2024
	11,778	$	3.20	January 2025
	1,215,230	$	1.50	December 2025
	109,375	$	8.00	February 2026
	191,780	$	4.56	March 2027
	2,739,727	$	3.52	September 2027
	5,609,845

Schdule of granted fair value warrants

	Nine Months Ended June 30, 2023						Nine Months Ended June 30, 2022
	Class A Warrants			Class B Warrants			Common Warrants			Placement Agent Warrants

Risk free interest rate		4.54	%		4.76	%		2.37	%		2.37	%
Expected life	3.14 years			1.14 years			5.5 years			5 years
Expected share price volatility		90.73	%		89.70	%		87.09	%		87.09	%
Expected dividend yield		0.00	%		0.00	%		0.00	%		0.00	%

Company's pre-funded warrants activity

	Number of Pre-funded Warrant Shares (#)
Nine Months Ended June 30, 2022
Balance - September 30, 2021		-

Issued		1,199,727

Balance - June 30, 2022		1,199,727

Share Options under 2019 plan

	Number of Options (#)			Weighted Average Exercise Price		Weighted Average Grant Date Fair Value
Nine Months Ended June 30, 2023
Balance - September 30, 2022		2,203,699		$	4.66	$	3.42

Granted		332,950			1.43		1.07
Forfeited		(88,226	)		3.28		2.34
Expired		(238	)		304.08		304.08

Balance - June 30, 2023		2,448,185		$	4.23	$	3.11

Nine Months Ended June 30, 2022
Balance - September 30, 2021		1,776,219		$	5.06	$	3.79

Granted		500,083			3.66		2.48
Exercised		(26,954	)		6.56		4.97
Expired		(45,649	)		8.05		6.48

Balance - June 30, 2022		2,203,699		$	4.66	$	3.42

Summary of plan outstanding and exercisable

Number of Options (#)		Exercisable at June 30, 2023 (#)		Range of Exercise Prices		Expiry Dates
	3,499		3,499	$	35.28 - 93.24	Sep 2023-Mar 2025
	296,403		296,403	C$	2.16	Aug 2027-Dec 2028
	323,976		323,976	$	3.16	Feb 2030
	397,000		363,829	$	7.44 - 8.07	Sep 2030-Oct 2030
	653,326		525,001	$	5.25 - 5.74	Jan 2031-Sep 2031
	481,365		279,177	$	2.94 - 3.71	Feb 2032-Mar 2032
	292,616		43,990	$	0.96 - 1.43	Dec 2032-Feb 2033
	2,448,185		1,835,875

Fair Value Of warrant Granted Assumptions


	Nine Months Ended
	June 30, 2023			June 30, 2022

Risk free interest rate	3.62%-4.18%			1.71% - 2.54%
Expected life	5 years			5 years
Expected share price volatility	95.3%-97.34%			85.91% - 86.59%
Expected dividend yield		0.00	%		0.00	%

Intangible Assets (Details) - USD ($)	Jun. 30, 2023	Sep. 30, 2022
Intangible Assets
The Constructs	$ 2,529,483	$ 2,529,483
Less: Accumulated Amortization	(324,170)	(248,291)
Total intangible assets, net	$ 2,205,313	$ 2,281,192

Intagible Assets (Details 1) - USD ($)	Jun. 30, 2023	Sep. 30, 2022
Intangible Assets
September 30, 2023	$ 25,293
September 30, 2024	101,172
September 30, 2025	101,172
September 30, 2026	101,172
September 30, 2027	101,172
Thereafter	1,775,332
Total	$ 2,205,313	$ 2,281,192

Intangible Assets (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
Intangible Assets (Details Narrative) - USD ($)	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Intangible Assets
Amortization Expense	$ 30,000.00	$ 30,000.00	$ 80,000.00	$ 80,000.00
Useful Life			25 years
Description Of Licence Agreement			The required upfront license payment of $2.5 million was paid by issuance of Series A-1 Convertible Preferred Shares, which have been fully converted to common shares

RightofUse Lease with Related Party (Details) - USD ($)	3 Months Ended		9 Months Ended
RightofUse Lease with Related Party (Details) - USD ($)	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
General and Administrative Expense
Right-of-use lease cost, included in general and administrative on the Statements of Operations	$ 21,188	$ 61,530	$ 20,105	$ 60,713

