As
filed with the Securities and Exchange Commission on May 27,
2020
Registration No.
333-234292
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Amendment
No. 8 to
FORM
F-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
BRIACELL THERAPEUTICS CORP.
(Exact
name of Registrant as specified in its charter)
British Columbia |
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2834 |
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47-1099599 |
(State
or other jurisdiction of |
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(Primary
Standard Industrial |
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(I.R.S.
Employer |
incorporation
or organization) |
|
Classification
Code Number) |
|
Identification
Number) |
Suite
300 – 235 15th Street
West
Vancouver, BC V7T 2X1
Telephone: (604) 921-1810
(Address,
including zip code, and telephone number, including area code, of
Registrant’s principal executive offices)
Paracorp
Incorporated
2804
Gateway Oaks Drive #100,
Sacramento,
CA 95833
Telephone: (888) 280-6563
(Name,
address, including zip code, and telephone number, including area
code, of agent of service)
Copies
to:
Gregory
Sichenzia, Esq.
Avital
Perlman, Esq.
Sichenzia
Ross Ference LLP
1185
Avenue of Americas
37th
Floor
New
York, NY 10036
Telephone:
(212) 930-9700
Facsimile:
(212) 930-9725
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|
Aaron
Sonshine
Bennett
Jones LLP
3400
One First Canadian Place
P.O.
Box 130, Toronto, ON
M5X
1A4
Telephone:
(416) 777-6448
Facsimile: (416) 863-1716
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|
Virgil
Z. Hlus
Clark Wilson LLP
Suite 900-885 West Georgia Street
Vancouver, BC,V6C 3H1
Telephone: (604) 687-5700
Facsimile: (604) 687-6314
|
Approximate
date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes
effective.
If
any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, check the following box. [X]
If
this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check
the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. [ ]
If
this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
[ ]
If
this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
[ ]
Indicate
by check mark whether the registrant is an emerging growth company
as defined in Rule 405 of the Securities Act of 1933. Emerging
growth company [X]
If an
emerging growth company that prepares its financial statements in
accordance with U.S. GAAP, 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 7(a)(2)(B) of the Securities Act.
[ ]
† The
term “new or revised financial accounting standard” refers to any
update issued by the Financial Accounting Standards Board to its
Accounting Standards Codification after April 5, 2012.
CALCULATION
OF REGISTRATION FEE
|
|
Proposed
Maximum
Aggregate
Offering
Price(1)(2)
|
|
|
Amount
of
Registration Fee |
|
Common
Units (3) |
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$ |
4,000,000.00 |
(4) |
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$ |
519.20 |
|
Common
shares, no par value, included in the Common Units |
|
|
|
(5) |
|
|
|
|
Warrants
included in the Common Units (6) |
|
|
|
(5) |
|
|
|
|
Pre-funded
Units(7) |
|
|
|
(4) |
|
|
|
|
Pre-funded
Warrants included in the Pre-funded Units(8) |
|
|
|
(9) |
|
|
|
|
Warrants
included in the Pre-funded Units(6) |
|
|
|
(9) |
|
|
|
|
Common
shares underlying the Pre-funded Warrants included in the
Pre-funded Units |
|
|
|
|
|
|
|
|
Common
shares underlying the Warrants included in the Common Units and the
Pre-funded Units |
|
$ |
5,000,000.00 |
|
|
$ |
649.00 |
|
Warrants
to be issued to the Placement Agent |
|
|
|
(10) |
|
|
|
|
Common
shares underlying warrants to be issued to the Placement
Agent |
|
|
250,000.00 |
(11) |
|
|
32.45 |
|
Total |
|
$ |
9,250,000.00 |
|
|
$ |
1,200.65 |
(12) |
|
1) |
Calculated
pursuant to Rule 457(o) on the basis of the maximum aggregate
offering price of all of the securities to be
registered. |
|
|
|
|
2) |
Pursuant
to Rule 416, the securities being registered hereunder include such
indeterminate number of additional securities as may be issued
after the date hereof as a result of stock splits, stock dividends
or similar transactions. |
|
|
|
|
3) |
Each
Common Unit consists of one common share and one warrant, each
whole warrant exercisable for one common share. |
|
|
|
|
4) |
The
proposed maximum aggregate offering price of Common Units proposed
to be sold in the offering will be reduced on a dollar-for-dollar
basis based on the offering price of any Pre-funded Units offered
and sold in the offering, and the proposed maximum aggregate
offering price of the Pre-funded Units to be sold in the offering
will be reduced on a dollar-for-dollar basis based on the offering
price of any Common Units sold in the offering. Accordingly, the
proposed maximum aggregate offering price of the Common Units and
Pre-funded Units (including the common shares issuable upon
exercise of the Pre-funded warrants included in the Pre-funded
Units), if any, is $4,000,000. |
|
|
|
|
5) |
Included
in the price of the Common Units. No separate registration fee
required pursuant to Rule 457(g) under the Securities Act of 1933,
as amended. |
|
|
|
|
6) |
The
warrants are exercisable at a price per common share equal to 125%
of the Common Unit offering price. |
|
|
|
|
7) |
Each
Pre-funded Unit consists of one Pre-funded warrant to purchase one
common share and one warrant to purchase one common
share. |
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|
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8) |
The
Pre-funded warrants are exercisable at an exercise price of $0.0001
per share. |
|
|
|
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9) |
Included
in the price of the Pre-funded Units. No separate registration fee
required pursuant to Rule 457(g) under the Securities Act of 1933,
as amended. |
|
|
|
|
10) |
No
fee pursuant to Rule 457(g) under the Securities Act of 1933, as
amended |
|
|
|
|
11) |
Estimated
solely for the purpose of calculating the registration fee pursuant
to Rule 457(g) under the Securities Act of 1933, as amended. We
have agreed to issue to the placement agent warrants to purchase a
number of common shares equal to 5% of the aggregate number of
Common Units and Pre-funded Units sold in the offering. The
warrants are exercisable at a per share exercise price equal to
125% of the per Common Unit public offering price for five years
after the effective date of this registration
statement. |
|
|
|
|
12) |
Previously
paid. |
The
registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically
states that this registration statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of
1933, as amended, or until the registration statement shall become
effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
The
information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective.
This prospectus is not an offer to sell these securities and it is
not soliciting an offer to buy these securities in any state where
the offer or sale is not permitted.
PRELIMINARY PROSPECTUS |
SUBJECT TO COMPLETION |
DATED MAY 27 , 2020 |
Up to
1,000,000 Common Units, Each Consisting of a Common Share and a
Warrant to Purchase One Common Share
Up to
1,000,000 Pre-funded Units, Each Consisting of a Pre-funded Warrant
to Purchase One Common Share and a Warrant to Purchase One Common
Share

BriaCell Therapeutics Corp.
We are offering in a reasonable efforts offering up to 1,000,000
common units (each, a “Common Unit”), each Common Unit consisting
of one common share, no par value per share, and one warrant (each
a “Warrant”), at an assumed price of US$4.00 per Common Unit. Each
Warrant will entitle the holder to purchase one common share at an
exercise price of US$____, equal to 125% of the public offering
price of one Common Unit, and expire five years from the date of
issuance.
We are also offering to those purchasers, if any, whose purchase of
Common Units in this offering would otherwise result in the
purchaser, together with its affiliates and certain related
parties, beneficially owning more than 4.99% (or, at the election
of the purchaser, 9.99%) of our outstanding common shares
immediately following the consummation of this offering, the
opportunity to purchase, if the purchaser so chooses, pre-funded
units (each a “Pre-funded Unit”) in lieu of Common Units that would
otherwise result in the purchaser’s beneficial ownership exceeding
4.99% (or, at the election of the purchaser, 9.99%) of our
outstanding common shares. We are offering a maximum of
Pre-funded
Units. Each Pre-funded Unit will consist of a pre-funded warrant to
purchase one common share at an exercise price of US$0.0001 per
share (each a “Pre-funded Warrant”) and a Warrant. The purchase
price of each Pre-funded Unit is equal to the price per Common Unit
being sold to the public in this offering, minus US$0.0001. The
Pre-funded Warrants will be immediately exercisable and may be
exercised at any time until all of the Pre-funded Warrants are
exercised in full.
For each
Pre-funded Unit we sell, the number of Common Units we are offering
will be decreased on a one-for-one basis. Common Units and
Pre-funded Units will not be certificated. The common shares or
Pre-funded Warrants, as the case may be, and the Warrants included
in the Common Units or the Pre-funded Units, can only be purchased
together in this offering, but the securities contained in the
Common Units or Pre-funded Units are immediately separable and will
be issued separately.
The offering also includes the common shares issuable from time to
time upon exercise of the Pre-Funded Warrants and Warrants. It is
currently estimated that the initial public offering price per
Common Unit will be between US$3.00 and US$5.00 and per Pre-funded
Unit will be between US$2.9999 and US$4.9999.
Our
common shares are currently quoted on the U.S. OTCQB marketplace of
OTC Markets Group, or OTCQB, under the symbol “BCTXF”, on the TSX
Venture Exchange, or TSXV, under the symbol “BCT.V” and on the
Frankfurt Stock Exchange under the Symbol “8BTA”.
On January
2, 2020, we implemented a 1-for-300 consolidation, or reverse
split, of our issued and outstanding common shares prior to the
date that we price this offering. Except where otherwise indicated,
all share and per share data in this prospectus have been
retroactively restated to reflect the reverse stock
split.
On
May 26, 2020, the closing price of our common shares was US$7.21
per share, as reported on the OTCQB. We have assumed a public
offering price of US$4.00 per Common Unit. The actual public
offering price per Common Unit and Pre-funded Unit, as the case may
be, will not be determined by any particular formula but will
rather be determined through negotiations between us and the
potential investors in the offering. Therefore, the assumed public
offering prices used throughout this prospectus may not be
indicative of the final offering price.
We
are an “emerging growth company” as that term is used in the
Jumpstart Our Business Start-ups Act of 2012 and, as such, have
elected to comply with certain reduced public company reporting
requirements for this prospectus and future filings.
Neither
the Securities and Exchange Commission nor any other regulatory
body has approved or disapproved of these securities or passed upon
the accuracy or adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
Investing
in our securities involves a high degree of risk. See “Risk
Factors” on page 18 to read about factors you should consider
before buying our securities.
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Per
Common
Unit |
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Per
Pre-Funded
Unit |
|
|
Total |
|
Public
offering price |
|
US$ |
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|
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US$ |
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US$ |
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Placement
agent fees(1) |
|
US$ |
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US$ |
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US$ |
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Proceeds
to BriaCell Therapeutics Corp., before expenses |
|
US$ |
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|
US$ |
|
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|
US$ |
|
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(1) |
Does not include a non-accountable expense
allowance equal to 1% of the initial public offering price per
Common Unit and Pre-Funded Unit, as applicable, payable to
the
placement agent. We refer you to “Plan
of Distribution” beginning on page 117 for additional
information regarding the placement agent’s
compensation.
|
We
have retained ThinkEquity, a division of Fordham Financial
Management, Inc. as our exclusive placement agent to use its
reasonable efforts to solicit offers to purchase the securities in
this offering. The placement agent does not have any obligation to
buy any of the securities from us or to arrange for the purchase or
sale of any specific number or dollar amount of the securities.