RightofUse Lease with Related Party (Details 1)	9 Months Ended
RightofUse Lease with Related Party (Details 1)	Jun. 30, 2023	Jun. 30, 2022	Sep. 30, 2022
Related party transactions
Remaining Lease Term (months)	18 months	3 months
Estimated Incremental Borrowing Rate	9.20%		6.50%

RightofUse Lease with Related Party (Details 2) - USD ($)	Jun. 30, 2023	Sep. 30, 2022
Year Ending
September 30, 2023	$ 20,422
September 30, 2024	81,689
September 30, 2025	20,422
Total Lease Payment	122,533
Less Imputed Interest	7,612
Present value of right-of-use lease liabilities	114,921
Present value included in current liabilities	74,846	$ 18,975
Present value included in long-term liabilities	$ 40,075	$ 0

RightofUse Lease with Related Party (Details 3) - USD ($)	9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Related party transactions
Cash paid for amounts included in the measurement of right-of-use lease liabilities, included in accounts payable and accrued liabilities on the Statements of Cash Flow	$ 59,045	$ 60,714

Commitments (Details) $ in Millions	Jun. 30, 2023 USD ($)
Year Ending September 30,
September 30, 2023	$ 466,000
September 30, 2024	1,369,000
September 30, 2025	49,000
September 30, 2026	36,000
September 30, 2027	11,000
Total	$ 1,931,000

Commitments (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
Commitments (Details Narrative) - USD ($)	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Common Shares
Description of aqquire drugs			the Company acquired drug substance of one of the Constructs for an aggregate purchase price of $5.0 million, payable in two installments. The Company recorded expense of $2.5 million for the second installment
Remaining payments of contingent			$ 356,000,000
2021 [Member] \| License Commitments Agreement [Member]
Payments to investors	$ 0	$ 0	0	$ 0
2021 [Member] \| License Commitments [Member]
Payments to investors			30,000.00
Payments to third party			68,900,000
2016 [Member] \| License Commitments [Member]
Payments to investors	18,400,000	$ 0	40,000.00	$ 0
Payments to third party	$ 40,000.00		$ 160,000

Capital Shares (Details) - $ / shares	9 Months Ended
Capital Shares (Details) - $ / shares	Jun. 30, 2023	Jun. 30, 2022
Capital shares
Number of warrants, beginning balance	3,651,953	720,446
Issued	2,691,330	2,931,507
Exercised	(705,314)
Expired	(28,124)
Number of warrants, ending balance	5,609,845	3,651,953
Weighted average exercise price, beginning balance	$ 4.00	$ 5.69
Issued	1.25	3.59
Exercised	1.09
Expired	15.90
Weighted average exercise price, ending balance	$ 2.99	$ 4.00

Capital Shares (Details 1) - $ / shares	9 Months Ended
Capital Shares (Details 1) - $ / shares	Jun. 30, 2023	Mar. 31, 2023	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021	Sep. 30, 2021	Sep. 30, 2019
Number of warrants	5,609,845			3,651,953	3,651,953			720,446
Weighted average exercise price	$ 2.99	$ 3.05	$ 2.84	$ 4.00	$ 4.00	$ 4.00	$ 5.65	$ 5.69	$ 11.19
Warrant 1 [Member]
Number of warrants	563,685
Weighted average exercise price	$ 4.80
Expiry date	July 2023
Warrant 3 [Member]
Number of warrants	770,786
Weighted average exercise price	$ 1.00
Expiry date	December 2023
Warrant 4 [Member]
Number of warrants	7,484
Weighted average exercise price	$ 4.81
Expiry date	June 2024
Warrant 5 [Member]
Number of warrants	11,778
Weighted average exercise price	$ 3.20
Expiry date	January 2025
Warrant 6 [Member]
Number of warrants	1,215,230
Weighted average exercise price	$ 1.50
Expiry date	December 2025
Warrant 7 [Member]
Number of warrants	109,375
Weighted average exercise price	$ 8.00
Expiry date	February 2026
Warrant 8 [Member]
Number of warrants	191,780
Weighted average exercise price	$ 4.56
Expiry date	March 2027
Warrant 9 [Member]
Number of warrants	2,739,727
Weighted average exercise price	$ 3.52
Expiry date	September 2027

Capital Shares (Details 2)	9 Months Ended
Capital Shares (Details 2)	Jun. 30, 2023	Jun. 30, 2022
Expected life (years)	5 years	5 years
Expected dividend yield	0.00%	0.00%
Class A Warrants Member
Risk free interest rate	4.54%	2.37%
Expected life (years)	3 years 1 month 20 days	5 years 6 months
Expected share price volatility	90.73%	87.09%
Expected dividend yield	0.00%	0.00%
Class B Warrants [Member]
Risk free interest rate	4.76%	2.37%
Expected life (years)	1 year 1 month 20 days	5 years
Expected share price volatility	89.70%	87.09%
Expected dividend yield	0.00%	0.00%

Capital Shares (Details 3)	9 Months Ended
Capital Shares (Details 3)	Jun. 30, 2022 shares
Number of warrants, beginning balance	720,446
Number of warrants, ending balance	3,651,953
Pre-Funded Warrants [Member]
Issued	1,199,727
Number of warrants, ending balance	1,199,727

Capital Shares (Details 4) - $ / shares	9 Months Ended
Capital Shares (Details 4) - $ / shares	Jun. 30, 2023	Jun. 30, 2022
Capital shares
Number of options, beginning balance	2,203,699	1,776,219
Number of options granted	332,950	500,083
Number of options forfeited	(88,226)
Number of options Exercised		(26,954)
Number of options expired	(238)	(45,649)
Number of options, ending balance	2,448,185	2,203,699
Weighted Average Exercise Price, beginning balance	$ 4.66	$ 5.06
Weighted average exercise price granted	1.43	3.66
Weighted average exercise price forfeited	3.28
Weighted average exercise price Exercised		6.56
Weighted average exercise price expired	304.08	8.05
Weighted Average Exercise Price, ending balance	4.23	4.66
Weighted Average Grant Date Fair Value, beginning balance	3.42	3.79
Weighted Average Grant Date Fair Value, Granted	1.07	2.48
Weighted Average Grant Date Fair Value,Exercised		4.97
Weighted Average Grant Date Fair Value, Forfeited	2.34
Weighted Average Grant Date Fair Value, expired	304.08	6.48
Weighted Average Grant Date Fair Value, ending balance	$ 3.11	$ 3.42

Capital Shares (Details 5) - $ / shares	9 Months Ended
Capital Shares (Details 5) - $ / shares	Jun. 30, 2023	Mar. 31, 2023	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021	Sep. 30, 2021	Sep. 30, 2019
Number of options	2,448,185	2,536,411	2,206,961	2,203,699	2,203,699	2,261,334	1,776,005	1,776,219	319,645
Options exercisable	1,835,875
Weighted average exercise price	$ 4.23	$ 4.20	$ 4.61	$ 4.66	$ 4.66	$ 4.70	$ 5.00	$ 5.06
Stock Option 1
Number of options	3,499
Options exercisable	3,499
Stock Option 1 \| Minumum
Weighted average exercise price	$ 35.28
Expiry dates	Sep 2023
Stock Option 1 \| Maximum
Weighted average exercise price	$ 93.24
Expiry dates	Mar 2025
Stock Option 2
Number of options	296,403
Options exercisable	296,403
Weighted average exercise price	$ 2.16
Stock Option 2 \| Minumum
Expiry dates	Aug 2027
Stock Option 2 \| Maximum
Expiry dates	Dec 2028
Stock Option 3
Number of options	323,976
Options exercisable	323,976
Weighted average exercise price	$ 3.16
Expiry dates	Feb 2030
Stock Option 4
Number of options	397,000
Options exercisable	363,829
Stock Option 4 \| Minumum
Weighted average exercise price	$ 7.44
Expiry dates	Sep 2030
Stock Option 4 \| Maximum
Weighted average exercise price	$ 8.07
Expiry dates	Oct 2030
Stock Option 5
Number of options	653,326
Options exercisable	525,001
Stock Option 5 \| Minumum
Weighted average exercise price	$ 5.25
Expiry dates	Jan 2031
Stock Option 5 \| Maximum
Weighted average exercise price	$ 5.74
Expiry dates	Sep 2031
Stock Option 6
Number of options	481,365
Options exercisable	279,177
Stock Option 6 \| Minumum
Weighted average exercise price	$ 2.94
Expiry dates	Feb 2032
Stock Option 6 \| Maximum
Weighted average exercise price	$ 3.71
Expiry dates	Mar 2032
Stock Option 7 Member
Number of options	292,616
Options exercisable	43,990
Stock Option 7 Member \| Minumum
Weighted average exercise price	$ 0.96
Expiry dates	Dec 2032
Stock Option 7 Member \| Maximum
Weighted average exercise price	$ 1.43
Expiry dates	Feb 2033