Because there is no minimum offering amount required as a condition
to closing in this offering, and such is being conducted on an “any
or all” basis, the actual public offering amount, placement agent
fees, and proceeds to us, if any, are not presently determinable
and may be substantially less than the total offering amount set
forth above.
Delivery of the securities to investors is expected to take place
on or about
,
2020.
ThinkEquity
a
division of Fordham Financial Management, Inc.
The
date of this prospectus is
,
2020
TABLE
OF CONTENTS
You
should rely only on the information contained in this prospectus,
any amendment or supplement to this prospectus or any free writing
prospectus prepared by or on our behalf. Neither we, nor the
placement agent, has authorized any other person to provide you
with different or additional information. Neither we, nor the
placement agent, take responsibility for, nor can we provide
assurance as to the reliability of, any other information that
others may provide. The placement agent is not making an offer to
sell these securities in any jurisdiction where the offer or sale
is not permitted. The information contained in this prospectus is
accurate only as of the date of this prospectus or such other date
stated in this prospectus, and our business, financial condition,
results of operations and/or prospects may have changed since those
dates.
Except
as otherwise set forth in this prospectus, neither we nor the
placement agent has taken any action to permit a public offering of
these securities outside the United States and Canada or to permit
the possession or distribution of this prospectus outside the
United States. Persons outside the United States who come into
possession of this prospectus must inform themselves about and
observe any restrictions relating to the offering of these
securities and the distribution of this prospectus outside the
United States.
Unless
the context otherwise requires, in this prospectus, the term(s)
“we”, “us”, “our”, “Company”, “our company”, “BriaCell,” and “our
business” refer to BriaCell Therapeutics Corp. and our
subsidiaries.
MARKET,
INDUSTRY AND OTHER DATA
This
prospectus contains estimates, projections and other information
concerning our industry, our business, and the markets for our
products. Information that is based on estimates, forecasts,
projections, market research or similar methodologies is inherently
subject to uncertainties, and actual events or circumstances may
differ materially from events and circumstances that are assumed in
this information. Unless otherwise expressly stated, we obtained
this industry, business, market and other data from our own
internal estimates and research as well as from reports, research
surveys, studies and similar data prepared by market research firms
and other third parties, industry, medical and general
publications, government data, and similar sources.
In
addition, assumptions and estimates of our and our industry’s
future performance are necessarily subject to a high degree of
uncertainty and risk due to a variety of factors, including those
described in “Risk Factors.” These and other factors could
cause our future performance to differ materially from our
assumptions and estimates. See “Cautionary Statement Regarding
Forward-Looking Statements.”
CURRENCY
AND EXCHANGE RATES
All
dollar amounts in this prospectus are expressed in Canadian dollars
unless otherwise indicated. The Company’s accounts are maintained
in Canadian dollars and the Company’s financial statements are
prepared in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards
Board. All reference to “U.S. dollars”, “USD”, or to “US$” are to
United States dollars.
The
following table sets forth the rate of exchange for the Canadian
dollar, expressed in United States dollars in effect at the end of
the periods indicated, the average of exchange rates in effect
during such periods, and the high and low exchange rates during
such periods based on the noon rate of exchange as reported by the
Bank of Canada for conversion of Canadian dollars into United
States dollars.
On May 27, 2020, the exchange rate was US$1.00 = CAD$1.3782.
Canada
Dollar per U.S. Dollar Noon Buying Rate |
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Average |
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High |
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Low |
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Period-End |
|
Year ended
July, 31, |
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2019 |
|
|
1.3234 |
|
|
|
1.3642 |
|
|
|
1.2803 |
|
|
|
1.3148 |
|
2018 |
|
|
1.2738 |
|
|
|
1.3310 |
|
|
|
1.2128 |
|
|
|
1.3017 |
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Most
recent six months |
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November
2019 |
|
|
1.3239 |
|
|
|
1.3307 |
|
|
|
1.3148 |
|
|
|
1.3289 |
|
December
2019 |
|
|
1.3172 |
|
|
|
1.3302 |
|
|
|
1.2988 |
|
|
|
1.2988 |
|
January
2020 |
|
|
1.3087 |
|
|
|
1.3233 |
|
|
|
1.2970 |
|
|
|
1.3233 |
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February
2020 |
|
|
1.3286 |
|
|
|
1.3429 |
|
|
|
1.3224 |
|
|
|
1.3429 |
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March
2020
|
|
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1.3953
|
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|
|
1.4496
|
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|
1.3356
|
|
|
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1.4187
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April
2020
|
|
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1.4058
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1.4217
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|
1.3904
|
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1.3910
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PROSPECTUS SUMMARY
This
summary highlights selected information contained elsewhere in this
prospectus and does not contain all of the information that you
should consider in making your investment decision. Before deciding
to invest in our common shares, you should read this entire
prospectus carefully, including the sections of this prospectus
entitled “Risk Factors” and “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” and our
consolidated financial statements and the related notes included
elsewhere in this prospectus. All share and per share data in this
prospectus reflects a
1-for-300 reverse stock split of our common shares issued and
outstanding (including adjustments for fractional shares),
which will be effected prior to the date we price this
offering.
Overview
of the Company
BriaCell
is an immuno-oncology focused biotechnology company developing
targeted and safe approaches for the management of cancer, with a
focus on advanced breast cancer. BriaCell has completed positive
proof-of-concept studies of Bria-IMT™, a whole cell targeted
immunotherapy, in patients with advanced breast cancer.
BriaCell
has been conducting a Phase I/IIa clinical trial of Bria-IMT™,
BriaCell’s lead candidate, in a Combination Study with immune
checkpoint inhibitors and has initiated combination therapy with
the Incyte drugs INCMGA00012 (an anti-PD-1 antibody) and
epacadostat, an orally bioavailable small-molecule inhibitor of
indoleamine 2,3-dioxygenase 1 (IDO1).
BriaCell
and Incyte Corporation have formed a non-exclusive clinical trial
collaboration to evaluate the effects of combinations of novel
clinical candidates. Under the agreement, Incyte and BriaCell will
be evaluating novel combinations of compounds from Incyte’s
development portfolio with Bria-IMT™ in advanced breast cancer
patients.
Pending
consummation of the offering, Bria-IMT™ will also be evaluated in
an investigator-initiated Phase I/IIa study in combination with
pembrolizumab (Keytruda) by Dr. Saveri Bhattacharya, Principal
Investigator, in women with advanced breast cancer at Thomas
Jefferson University. Dr. Bhattacharya has been selected to receive
a grant from the Merck Investigator Studies Program for this study.
Merck will provide Keytruda to Thomas Jefferson University and Dr.
Bhattacharya for use in the combination study. The Company does not
have an agreement with Merck for the supply of Keytruda. The
Company has entered into a study agreement with Thomas Jefferson
University providing for the investigator-initiated Phase I/IIa
study by Dr. Bhattacharya and the Company’s supply of Bria-IMT™ to
Thomas Jefferson University and Dr. Bhattacharya (the “Study
Agreement”). Pursuant to the Study Agreement, the Company shall pay
Thomas Jefferson University a total budget of $3,049,322.50. The
FDA and Thomas Jefferson University’s internal review board have
approved the clinical protocol. Patients with advanced breast
cancer who have at least one human leukocyte antigen (“HLA”) that
matches with Bria-IMT™ will be eligible for the trial. Pending
consummation of the offering, the study is expected to commence in
June 2020 with safety and efficacy data to be released during 2021
and 2022.
BriaCell
is also developing Bria-OTS™, an off-the-shelf personalized
immunotherapy, for advanced breast cancer. Bria-OTS™ immunotherapy
treatments are personalized to match the patient without the need
for personalized manufacturing. Bria-OTS™ are a set of biologic
drugs similar to Bria-IMT™, differing by a set of HLAs. The
Bria-OTS™ cell lines will be pre-manufactured and stored frozen and
ready to ship once a patient’s HLA type is known, making them
“off-the-shelf.” HLA molecules are polymorphic in that they are
different in some people and shared by some people with the
different HLA molecules referred to as “HLA alleles” or “HLA
types”. Patients will be treated with the Bria-OTS™ drugs most
closely matching their HLA type, making their treatment
“personalized”. Bria-OTS™, which is expected to cover over 99
percent of the patient population, is designed to produce a potent
and selective immune response against the cancer of each patient
while eliminating the time, expense and complex manufacturing
logistics associated with other personalized
immunotherapies.
BriaCell’s
pipeline also includes other immunotherapy cell lines in
development for other cancers (including lung, prostate and
melanoma), the development of other immunotherapy approaches for
cancer and infectious diseases, including multi-specific binding
reagents similar to Bi-specific T-cell engagers, and small molecule
inhibitors of protein kinase C delta which are postulated to be
effective in cancers caused by mutations in the RAS
oncogene.
Products/Pipeline
Bria-IMT™
Bria-IMT™,
BriaCell’s lead candidate, is a whole-cell immunotherapy undergoing
clinical testing in patients with metastatic breast cancer who have
failed at least two prior lines of therapy. BriaCell has been
conducting a Phase I/IIa clinical trial of Bria-IMT™ in combination
with immune checkpoint inhibitors. The combination study is being
conducted at 3 clinical sites: St. Joseph Heritage Healthcare,
Santa Rosa, California, United States; University of
Miami/Sylvester at Plantation, Plantation, Florida, USA; Cancer
Center of Kansas (CCK), Wichita, Kansas, USA; Subsequent to the
establishment of a collaboration with Incyte Corporation, this
study has been modified to evaluate the combination of Bria-IMT™
with INCMGA00012 (a PD-1 inhibitor) and epacadostat (an indoleamine
dioxygenase (IDO) inhibitor).
BriaCell
has achieved proof of concept based on data from a Phase I/IIa
study of Bria-IMT™ in advanced breast cancer patients. In essence,
BriaCell obtained evidence that patients with certain HLA molecules
also present in Bria-IMT™ have a higher likelihood of responding to
the Bria-IMT™ regimen with tumor shrinkage, which is consistent
with results from a molecular analysis of Bria-IMT™ conducted by
BriaCell. BriaCell has also obtained evidence that patients with
well-differentiated (grade I) or moderately differentiated (grade
II) tumors are more likely to respond. Our proof of concept data is
preliminary and we will need to complete the Phase I/IIa study and
additional clinical studies before the Food and Drug
Administration, or FDA, assesses the efficacy, safety and
tolerability of this product candidate and determines whether it
will be approved for commercial sale. Specifically, BriaCell plans
to continue the Phase I/IIa study of the combination of Bria-IMT™
with INCMGA00012 and epacadostat. Once sufficient data is available
from this study (anticipated to include data on at least 30
patients), BriaCell will determine the design of a Phase II
registration study. BriaCell will negotiate with the FDA to obtain
a “Special Protocol Assessment” (SPA) of the registration study.