Capital Shares (Details 6)	9 Months Ended
Capital Shares (Details 6)	Jun. 30, 2023	Jun. 30, 2022
Capital shares
Risk Free Interest Rate, Minimum	3.62%	1.71%
Risk Free Interest Rate, Maximum	4.18%	2.54%
Expected Life (years)	5 years	5 years
Expected Share Price Volatility, Minimum	95.30%	85.91%
Expected Share Price Volatility, Maximum	97.34%	86.59%
Expected Dividend Yield	0.00%	0.00%

Capital Shares (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended		3 Months Ended		9 Months Ended
	Nov. 02, 2022	Mar. 27, 2023	Mar. 24, 2022	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Mar. 31, 2023	Dec. 31, 2022	Sep. 30, 2022	Mar. 31, 2022	Dec. 31, 2021	Sep. 30, 2021	Sep. 30, 2019
Weighted average contractual life remaining on outstanding options						31 months
Share-based compensation				$ 110	$ 570	$ 730	$ 1,800
Unrecognized share-based compensation				$ 460		$ 460
Gross Proceeds		$ 20,000
Net proceeds from the offering			$ 9,010
Class of Warrant or Right, Exercise Price of Warrants or Rights				$ 2.99	$ 4.00	$ 2.99	$ 4.00	$ 3.05	$ 2.84	$ 4.00	$ 4.00	$ 5.65	$ 5.69	$ 11.19
Options						332,950
Aggregate gross sales price		$ 8,370
Common share sold during period				808,107		626,884
Proceeds from share sold during period				$ 690		$ 2,620
Private Placement [Member]
Warrants To Purchase Common Stock			2,739,727
Affiliated Designees [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 4.5625
Warrant expiry date			Mar. 21, 2027
Warrants to purchase common shares			191,780
Fair value			$ 410
Warrants Additional Paid In Capital [Member]
Gross Proceeds	$ 1,220		$ 4,130
NovemberTwoTwoThousandTwentyTwo[Member]
Gross Proceeds	$ 2,910
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 1.50
Warrant expiry date	Dec. 23, 2025
Units of Common Shares	2,691,337
Black Scholes Option [Member]
Expected term						10 years
Grant date						5 years
March 24, 2022 [Member]
Offering Common Shares			1,540,000
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 3.52
Warrant expiry date			Sep. 24, 2027
Employees [Member]
Granted option shares						415,083
Expected Option Forfeitures Term						10 years
Director [Member]
Granted option shares						85,000
2019 Plan [Member]
Weighted average contractual life remaining on outstanding options						90 months
Unrecognized share-based compensation recognition period						36 months
Number Of Shares Available For Issuance						1,557,766
Option Term						10 years
Remaining Number Of Options Available For Grant						1,557,766
Class A Warrants Member
Warrants to purchase common shares	1,345,665
Class B Warrants [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 1.00
Warrant expiry date	Dec. 23, 2022
Warrants to purchase common shares	1,345,665
Pre-Funded Warrants [Member]
Gross Proceeds			$ 5,870
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 0.0001
Warrants To Purchase Common Stock			1,199,727

Financial Instruments (Details Narrative) $ / shares in Units, $ in Millions	9 Months Ended
	Jun. 30, 2023 USD ($) $ / shares	Jun. 30, 2023 CAD ($)	Sep. 30, 2022 USD ($)
Assets	$ 9,419,524		$ 11,575,728
USD to CAD [Member]
Currency exchange rate \| $ / shares	$ 1.3250
Ontario Subsidary [Member]
Assets		$ 3.3
Currency exchange rate description	Based on the exposure at June 30, 2023, a 10% annual change in the Canadian/U.S. exchange rate would impact the Company’s loss and other comprehensive loss by approximately $0.3 million

Related Party Transactions (Details Narrative) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Related party transactions
Rent expense	$ 20	$ 60

Subsequent events (Details Narrative) $ in Thousands	1 Months Ended
Subsequent events (Details Narrative) $ in Thousands	Jun. 30, 2023 USD ($) shares
Common shares issued	226,882
Gross proceeds \| $	$ 190
Employees And Directors
Options granted	497,000
Restricted share units	326,200