Under the SPA, the FDA would agree with the design and endpoints of
the registration study and if these endpoints are met, would agree
to grant marketing approval of the drug. Completion of the Phase II
registration study will permit BriaCell to submit a Biologics
License Application for Bria-IMT.
About
Bria-IMT™
Developed
and characterized by a team of dedicated scientists and clinicians,
Bria-IMT™ (SV-BR-1-GM) is a targeted immunotherapy being developed
for the treatment of breast cancer. Bria-IMT™ is a genetically
engineered human breast cancer cell line with features of immune
cells and clinically applied as a targeted
immunotherapy.
In
short, Bria-IMT™ immunotherapy is a genetically engineered human
breast cancer cell line which activates the immune system to attack
and destroy breast cancer tumors.
Mechanism
of Action of Bria-IMT™: The mechanism of action of Bria-IMT™ is
currently under investigation. It is likely that the expression of
certain breast cancer antigens (proteins expressed in breast cancer
cells) in Bria-IMT™ generates strong T cell and potentially
antibody responses resulting in recognition and destruction of
cancerous cells.
Bria-IMT™
is designed to secrete granulocyte/macrophage-colony stimulating
factor (GM-CSF), a factor that stimulates components of the immune
system. Specifically, GM-CSF activates dendritic cells, the cells
that start immune responses. These activated dendritic cells then
activate T cells, a key component of the immune system, to
recognize the tumor cells as foreign, and eliminate them. To
amplify this action, we have combined Bria-IMT™ with other immune
system activators including cyclophosphamide (used in low doses to
reduce immune suppression), and interferon-α, a cytokine. We
believe this approach of simultaneous activation of the immune
system via different pathways will improve the immune system
response to attack and destroy cancer cells.
Using BriaCell’s novel technology platform and our strong R&D
capabilities, we plan to develop Bria-OTS™, a personalized
off-the-shelf immunotherapy for breast cancer, and similar
immunotherapy cell lines for other cancer indications.
● |
Bria-OTS™
is under development as an off-the-shelf personalized immunotherapy
for advanced breast cancer. |
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The
concept for Bria-OTS™ comes from BriaCell’s work with Bria-IMT™,
where we noted that if a patient “matches” Bria-IMT™ in their HLA
type, they were more likely to respond. |
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HLA
molecules are the molecules that start immune responses but are
polymorphic – i.e. they are different in different people, although
some people will share the same HLA molecules (referred to as “HLA
alleles” or “HLA types”). |
● |
Bria-OTS™
is made from cell lines that are genetically engineered to
expresses the immune boosters GM-CSF and interferon-α, as well as
specific HLA types (a.k.a. alleles). |
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● |
Different
cell lines are being pre-manufactured to express 15 different HLA
types matching >99% of the overall breast cancer patient
population (the methodology in determining that Bria-OTS would
match 99% of the breast cancer population is discussed on pages 55
and 56 herein). |
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Using
the BriaDx™, a companion diagnostic test performed via buccal swabs
inside the patient’s mouth, the suitable personalized treatment
will be selected for each patient for administration. |
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This
approach allows personalized treatment without the need for
personalized manufacturing. Additionally, it saves time and skips
expensive and complicated manufacturing procedures associated with
other personalized treatments. |
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Bria-OTS™
cell lines are being engineered with the goal of transferring them
to production in 2020 and commencing clinical evaluation in 2020
(expected authorization by FDA and expected first patient to be
dosed in the fourth quarter of 2020) with safety and efficacy data
expected to be released during 2021 and 2022. |
BriaDx™
BriaDx™ is a diagnostic test
that BriaCell is developing to identify the patients most likely to
respond to Bria-IMT™. Currently, BriaDx™ includes HLA typing of the
patients as patients having HLA alleles also present in Bria-IMT™
appear to have a higher likelihood of responding to the Bria-IMT™
regimen with tumor regression (“shrinkage”). Additional markers of
potential diagnostic use are being explored based on the expression
of specific biomarkers in the responder (i.e. biomarkers which
identify the patients for which Bria-IMT™ immunotherapy appears
more effective) vs the non-responder patients from clinical studies
of Bria-IMT™ in advanced breast cancer patients.
Blood
including circulating tumor cells from the patients is analyzed
using cutting-edge technologies including gene expression analysis
and assessment of the levels of antibodies predicted to bind to
Bria-IMTTM.
The
insights gained from biomarker studies conducted to date have
provided us with a solid basis for the development of Bria-OTS™, an
off-the-shelf personalized immunotherapy which would match over 99%
of patients with advanced breast cancer.
BriaDx™
is being developed to help understand which patients are most
likely to respond to Bria-IMT™ targeted immunotherapy. Based on the
proposed mechanism of action of Bria-IMT™ (see Figure below) HLA
molecules play a key role inducing cellular immune responses to
Bria-IMT™ which boosts the patient’s immune response to their
cancer.
HLA
molecules are polymorphic, in that they are different in different
individuals but shared by some individuals (similar to eye color).
Based on our clinical data to date we hypothesize that patients
with HLA alleles also present in Bria-IMT™ have a higher likelihood
of responding to the Bria-IMT™ regimen with tumor regression
(“shrinkage”). Therefore, BriaDx™, a companion diagnostic test,
determines the patients’ HLA types.
Available Clinical Data for Treatment with the Bria-IMT™
Regimen
BriaCell
conducted three Proof of Concept clinical trials, one using
parental SV-BR-1 cells and the other two using Bria-IMT™
(i.e., genetically engineered SV-BR-1 cells – producing GM-CSF
also called SV-BR-1-GM), in metastatic (i.e., Stage IV) breast
cancer patients who had failed prior treatments. The patients
were treated with the Bria-IMT™ regimen according to the following
schedule, and the results are summarized starting on page 51
herein.
Mechanism
of Action of BRIA-IMT™ and BRIA-OTS™
The
mechanism of action of Bria-IMT™/Bria-OTS™ is currently under
investigation.
We
believe that Bria-IMT™/Bria-OTS™ activates the patient’s immune
system to recognize tumor cells and destroy them. We hypothesize
that Bria-IMT™/Bria-OTS™ exerts its action via the patient’s
antigen-presentation system {i.e. the system that presents antigen
material on the surface of cells for recognition by the T cells of
the immune system as either self (i.e., safe) or foreign (i.e., to
be destroyed)}. Specifically, Bria-IMT™/Bria-OTS™ is thought to
stimulate dendritic cells, a key component of the
antigen-presenting system, to display certain immunogenic (i.e.,
immune response-generating) protein fragments to T cells, which
activates the T cells to destroy the tumor cells either directly,
or indirectly by inducing a humoral (antibody-generating) immune
response. In addition, we also have shown that Bria-IMT™ is capable of directly
stimulating T cells thereby potentially adding additional
therapeutic benefits. The latter property of Bria-IMT™ is the basis
of the Bria-OTS™ project as it requires HLA matching between the
therapeutic cells and the patient.
Our
preliminary analyses have shown several up-regulated genes in
Bria-IMT™ that encode proteins known to be immunogenic (i.e. immune
response-generating), suggesting that Bria-IMT™ can stimulate the
immune system against the cancer cells.
Bria-IMT™
is a human breast cancer cell line which expresses Her2/neu (a
protein well known for its overexpression in breast cancer but also
associated other epithelial malignancies including ovarian,
pancreatic, colon, bladder and prostate cancers). Bria-IMT™ has
been engineered to produce and secrete
granulocyte/macrophage-colony stimulating factor (GM-CSF), a
protein that promotes dendritic cell function, a key component of
the immune system, and hence activates the immune
system.
BRIA-IMT™ & BRIA-OTS™
Potential
Mechanisms of Specific Immune Activation in Advanced Breast
Cancer

1. |
Bria-IMT/OTS™
produces breast cancer antigens (proteins made by breast cancer
cells) |
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2. |
Bria-IMT/OTS™
secretes GM-CSF which further promotes dendritic cell-based antigen
presentation (boosts the response) |
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3. |
Breast
cancer antigens are taken up by dendritic cells and “presented” to
CD4+ and CD8+ T cells implicated in tumor destruction. |
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4. |
Bria-IMT/OTS™
directly stimulates cancer fighting CD4+ and CD8+ T cells (further
boosts the response) |
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5. |
Bria-IMT/OTS™
biological activity depends on HLA matching of Bria-IMT/OTS™ and
the patient |
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6. |
Based
on these observations, BriaCell is extending this technology to
other types of cancer by developing additional immunotherapy cell
lines. These include Prostate Cancer (novel immunotherapy cell line
1 or NICL1), non-small cell lung cancer (NICL2) and melanoma
(NICL3). Production of these NICLs is anticipated to commence in
2020 and IND filings for these NICLs are anticipated starting in
2021 (NICL1 and NICL2) and 2022 (NICL3). Each of these IND filings
is expected to require an additional ~US$1,000,000.
|
Clinical
Trials
Phase
I/IIA Combination Study of BRIA-IMT™ with Immune Checkpoint
Inhibitors in Advanced Breast Cancer
The FDA approved the combination study of Bria-IMT™ with immune
checkpoint inhibitors. The initial study used pembrolizumab
(Keytruda, purchased by the Company as the Company does not have an
agreement with Merck for the supply of Keytruda). The Company dosed
11 patients with this combination and no dose limiting toxicities
were observed. Additionally, evidence of additive or synergistic
activity was observed.
The combination with Keytruda was discontinued and the study was
subsequently modified to use a combination of Bria-IMT with the
Incyte PD-1 inhibitor (INCMGA00012) and epacadostat. The Company
anticipates additional safety and efficacy data for the combination
of Bria-IMT™ with INCMGA00012 and epacadostat to be released
between the second quarter of 2020 and throughout 2021 and
2022.
Rationale for the Combination Study of BRIA-IMT™ with Immune
Checkpoint Inhibitors
The
immune checkpoint inhibitors such as anti-PD-1 antibodies have come
to the forefront in the fight against cancer with substantial
benefits for some patients. Most recently, the significance of
immune checkpoint inhibitors was recognized by the Nobel committee
by awarding Dr. Tasuku Honjo and Dr. James P. Allison with the 2018
Nobel Prize in Physiology or Medicine (Scientists behind
game-changing cancer immunotherapies win Nobel medicine prize),
validating the Company’s decision to initiate a combination therapy
with the immune checkpoint inhibitors.
Drs.
Alison and Honjo independently, using different strategies, showed
a new approach of treating patients by awakening certain cells of
the immune system (T cells) to attack tumors. This new approach of
treating patients with immune checkpoint inhibitors (such as
anti-PD-1 antibodies), designed to overcome immune suppression in
cancer patients, is revolutionizing the fight against
cancer.
In
2010 an important pre-clinical study by Dr. Allison’s group
showed that combination with anti-PD-1 antibodies potentiated the
tumor-destroying effect of melanoma cells engineered to produce
granulocyte-macrophage colony-stimulating factor (GM-CSF), a
substance that activates the immune system, compared to the
treatment with the GM-CSF producing cells alone. Bria-IMT™
similarly uses a breast cancer cell line which produces GM-CSF.
Bria-IMT™ has also been shown to indirectly and directly stimulate
T cells, and hence boost the immune system. BriaCell has
published these findings in a leading immunology journal. It
is important to note that PD-1 inhibitors have not been shown to
work on their own in breast cancer.
BriaCell
& Incyte Collaboration and Supply Agreement
Non-exclusive clinical trial collaboration to evaluate the effects
of combinations of novel clinical candidates
● |
The
clinical study will focus on (but not limited to) BriaCell’s lead
candidate, Bria-IMT™, in combination with Incyte’s selected
compounds for advanced breast cancer. |
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Incyte
to provide compounds from its development portfolio, including
INCMGA0012, an anti-PD-1 monoclonal antibody, and
epacadostat, an IDO1 inhibitor, for use in combination
studies with BriaCell’s lead candidate, Bria-IMT™. |
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Incyte
is a global biopharmaceutical company focused on discovering and
developing novel therapeutics in oncology and other serious
diseases.
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Incyte
has a deep and rich pipeline in immuno-oncology with numerous
molecular targets including PD-1, IDO, GITR, OX40, TIM-3, LAG-3,
ARG, AXL/MER and PD-L1xCD137 |
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The
first 6 patients will receive the Bria-IMT™ regimen in combination
with INCMGA00012. Once safety of the combination has been
established, subsequent cohorts will receive a triple combination
of the Bria-IMT™ regimen with INCMGA00012 and
epacadostat. |
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The
design of the clinical study is shown below. Dosing of the novel
combinations commenced in the fourth quarter of 2019. |
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The
Company anticipates additional safety and efficacy data to be
released between the second quarter of 2020 and throughout 2021 and
2022. |
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Pending
discussions with the Food and Drug Administration (FDA), a
registration study focused on, but not limited to, Bria-IMT™, in
combination with Incyte’s selected compounds for advanced breast
cancer is planned to commence in 2021 with the Bria-OTS™ program
following by approximately 6 quarters. |

Bria-IMT™ -
Keytruda® Combination Study at Thomas Jefferson
University
Pending
consummation of the offering, Bria-IMT™ will be evaluated in an
investigator-initiated Phase I/IIa study in combination with
pembrolizumab (Keytruda) by Dr. Saveri Bhattacharya, Principal
Investigator, in women with advanced breast cancer at Thomas
Jefferson University. Dr. Bhattacharya has been selected to receive
a grant from the Merck Investigator Studies Program for this study.
Merck will provide Keytruda to Thomas Jefferson University and Dr.
Bhattacharya for use in the combination study. The Company does not
have an agreement with Merck for the supply of Keytruda. The
Company has entered into the Study Agreement with Thomas Jefferson
University providing for the investigator-initiated Phase I/IIa
study by Dr. Bhattacharya and the Company’s supply of Bria-IMT™ to
Thomas Jefferson University and Dr. Bhattacharya. As consideration,
the Company shall pay Thomas Jefferson University a total budget of
$3,049,322.50. The FDA and Thomas Jefferson University’s internal
review board have approved the clinical protocol. Patients with
advanced breast cancer who have at least HLA that matches with
Bria-IMT™ will be eligible for the trial. Pending consummation of
the offering the study is expected to commence in June 2020 with
safety and efficacy data to be released during 2021 and
2022.
Market
It is
estimated that in 2019, approximately 268,600 women will be
diagnosed with breast cancer in the United States. According to the
National Breast Cancer Foundation, on every two minutes an American
woman is diagnosed with breast cancer and more than 40,500 die each
year. Although about 100 times less common than in women, breast
cancer also affects men. It is estimated that the lifetime risk of
men getting breast cancer is about 1 in 1,000, and the ACS
estimates that approximately 2,670 new cases of invasive male
breast cancer will be diagnosed and approximately 500 men will die
from breast cancer in 2019.
According
to the May 2019 “Global Oncology Trends 2019” report by the IQVIA
Institute, the global market for cancer drugs (including
immunotherapy drugs) is expected to reach nearly US$240 billion by
the end of 2023, growing at a compound annual growth rate, or CAGR
of 9-12% between 2019 and 2023.
Marketing
and Sales Strategy
The
product will initially be marketed to oncologists who are well
versed in the use of immunotherapy for cancer. Partnering with
other pharma companies in order to market combinations with a
number of drugs is also an option that we intend to pursue. This
study will utilize a frozen formulation which consists of
irradiated SV-BR-1-GM cells in viable freezing media. This
formulation will permit stockpiling of the immunotherapy so that it
can be sent on demand to clinical sites. The eventual goal is to
reach all oncologists who treat late stage breast cancer either by
direct outreach or by partnering with another company that has an
established presence in the oncology space.
Other
Commercial Considerations
There
is a high unmet medical need in late stage breast cancer, providing
potential for accelerated approval of Bria-IMT™. The FDA is
interested in facilitating the availability of novel therapies of
patients with unmet medical needs, especially those that can target
the population most likely to respond. In addition, Bria-IMT™ may
fit the description of an orphan drug, especially if HLA matching
and/or limitation to grade I/II tumors is required. These two facts
may help facilitate accelerated approval of Bria-IMT™.
Production
and Marketing Plan
Bria-IMT™ cells grow
in simple tissue culture media and are irradiated prior to
inoculation. Bria-IMT™
manufacturing will be performed by Contract Manufacturing
Organizations (CMOs). Recently we have been working with KBI
Biopharma, Inc. who have developed a frozen formulation, where the
cells are grown, harvested and irradiated followed by
cryopreservation in a viable state. The cells are stockpiled and
shipped directly to clinical sites for inoculation. Each lot of
Bria-IMT™ is tested
for potency (GM-CSF production), identity (HER2+ and ER/PR-) and
adventitious agents to assure that each patient receives a safe and
effective treatment. To date, there have been no issues with these
tests. Additional manufacturing facilities have been evaluated and
may be enlisted as demand grows.
Earlier
Phase Programs
BriaCell
has recently filed provisional patent applications
describing:
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Coronavirus
Immunotherapy |
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Antibody-Based
Treatment of Infectious Diseases |
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Novel
Therapeutics for Cancer |
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Novel
Immune Therapies for Multiple Disease Indications |
The
Coronavirus Immunotherapy patent application, filed on April 10,
2020, entitled, “INDUCING IMMUNE RESPONSES BY TRANSFORMING CANCER
CELLS INTO ANTIGEN-PRESENTING CELLS”, is based on molecular
analyses of the Company’s lead anti-tumor product candidate.
Antigen-presenting cells are the cells that typically start immune
responses. BriaCell’s whole-cell immunotherapies are designed to
stimulate the immune system to recognize and destroy the patient’s
tumors by acting as antigen-presenting cells that stimulate the
patient’s cancer-cell-recognizing immune cells. The new patent
application by BriaCell scientists expands on this paradigm by
proposing additional cellular therapeutics designed to activate
immune cells recognizing SARS-CoV-2 (the coronavirus causing
COVID-19) antigens. The patent application seeks protection for,
among others, new whole-cell therapeutics and methods for their
use. These are designated “Novel Immunotherapy Cell Lines
(NICL-CoV-2)”. An IND filing for this treatment is anticipated to
be made in 2021 and requires an additional
~US$1,000,000.
The
Antibody-Based Treatment of Infectious Diseases patent application,
filed on April 20, 2020, entitled, “COMPUTER-GUIDED DESIGN OF
ANTIBODIES INCLUDING NEUTRALIZING SARS-CoV-2 BINDING AGENTS”,
outlines compositions and methods for generating antibodies to
neutralize SARS-CoV-2 (the coronavirus causing COVID-19) using
computer-based simulation technology. Such antibodies are
envisioned to prevent and treat the life-threatening symptoms of
COVID-19. The use of computer simulation creates highly targeted
antibodies by improving pre-existing antibodies. The improvements
include, but are not limited to, creating higher affinity and/or
specificity antibodies to the SARS-CoV-2 Spike protein (the protein
which the virus uses to infect cells) versus the unmodified
antibody. The resulting therapeutic antibodies are expected to
quickly and specifically recognize the SARS-CoV-2 virus, bind to
it, and neutralize it. The patent application also provides
compositions and methods, using similar technologies, for
cancer-directed antibodies. The patent application seeks protection
for the design of new therapeutic antibodies and methods for their
use. These are designated “Antibodies for SARS-CoV-2”. An
IND filing for this treatment is anticipated to be made in 2021 and
requires an additional ~US$1,000,000.
The patent application for Novel Immune Therapies for Multiple
Disease Indications, filed on May 15, 2020, entitled, “MULTI-VALENT
IMMUNOSTIMULATORS FOR INFECTIOUS DISEASES, AUTOIMMUNE DISEASES,
ALLERGIC DISEASES AND CANCER”, describes a platform to generate
multi-valent reagents carrying an antigen (such as an antigen from
SARS-CoV-2) and delivering it to immune cells such as dendritic
cells, a type of antigen-presenting cell crucial for the induction
and modulation of immune responses. The expected effect is a
targeted therapy envisioned to selectively destroy infectious
agents or cancer cells with minimal negative effect on normal
cells. This may mean less severe side effects for the treated
patients compared to other therapies. The technology also has uses
for autoimmune diseases and allergic diseases. The Company cautions
that these novel therapeutics are still under early-stage research
and development and is not making any express or implied claims as
to their success in cancer treatment or commercial viability. The
patent application seeks protection for, among others, the design
of new therapeutics and methods for their use. These are designated
“Novel ImmunoStimulators (NIS-CoV-2)”. An IND filing for this
treatment is anticipated to be made in 2021 and requires an
additional ~US$1,000,000.
The
Company cautions that COVID-19 therapeutic development is still
under early-stage research and development and is not making any
express or implied claims that it has the ability to treat, prevent
or eliminate the COVID-19 virus at this time.
The patent application for Novel Therapeutics for Cancer, filed on
April 23, 2020, is entitled, “METHODS FOR INDUCING AND ENHANCING
ANTI-CANCER IMMUNE RESPONSES USING NOVEL MOLECULAR CONSTRUCTS”. It
outlines the development and use of multi-specific binding reagents
that simultaneously bind to an immune cell and a cancer cell, or
just to a cancer cell, and activate the immune system against the
cancer cells. The novel binding reagents are designed to act, among
others, as potent immune cell activators/immune checkpoint
inhibitors without the toxicity of current checkpoint inhibitors.
The expected effect is a highly targeted therapy envisioned to
selectively destroy cancer cells without affecting normal
(non-cancerous) cells. This may mean less severe side effects for
the treated cancer patients compared to alternative therapies. The
Company cautions that these novel therapeutics are still under
early-stage research and development and is not making any express
or implied claims as to their success in cancer treatment or
commercial viability. The patent application seeks protection for,
among others, the design of new therapeutics and methods for their
use. These are designated “Bria-TILs-Rx”. IND filings for
Bria-TILs-Rx for the treatment of prostate cancer and epithelial
and glandular cancer, respectively, are anticipated to be made in
2022 and require an additional ~US$1,000,000 each.
Risks
Related to our Business and this Offering
Our business and this offering are subject to numerous risks, as
more fully described in the section entitled “Risk Factors”
immediately following this prospectus summary. You should read
these risks before you invest in our securities. In particular, our
risks include, but are not limited to, the following:
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We
have a history of losses, may incur future losses and may not
achieve profitability; |
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We
are an early stage development company; |
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We
have an unproven market for our product candidates; |
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We
are heavily reliant on third-parties to carry out a large portion
of our business; |
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Pre-clinical studies and initial clinical trials
are not necessarily predictive of future results; |
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We
must obtain additional capital to continue our
operations; |
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We
are highly dependent on our key personnel; |
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The
report of our independent registered public accounting firm
expresses substantial doubt about our ability to continue as a
going concern; |
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We
may not succeed in completing the development of our products,
commercializing our products or generating significant
revenues; |
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We
may not successfully develop, maintain and protect our proprietary
products and technologies; |
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Changes in legislation and regulations may affect
our revenue and profitability; |
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If we
or our licensees are unable to obtain U.S., Canadian and/or foreign
regulatory approval for our product candidates, we will be unable
to commercialize our therapeutic candidates; |
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Clinical trials involve a lengthy and expensive
process with an uncertain outcome, and results of earlier studies
and trials may not be predictive of future trial
results; |
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An
active trading market for our common shares may not develop on the
OTCQB and our securityholders may not be able to resell their
common shares; |
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The
Warrants may not have any value; |
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Without an active trading market, the liquidity of the Pre-funded
Warrants and Warrants will be very limited and the Warrants and
Pre-Funded Warrants may not have any value;
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Neither the Warrants or the Pre-Funded Warrants
are listed or quoted on any trading market or exchange; |
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Future issuance of our common shares could dilute
the interests of existing shareholders; |
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We
have a significant number of options and warrants outstanding, and
while these options and warrants are outstanding, it may be more
difficult to raise additional equity capital; |
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We
are a foreign private issuer and, as a result, we are not subject
to U.S. proxy rules and are subject to reporting obligations that,
to some extent, are more lenient and less frequent than those
applicable to a U.S. issuer; |
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If
you purchase our common shares in this offering, you will incur
immediate and substantial dilution in the book value of your
shares; and |
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Our
management will have broad discretion in the use of the net
proceeds from this offering and may allocate the net proceeds from
this offering in ways that you and other shareholders may not
approve. |
Corporate
Background
We
were incorporated in the province of British Columbia on July 26,
2006. Our common shares have been quoted on the OTCQB under the
symbol BCTXF, on the TSX Venture Exchange under the symbol “BCT.V”
and on the Frankfurt Stock Exchange under the symbol
“8BTA”.
Our
principal executive office is located at Suite 300 – 235 15th
Street, West Vancouver, British Columbia, V7T 2X1 and our telephone
number in Canada is (604) 921-1810. Our web address is
https://briacell.com/. The information contained on our website or
available through our website is not incorporated by reference into
and should not be considered a part of this prospectus, and the
reference to our website in this prospectus is an inactive textual
reference only. Any website references (URL’s) in this prospectus
are inactive textual references only and are not active hyperlinks.
The contents of our website is not part of this prospectus, and you
should not consider the contents of our website in making an
investment decision with respect to our common shares. Paracorp
Incorporated is our agent in the United States, and its address is
2804 Gateway Oaks Drive #100, Sacramento, CA 95833, Tel: (888)
280-6563, Fax: (800) 603-5868; Attn: Katelyn Bean
(kbean@myparacorp.com).
The
Company’s corporate offices in the United States are located at 820
Heinz Avenue, Berkley, California 94710. The Company’s two wholly
owned subsidiaries BriaCell Therapeutics Corp., a Delaware
corporation, and Sapientia Pharmaceuticals Inc., a Delaware
corporation, were formed on April 3, 2014 and September 20, 2012
respectively.
In
February and March 2019, the Company’s Board of Directors was
substantially restructured with the appointment of Jamieson
Bondarenko, Dr. Rebecca Taub and Vaughn C. Embro-Pantalony to
replace three resigning directors. Additionally, on August 12,
2019, Richard Berman was appointed to our Board of Directors. After
these restructuring events, the current Board of Directors consists
of:
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Dr.
William V. Williams, Director and Chief Executive
Officer; |
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Jamieson
Bondarenko, Director and Chairman of the Board; |
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Dr.
Charles Wiseman, Director; |
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Dr.
Rebecca Taub, Director |
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Vaughn
C. Embro-Pantalony, Director; and |
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Richard
Berman, Director |
Implications
of Being an “Emerging Growth Company” and a Foreign Private
Issuer
As a
company with less than US$1.07 billion in revenue during our last
fiscal year, we qualify as an “emerging growth company” as defined
in the Jumpstart Our Business Startups Act of 2012, or the JOBS
Act. An emerging growth company may take advantage of specified
reduced reporting and other burdens that are otherwise applicable
generally to public companies. These provisions include:
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reduced
executive compensation disclosure; |
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exemptions
from the requirement to hold a non-binding advisory vote on
executive compensation, including golden parachute compensation;
and |
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an
exemption from the auditor attestation requirement in the
assessment of our internal control over financial reporting
pursuant to the Sarbanes-Oxley Act of 2002. |
We
may take advantage of these provisions until we are no longer an
emerging growth company. We would cease to be an emerging growth
company upon the earlier to occur of: (1) the last day of our
fiscal year following the fifth anniversary of the completion of
this offering; (2) the last day of the fiscal year in which we have
total annual gross revenue of US$1.07 billion or more; (3) the date
on which we have issued more than US$1.0 billion in nonconvertible
debt during the previous three years; or (4) the date on which we
are deemed to be a large accelerated filer under the rules of the
Securities and Exchange Commission, or the SEC.
We
intend to report under the Securities Exchange Act of 1934, as
amended, or the Exchange Act, as a non-U.S. company with foreign
private issuer status. Even after we no longer qualify as an
emerging growth company, as long as we continue to qualify as a
foreign private issuer under the Exchange Act, we will be exempt
from certain provisions of the Exchange Act that are applicable to
U.S. domestic public companies, including:
|
● |
the
sections of the Exchange Act regulating the solicitation of
proxies, consents or authorizations with respect to a security
registered under the Exchange Act; |
|
|
|
|
● |
the
sections of the Exchange Act requiring insiders to file public
reports of their share ownership and trading activities and
liability for insiders who profit from trades made in a short
period of time; and |
|
|
|
|
● |
the
rules under the Exchange Act requiring the filing with the SEC of
quarterly reports on Form 10-Q containing unaudited financial
statements and other specified information, and current reports on
Form 8-K upon the occurrence of specified significant events,
although we report our results of operations on a quarterly basis
under the Canadian securities laws. |
Both
foreign private issuers and emerging growth companies are also
exempt from certain more stringent executive compensation
disclosure rules. Thus, even if we no longer qualify as an emerging
growth company, but remain a foreign private issuer, we will
continue to be exempt from the more stringent compensation
disclosures required of companies that are neither an emerging
growth company nor a foreign private issuer.
We
would cease to be a foreign private issuer at such time as more
than 50% of our outstanding voting securities are held by U.S.
residents, and any one of the following three circumstances
applies: (i) the majority of our executive officers or directors
are U.S. citizens or residents, (ii) more than 50% of our assets
are located in the United States or (iii) our business is
administered principally in the United States.
In
this prospectus, we have taken advantage of certain of the reduced
reporting requirements as a result of being an emerging growth
company and a foreign private issuer. Accordingly, the information
contained herein may be different than the information you receive
from other public companies in which you hold equity
securities.
Reverse
Split
On
October 22, 2019, our shareholders approved a reverse stock split
of our issued and outstanding common shares at a ratio of between
1-for-2 and 1-for-300, with the specific ratio and effective time
of the reverse stock split to be determined by our Board of
Directors, or our Board. In November, our Board of Directors
approved a 1-for-300 reverse stock split, or the Reverse Split,
which was implemented on January 2, 2020.
THE OFFERING
The
information below is only a summary of more detailed information
included elsewhere in this prospectus. This summary may not contain
all the information that is important to you or that you should
consider before making a decision to invest in our securities.
Please read this entire prospectus, including the risk factors,
carefully.
Common
Units offered |
|
1,000,000
Common Units, each consisting of one common share
and one Warrant, each whole Warrant exercisable for one common
share. The Warrants included within the units are exercisable
immediately, have an exercise price of
US$
per share, equal to 125% of the public offering price of one unit,
and expire five years from the date of issuance. The common shares
and Warrants that are part of the Common Units are immediately
separable and will be issued separately in this
offering. |
|
|
|
Pre-Funded
Units offered |
|
We are
also offering to those purchasers, if any, whose purchase of Common
Units in this offering would otherwise result in the purchaser,
together with its affiliates and certain related parties,
beneficially owning more than 4.99% (or, at the election of the
purchaser, 9.99%) of our outstanding common shares immediately
following the consummation of this offering, the opportunity to
purchase, if the purchaser so chooses, pre-funded units (each a
“Pre-funded Unit”) in lieu of Common Units that would otherwise
result in the purchaser’s beneficial ownership exceeding 4.99% (or,
at the election of the purchaser, 9.99%) of our outstanding common
shares. Each Pre-funded Unit will consist of a pre-funded warrant
to purchase one common share at an exercise price of US$0.0001 per
share (each a “Pre-funded Warrant”) and a Warrant. The purchase
price of each Pre-funded Unit is equal to the price per Common Unit
being sold to the public in this offering, minus US$0.0001. The
Pre-funded Warrants will be immediately exercisable and may be
exercised at any time until all of the Pre-funded Warrants are
exercised in full. For each Pre-funded Unit we sell, the number of
Common Units we are offering will be decreased on a one-for-one
basis. We are offering a maximum of 1,000,000 Pre-funded Units.
Because we will issue one Warrant as part of each Common Unit or
Pre-funded Unit, the number of Warrants sold in this offering will
not change as a result of a change in the mix of the Common Units
and Pre-funded Units sold. This prospectus also relates to the
offering of the common shares issuable upon exercise of the
Pre-funded Warrants.
|
|
|
|
Public
offering price |
|
The
assumed public offering price is US$4.00 per Common Unit and
US$3.99 per Pre-Funded Unit
|
|
|
|
Common
shares outstanding prior to this offering |
|
721,962
shares of common stock, after giving effect to the Reverse
Split. |
|
|
|
Common
shares outstanding after this offering (1)(2) |
|
1,721,962
shares |
|
|
|
Use
of proceeds |
|
We expect to receive approximately US$3,000,000 in net proceeds
from the sale of securities offered by us in this offering, after
deducting estimated placement agent fees and estimated offering
expenses payable by us, based on an assumed offering price of
US$4.00 per Common Unit. We intend to use the net proceeds from
this offering to advance our clinical trials and as further set
forth in the “Use of Proceeds” section. |
|
|
|
Risk
factors |
|
An
investment in our securities involves significant risks. See the
section entitled “Risk Factors” and other information included in
this prospectus for a discussion of factors you should carefully
consider before deciding to invest in our securities. |
|
|
|
Lock-up |
|
We
and our directors and executive officers have agreed with the
placement agent not to offer, issue, sell, contract to sell,
encumber, grant any option for the sale of or otherwise dispose of
any of our securities for a period of six months commencing on the
date of this prospectus. See “Plan of Distribution” beginning on
page 117. |
|
|
|
Market
and trading symbol for our common shares and
Warrants |
|
Our
common shares are currently quoted on the OTCQB under the symbol
“BCTXF”, on the TSXV under the symbol “BCT.V” and on the Frankfurt
Stock Exchange under the symbol “8BTA”. We do not plan to list the
Warrants or Pre-funded Warrants on any market or
exchange. |
(1) |
The number
of common shares to be outstanding after this offering is based on
721,962 common shares outstanding as of May 27, 2020 and excludes
the following:
|
|
● |
178,528
shares of common stock issuable upon the exercise of outstanding
warrants, at a weighted average exercise price of
$44.19; |
|
|
|
|
● |
13,790
shares of common stock issuable upon the exercise of outstanding
compensation warrants, at a weighted average exercise price of
$43.20; |
|
|
|
|
● |
912
shares of common stock issuable upon the granting of 912 warrants
arising from the exercise of 912 compensation warrants at a
weighted average exercise price of $90.00; and
|
|
|
|
|
● |
19,969
shares of
common stock issuable upon the exercise of outstanding options, at
a weighted average exercise price of $49.43.
|
(2) |
Except as
otherwise indicated herein, all information in this prospectus
assumes no sale of Pre-funded Units in this offering, no exercise
of the warrants being offered in this offering, and no exercise of
the placement agent warrants.
|
Summary
Financial Data
The
summary financial information set forth below has been derived from
our unaudited condensed consolidated interim financial statements
for the three and six months ended January 31, 2020 and our audited
financial statements for the fiscal years ended July 31, 2019,
2018, 2017, 2016 and 2015. You should read the following summary
financial data for the three and six months ended January 31, 2020
and the years ended July 31, 2019 and 2018 together with our
historical financial statements and the notes thereto included
elsewhere in this prospectus and with the information set forth in
the section titled “Management’s Discussion and Analysis of
Financial Conditions and Results of Operations”. The audited
financial statements for the years ended July 31, 2017, 2016 and
2015 are not included in this prospectus.
|
|
As
of
January
31,
|
|
|
As of July
31, |
|
|
|
2020 |
|
|
2019 |
|
|
2018 |
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
|
93,692 |
|
|
|
192,916 |
|
|
|
938,448 |
|
|
|
1,264,429 |
|
|
|
171,865 |
|
|
|
464,732 |
|
Total
Assets |
|
|
631,852 |
|
|
|
546,259 |
|
|
|
2,977,140 |
|
|
|
2,039,199 |
|
|
|
1,091,587 |
|
|
|
1,660,288 |
|
Total
Liabilities |
|
|
3,620,682 |
|
|
|
1,392,396 |
|
|
|
1,745,850 |
|
|
|
1,104,147 |
|
|
|
63,470 |
|
|
|
152,425 |
|
Total
Shareholders’ Equity (deficit) |
|
|
(2,988,830 |
) |
|
|
(846,137 |
) |
|
|
1,231,290 |
|
|
|
935,052 |
|
|
|
1,028,117 |
|
|
|
1,507,863 |
|
|
|
Six
months
ended
January
31,
|
|
|
Year ended
July 31, |
|
|
|
2020 |
|
|
2019 |
|
|
2018 |
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
Operating
Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
and other income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research
costs |
|
|
2,220,697 |
|
|
|
4,917,287 |
|
|
|
3,112,579 |
|
|
|
2,125,941 |
|
|
|
944,942 |
|
|
|
390,036 |
|
General
and administrative costs |
|
|
1,220,122 |
|
|
|
1,244,471 |
|
|
|
1,387,713 |
|
|
|
820,281 |
|
|
|
584,105 |
|
|
|
892,611 |
|
Share-based
compensation |
|
|
1,779 |
|
|
|
60,586 |
|
|
|
476,211 |
|
|
|
272,014 |
|
|
|
648,149 |
|
|
|
516,288 |
|
Listing
costs |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,599,488 |
|
Surrender
of royalty rights |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
150,000 |
|
Total
expenses |
|
|
3,442,598 |
|
|
|
6,222,344 |
|
|
|
4,976,503 |
|
|
|
3,218,236 |
|
|
|
2.177,196 |
|
|
|
3,548,423 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss |
|
|
(3,442,598 |
) |
|
|
(6,222,344 |
) |
|
|
(4,976,503 |
) |
|
|
(3,218,236 |
) |
|
|
(2.177,196 |
) |
|
|
(3,548,423 |
) |
Interest
income |
|
|
- |
|
|
|
12,004 |
|
|
|
15,991 |
|
|
|
6,428 |
|
|
|
4,738 |
|
|
|
9,227 |
|
Interest
expenses |
|
|
(6,208 |
) |
|
|
(31,317 |
) |
|
|
(20,364 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Change in
fair value of convertible debt |
|
|
(79,119 |
) |
|
|
420,585 |
|
|
|
(407,709 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Loss on
available for sale investments |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(27,763 |
) |
|
|
- |
|
Foreign
exchange gain (loss) |
|
|
(20,096 |
) |
|
|
31,410 |
|
|
|
(24,078 |
) |
|
|
(8,913 |
) |
|
|
(14,561 |
) |
|
|
50,385 |
|
|
|
|
(105,423 |
) |
|
|
432,682 |
|
|
|
(436,160 |
) |
|
|
(2,485 |
) |
|
|
(37,586 |
) |
|
|
59,612 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss For
The Period |
|
|
(3,548,021 |
) |
|
|
(5,789,662 |
) |
|
|
(5,412,663 |
) |
|
|
(3,220,721 |
) |
|
|
(2,214,782 |
) |
|
|
(3,488,811 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items That
Will Subsequently Be Reclassified To Profit Or Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency translation adjustment |
|
|
(11,195 |
) |
|
|
(18,781 |
) |
|
|
(33,340 |
) |
|
|
41,828 |
|
|
|
18,575 |
|
|
|
(48,921 |
) |
Unrealized
loss on available for sale investments |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(6,892 |
) |
|
|
(20,871 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items
Reclassified To Profit Or Loss |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclass of
unrealized losses on available for sale investments |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
27,763 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss for
the year |
|
|
(3,559,216 |
) |
|
|
(5,808,443 |
) |
|
|
(5,446,003 |
) |
|
|
(3,178,893 |
) |
|
|
(2,175,336 |
) |
|
|
(3,558,603 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
Fully Diluted Loss Per Share |
|
|
(5.07 |
) |
|
|
(10.02 |
) |
|
|
(12.73 |
) |
|
|
(9.36 |
) |
|
|
(7.54 |
) |
|
|
(14.28 |
) |
Weighted Average
Number Of Shares Outstanding |
|
|
702,022 |
|
|
|
579,664 |
|
|
|
427,815 |
|
|
|
339,707 |
|
|
|
288,472 |
|
|
|
249,203 |
|
RISK FACTORS
An
investment in our common shares involves a high degree of risk. You
should carefully consider the following factors and other
information in this prospectus before deciding to invest in us. If
any of the following risks actually occur, our business, financial
condition, results of operations and prospects for growth would
likely suffer. As a result, you could lose all or part of your
investment. Additional risks and uncertainties not presently known
to us or that we currently deem immaterial also may materially and
adversely affect our business, financial condition and results of
operations. See also “Cautionary Statement Regarding
Forward-Looking Statements.”
Risks
Related to Our Business
We have a history of losses, may incur future losses and may not
achieve profitability
BriaCell
is a development stage immune-oncology biotechnology corporation
that to date has not recorded any revenues from the sale of
diagnostic or therapeutic products. Since incorporation, BriaCell
has accumulated net losses and expects such losses to continue as
it commences product and pre-clinical development and eventually
enters into license agreements for its technology. We incurred net
losses of $3,548,021, $3,220,721, $5,412,663 and $5,789,662 in the
six months ended January 31, 2020 and the fiscal years ended July
31, 2017, 2018 and 2019, respectively. Management expects to
continue to incur substantial operating losses unless and until
such time as product sales generate sufficient revenues to fund
continuing operations. BriaCell has neither a history of earnings
nor has it paid any dividends and it is unlikely to pay dividends
or enjoy earnings in the immediate or foreseeable
future.
We are an early stage development company
The
Company expects to spend a significant amount of capital to fund
research and development. As a result, the Company expects that its
operating expenses will increase significantly and, consequently,
it will need to generate significant revenues to become profitable.
Even if the Company does become profitable, it may not be able to
sustain or increase profitability on a quarterly or annual basis.
The Company cannot predict when, if ever, it will be profitable.
There can be no assurances that the Intellectual Property of
BriaCell, or other technologies it may acquire, will meet
applicable regulatory standards, obtain required regulatory
approvals, be capable of being produced in commercial quantities at
reasonable costs, or be successfully marketed. The Company will be
undertaking additional laboratory studies or trials with respect to
the Intellectual Property of BriaCell, and there can be no
assurance that the results from such studies or trials will result
in a commercially viable product or will not identify unwanted side
effects.
We have an unproven market for our product
candidates
The
Company believes that the anticipated market for its potential
products and technologies if successfully developed will continue
to exist and expand. These assumptions may prove to be incorrect
for a variety of reasons, including competition from other products
and the degree of commercial viability of the potential
product.
We may not succeed in adapting to and meeting the business needs
associated with our anticipated growth
Anticipated
growth in all areas of BriaCell’s business is expected to continue
to place a significant strain on its managerial, operational and
technical resources. The Company expects operating expenses and
staffing levels to increase in the future. To manage such growth,
the Company must expand its operational and technical capabilities
and manage its employee base while effectively administering
multiple relationships with various third parties. There can be no
assurance that the Company will be able to manage its expanding
operations effectively. Any failure to implement cohesive
management and operating systems, to add resources on a
cost-effective basis or to properly manage the Company’s expansion
could have a material adverse effect on its business and results of
operations.
We are heavily reliant on third-parties to carry out a large
portion of our business
The
Company does not expect to have any in-house manufacturing,
pharmaceutical development or marketing capability. To be
successful, a product must be manufactured and packaged in
commercial quantities in compliance with regulatory requirements
and in reasonable time frames and at accepted costs. The Company
intends to contract with third parties to develop its products. No
assurance can be given that the Company or its suppliers will be
able to meet the supply requirements in respect of the product
development or commercial sales.
Production
of therapeutic products may require raw materials for which the
sources and amount of supply are limited, or may be hindered by
quality or scheduling issues in respect of the third party
suppliers over which the Company has limited control. An inability
to obtain adequate supplies of raw materials could significantly
delay the development, regulatory approval and marketing of a
product. The Company has limited in-house personnel to internally
manage all aspects of product development, including the management
of multi-center clinical trials. The Company is significantly
reliant on third-party consultants and contractors to provide the
requisite advice and management. There can be no assurance that the
clinical trials and product development will not encounter delays
which could adversely affect prospects for the Company’s
success.
To be
successful, an approved product must also be successfully marketed.
The market for the Company’s product being developed by the Company
may be large and will require substantial sales and marketing
capability. At the present time, the Company does not have any
internal capability to market pharmaceutical products. The Company
intends to enter into one or more strategic partnerships or
collaborative arrangements with pharmaceutical companies or other
companies with marketing and distribution expertise to address this
need. If necessary, the Company will establish arrangements with
various partners for geographical areas. There can be no assurance
that the Company can market, or can enter into a satisfactory
arrangement with a third party to market a product in a manner that
would assure its acceptance in the marketplace. However, if a
satisfactory arrangement with a third party to market and/or
distribute a product is obtained; the Company will be dependent on
the corporate collaborator(s) who may not devote sufficient time,
resources and attention to the Company’s programs, which may hinder
efforts to market the products.
Should
the Company not establish marketing and distribution strategic
partnerships and collaborative arrangements on acceptable terms,
and undertake some or all of those functions, the Company will
require significant additional human and financial resources and
expertise to undertake these activities, the availability of which
is not guaranteed. The Company will rely on third parties for the
timely supply of raw materials, equipment, contract manufacturing,
and formulation or packaging services. Although the Company intends
to manage these third-party relationships to ensure continuity and
quality, some events beyond the Company’s control could result in
complete or partial failure of these goods and services. Any such
failure could have a material adverse effect on the financial
conditions and result of operation of the Company
Due
to the complexity of the process of developing pharmaceutical
products, the Company’s business may depend on arrangements with
pharmaceutical and biotechnology companies, corporate and academic
collaborators, licensors, licensees and others for the research,
development, clinical testing, technology rights, manufacturing,
marketing and commercialization of its products. Such agreements
could obligate the Company to diligently bring potential products
to market, make milestone payments and royalties that, in some
instances, could be substantial, and incur the costs of filing and
prosecuting patent applications. There can be no assurance that the
Company will be able to establish or maintain collaborations that
are important to its business on favorable terms, or at
all.
A
number of risks arise from the Company’s potential dependence on
collaborative agreements with third parties. Product development
and commercialization efforts could be adversely affected if any
collaborative partner terminates or suspends its agreement with the
Company, causes delays, fails to on a timely basis develop or
manufacture in adequate quantities a substance needed in order to
conduct clinical trials, fails to adequately perform clinical
trials, determines not to develop, manufacture or commercialize a
product to which it has rights, or otherwise fails to meet its
contractual obligations. The Company’s collaborative partners could
pursue other technologies or develop alternative products that
could compete with the products the Company is
developing.
The
Company has signed Non-Disclosure Agreements (“NDA”) with many
different third parties as is customary in the industry. There is
no guarantee that, despite the terms of the NDA which bind third
parties, the Company will ultimately be able to prevent from such
third parties from breaching their obligations under the NDA. Use
of the Company’s confidential information in an unauthorized manner
is likely to negatively affect the Company.
Pre-clinical studies and initial clinical trials are not
necessarily predictive of future results
Pre-clinical
tests and Phase I/II clinical trials are primarily designed to test
safety, to study pharmacokinetics and pharmacodynamics and to
understand the side effects of product candidates at various doses
and schedules. Success in pre-clinical and early clinical trials
does not ensure that later large-scale efficacy trials will be
successful nor does it predict final results. Favorable results in
early trials may not be repeated in later trials.
A
number of companies in the life sciences industry have suffered
significant setbacks in advanced clinical trials, even after
positive results in earlier trials. Clinical results are frequently
susceptible to varying interpretations that may delay, limit or
prevent regulatory approvals. Negative or inconclusive results or
adverse medical events during a clinical trial could cause a
clinical trial to be delayed, repeated or terminated. Any
pre-clinical data and the clinical results obtained for BriaCell’s
technology may not predict results from studies in larger numbers
of subjects drawn from more diverse populations or in the
commercial setting, and also may not predict the ability of our
products to achieve their intended goals, or to do so
safely.
An inability to obtain raw materials or product supply could have a
material adverse impact on the Company’s business, financial
condition and results of operations
Raw
materials and supplies are generally available in quantities to
meet the needs of the Company’s business. The Company will be
dependent on third-party manufacturers for the pharmaceutical
products that it markets. An inability to obtain raw materials or
product supply could have a material adverse impact on the
Company’s business, financial condition and results of
operations.
We must obtain additional capital to continue our
operations
The
Company anticipates that additional capital will be required to
complete its current research and development programs. It is
anticipated that future research, additional pre-clinical and
toxicology studies and manufacturing initiatives, including that to
prepare for market approval and successful product market launch
will require additional funds. Further financing may dilute the
current holdings of shareholders and may thereby result in a loss
for the shareholders. There can be no assurance that the Company
will be able to obtain adequate financing, or financing on terms
that are reasonable or acceptable for these or other purposes, or
to fulfill the Company’s obligations under various license
agreements. Failure to obtain such additional financing could
result in delay or indefinite postponement of further research and
development of the Company’s technologies with the possible loss of
license rights to these technologies.
Although
the Company’s common shares are quoted or listed for trading on the
OTCQB and TSXV, there can be no assurance that a liquid market for
our common shares will develop, which may have an adverse effect on
the market price of the Company’s common shares. There is no
guarantee that our common shares will remain listed on the TSXV
after the offering.
We are highly dependent on our key personnel
Although
the Company is expected to have experienced senior management and
personnel, the Company will be substantially dependent upon the
services of a few key personnel, particularly Dr. Charles Wiseman,
Dr. Markus Lacher and Dr. William V. Williams and other
professionals for the successful operation of its business. Phase I
of the Company’s research and development is planned to be
completed by qualified professionals and is expected to concentrate
on treatment of advanced breast cancer. The loss of the services of
any of these personnel could have a material adverse effect on the
business of the Company. The Company may not be able to attract and
retain personnel on acceptable terms given the intense competition
for such personnel among high technology enterprises, including
biotechnology, and healthcare companies, universities and
non-profit research institutions. If we lose any of these persons,
or are unable to attract and retain qualified personnel, our
business, financial condition and results of operations may be
materially and adversely affected.
If the Company experiences a data security breach and confidential
information is disclosed, the Company may be subject to penalties
and experience negative publicity
The
Company and its customers could suffer harm if personal and health
information were accessed by third parties due to a system security
failure. The collection of data requires the Company to receive and
store a large amount of personally identifiable data. Recently,
data security breaches suffered by well-known companies and
institutions have attracted a substantial amount of media
attention, prompting legislative proposals addressing data privacy
and security. The Company may become exposed to potential
liabilities with respect to the data that it collects, manages and
processes, and may incur legal costs if information security
policies and procedures are not effective or if the Company is
required to defend its methods of collection, processing and
storage of personal data. Future investigations, lawsuits or
adverse publicity relating to its methods of handling such
information could have a material adverse effect on the Company’s
business, financial condition and results of operations due to the
costs and negative market reaction relating to such
developments.
The report of our independent registered public accounting firm
expresses substantial doubt about our ability to continue as a
going concern
Our
independent registered public accounting firm indicated in its
report on our financial statements for the year ended July 31,
2019, that conditions exist that raise substantial doubt about our
ability to continue as a “going concern.” A going concern paragraph
included in our independent registered public accounting firm’s
report on our consolidated financial statements could impair
investor perceptions and our ability to finance our operations
through the sale of equity, incurring debt, or other financing
alternatives. Our ability to continue as a going concern will
depend upon many factors beyond our control including the
availability and terms of future funding. If we are unable to
achieve our goals and raise the necessary funds to finance our
operations, our business would be jeopardized, and we may not be
able to continue. If we ceased operations, it is likely that all of
our investors would lose their investment.
We may not succeed in completing the development of our products,
commercializing our products or generating significant
revenues
Since
commencing our operations, we have focused on the research and
development and limited clinical trials of our product candidates.
Our ability to generate revenues and achieve profitability depends
on our ability to successfully complete the development of our
products, obtain market approval and generate significant revenues.
The future success of our business cannot be determined at this
time, and we do not anticipate generating revenues from product
sales for the foreseeable future. In addition, we face a number of
challenges with respect to our future commercialization efforts,
including, among others, that:
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we
may not have adequate financial or other resources to complete the
development of our product, including two stages of clinical
development that are necessary in order to commercialize our
products; |
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we
may not be able to manufacture our products in commercial
quantities, at an adequate quality or at an acceptable
cost; |
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we
may not be able to maintain our CE mark due to the regulatory
changes; |
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we
may never receive FDA approval for our intended development
plans; |
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we
may not be able to establish adequate sales, marketing and
distribution channels; |
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healthcare
professionals and patients may not accept our product
candidates; |
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technological
breakthroughs in cancer detection, treatment and prevention may
reduce the demand for our product candidates; |
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changes
in the market for cancer treatment, new alliances between existing
market participants and the entrance of new market participants may
interfere with our market penetration efforts; |
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third-party
payors may not agree to reimburse patients for any or all of the
purchase price of our products, which may adversely affect
patients’ willingness to purchase our product
candidates; |
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uncertainty
as to market demand may result in inefficient pricing of our
product candidates; |
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we
may face third-party claims of intellectual property
infringement; |
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we
may fail to obtain or maintain regulatory approvals for our
products candidates in our target markets or may face adverse
regulatory or legal actions relating to our product candidates even
if regulatory approval is obtained; and |
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we
are dependent upon the results of ongoing clinical studies relating
to our product candidates and the products of our competitors. We
may fail in obtaining positive results. |
If we
are unable to meet any one or more of these challenges
successfully, our ability to effectively commercialize our product
candidates could be limited, which in turn could have a material
adverse effect on our business, financial condition and results of
operations.
If product liability lawsuits are brought against us, we may incur
substantial liabilities and the commercialization of our drug
candidates may be affected
As
our drug candidates enter clinical trials, we will face an inherent
risk of product liability suits and will face an even greater risk
if we obtain approval to commercialize any drugs. For example, we
may be sued if our drug candidates cause or are perceived to cause
injury or are found to be otherwise unsuitable during clinical
testing, manufacturing, marketing or sale. Any such product
liability claims may include allegations of defects in
manufacturing, defects in design, a failure to warn of dangers
inherent in the drug, negligence, strict liability or a breach of
warranties. Claims could also be asserted under state consumer
protection acts. If we cannot successfully defend ourselves against
product liability claims, we may incur substantial liabilities or
be required to limit commercialization of our drug candidates. Even
successful defense would require significant financial and
management resources. Regardless of the merits or eventual outcome,
liability claims may result in:
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decreased
demand for our drugs; |
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injury
to our reputation; |
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withdrawal
of clinical trial participants and inability to continue clinical
trials; |
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initiation
of investigations by regulators; |
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costs
to defend the related litigation; |
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a
diversion of management’s time and our resources; |
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substantial
monetary awards to trial participants or patients; |
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product
recalls, withdrawals or labeling, marketing or promotional
restrictions; |
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loss
of revenue; |
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exhaustion
of any available insurance and our capital resources; |
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the
inability to commercialize any drug candidate; and |
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a
decline in the price of our common shares. |
We
shall seek to obtain the appropriate insurance once our candidates
are ready for clinical trial. However, our inability to obtain
sufficient product liability insurance at an acceptable cost to
protect against potential product liability claims could prevent or
inhibit the commercialization of drugs we develop, alone or with
collaborators. We currently do not have in place product liability
insurance and although we plan to have in place such insurance as
and when the products are ready for commercialization, as well as
insurance covering clinical trials, the amount of such insurance
coverage may not be adequate, we may be unable to maintain such
insurance, or we may not be able to obtain additional or
replacement insurance at a reasonable cost, if at all. Our
insurance policies may also have various exclusions, and we may be
subject to a product liability claim for which we have no coverage.
We may have to pay any amounts awarded by a court or negotiated in
a settlement that exceed our coverage limitations or that are not
covered by our insurance, and we may not have, or be able to
obtain, sufficient capital to pay such amounts. Even if our
agreements with any future corporate collaborators entitle us to
indemnification against losses, such indemnification may not be
available or adequate should any claim arise.
Additionally,
we may be sued if the products that we commercialize, market or
sell cause or are perceived to cause injury or are found to be
otherwise unsuitable, and may result in:
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decreased
demand for those products; |
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damage
to our reputation; |
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costs
incurred related to product recalls; |
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limiting
our opportunities to enter into future commercial partnership;
and |
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a
decline in the price of our common shares. |
We
face business disruption and related risks resulting from the
recent outbreak of the novel coronavirus 2019 (COVID-19), which
could have a material adverse effect on our business
plan.
The
development of our product candidates could be disrupted and
materially adversely affected by the recent outbreak of COVID-19.
As a result of measures imposed by the governments in affected
regions, businesses and schools have been suspended due to
quarantines intended to contain this outbreak. The spread of
COVID-19 from China to other countries has resulted in the Director
General of the World Health Organization declaring the outbreak of
COVID-19 as a Public Health Emergency of International Concern
(PHEIC), based on the advice of the Emergency Committee under the
International Health Regulations (2005), and the Centers for
Disease Control and Prevention in the U.S. issued a warning on
February 25, 2020 regarding the likely spread of COVID-19 to the
U.S. While the COVID-19 outbreak is still in the early stages,
international stock markets have begun to reflect the uncertainty
associated with the slow-down in the Chinese economy and the
reduced levels of international travel experienced since the
beginning of January and the significant declines in the Dow
Industrial Average during 2020 was largely attributed to the
effects of COVID-19. We have enrolled, and will seek to enroll,
cancer patients in our clinical trials. In the event that clinical
trial sites are slowed down or closed to enrollment in our trials,
this could have a material adverse impact on our clinical trial
plans and timelines. We may face difficulties recruiting or
retaining patients in our ongoing and planned clinical trials if
patients are affected by the virus or are fearful of visiting or
traveling to our clinical trial sites because of the outbreak. We
are continuing to assess our business plans and the impact COVID-19
is having on our clinical trial timelines and our ability to
recruit candidates for clinical trials, but there can be no
assurance that this analysis will enable us to avoid part or all of
any impact from the spread of COVID-19 or its consequences,
including downturns in business sentiment generally or in our
sector in particular. The
extent to which COVID-19 and global efforts to contain its spread
will impact our operations will depend on future developments,
which are highly uncertain and cannot be predicted at this time,
and include the duration, severity and scope of the outbreak and
the actions taken to contain or treat the coronavirus outbreak. We
currently believe that the execution of our clinical trials and
research programs are delayed by at least one quarter due to
COVID-19.
Risks
Related to Our Intellectual Property
We may not successfully develop, maintain and protect our
proprietary products and technologies
BriaCell’s
success depends to a significant degree upon its ability to
develop, maintain and protect proprietary products and
technologies. BriaCell files patent applications in the United
States and other countries as part of its global strategy to
protect its Intellectual Property and maintains certain US and
Non-US patents in its IP portfolio. However, patents provide only
limited protection of BriaCell’s Intellectual Property. The
assertion of patent protection involves complex legal and factual
determinations and is therefore uncertain and can be expensive.
BriaCell cannot provide assurances that patents will be granted
with respect to any of its pending patent applications, or that the
scope of any of its granted patents, or any patents granted in the
future, will be sufficiently broad to offer meaningful protection,
or that it will develop and file patent applications on additional
proprietary technologies that are patentable, or, if patentable,
that any patents will be granted from such patent applications.
BriaCell’s current or future patents could be successfully
challenged, invalidated or circumvented. This could result in
BriaCell’s patent rights failing to create an effective competitive
barrier. Losing a significant patent or failing to get a patent to
issue from a pending patent application that BriaCell considers
significant could have a material adverse effect on BriaCell’s
business. The laws governing the scope of patent coverage in
various countries continue to evolve. The laws of some foreign
countries may not protect BriaCell’s Intellectual Property rights
to the same extent as the laws of the United States. BriaCell has
applied for patent protection only in selected countries.
Therefore, third parties may be able to replicate BriaCell
technologies covered by BriaCell’s patent portfolio in countries in
which it does not have patent protection.
BriaCell’s
future success and competitive position depends in part upon its
ability to maintain its Intellectual Property portfolio. There can
be no assurance that any patents will be issued on any existing or
future patent applications.
We are susceptible to intellectual property suits that could cause
us to incur substantial costs or pay substantial damages or
prohibit us from selling our product candidates
There
is a substantial amount of litigation over patent and other
Intellectual Property rights in the biotechnology industry. Whether
or not a product infringes a patent involves complex legal and
factual considerations, the determination of which is often
uncertain. Our management is presently unaware of any other
parties’ patents and proprietary rights which our products under
development would infringe. Searches typically performed to
identify potentially infringed patents of third parties are often
not conclusive and, because patent applications can take many years
to issue, there may be applications now pending, which may later
result in issued patents which our current or future products may
infringe or be alleged to infringe. In addition, our competitors or
other parties may assert that our product candidates and the
methods employed may be covered by patents held by them. If any of
our products infringes a valid patent, we could be prevented from
manufacturing or selling such product unless we are able to obtain
a license or able to redesign the product in such a manner as to
avoid infringement. A license may not always be available or may
require us to pay substantial royalties. We also may not be
successful in any attempt to redesign our product to avoid
infringement, nor does a later redesign protect BriaCell from prior
infringement. Infringement and other Intellectual Property claims,
with or without merit, can be expensive and time-consuming to
litigate and can divert our management’s attention from operating
our business.
The steps we have taken to protect our Intellectual Property may
not be adequate, which could have a material adverse effect on our
ability to compete in the market
BriaCell’s
ability to establish and maintain a competitive position may be
achieved in part by prosecuting claims against others who it
believes to be infringing its rights. In addition, enforcement of
BriaCell’s patents in foreign jurisdictions will depend on the
legal procedures in those jurisdictions. In addition to filing
patent applications, we rely on confidentiality, non-compete,
non-disclosure and assignment of inventions provisions, as
appropriate, in our agreements with our employees, consultants, and
service providers, to protect and otherwise seek to control access
to, and distribution of, our proprietary information. These
measures may not be adequate to protect our Intellectual Property
from unauthorized disclosure, third-party infringement or
misappropriation, for the following reasons:
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the
agreements may be breached, may not provide the scope of protection
we believe they provide or may be determined to be
unenforceable; |
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we
may have inadequate remedies for any breach; |
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proprietary
information could be disclosed to our competitors; or |
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others
may independently develop substantially equivalent or superior
proprietary information and techniques or otherwise gain access to
our trade secrets or disclose such technologies. |
Specifically,
with respect to non-compete agreements, both state law and
precedent varies greatly from state to state and we may be unable
to enforce these agreements, in whole or in part, and it may be
difficult for us to restrict our competitors from gaining the
expertise that our former employees gained while working for us. If
our Intellectual Property is disclosed or misappropriated, it could
harm our ability to protect our rights and could have a material
adverse effect on our business, financial condition and results of
operations.
We may need to initiate lawsuits to protect or enforce our patents
and other Intellectual Property rights, which could be expensive
and, if we lose, could cause us to lose some of our Intellectual
Property rights, which would harm our ability to compete in the
market
We
rely on patents, confidentiality and trade secrets to protect a
portion of our Intellectual Property and our competitive position.
Patent law relating to the scope of claims in the technology fields
in which we operate is still evolving and, consequently, patent
positions in the biotechnology/pharmaceutical industry can be
uncertain. In order to protect or enforce our patent rights, we may
initiate patent and related litigation against third parties, such
as infringement suits or requests for injunctive relief. BriaCell’s
ability to establish and maintain a competitive position may be
achieved in part by prosecuting claims against others who it
believes to be infringing its rights. In addition, enforcement of
BriaCell’s patents in foreign jurisdictions will depend on the
legal procedures in those jurisdictions. Any lawsuits that we
initiate could be expensive, take significant time and divert our
management’s attention from other business concerns and the outcome
of litigation to enforce our Intellectual Property rights in
patents, copyrights, trade secrets or trademarks is highly
unpredictable. Litigation also puts our patents at risk of being
invalidated or interpreted narrowly and our patent applications at
risk of not issuing, or adversely affect its ability to distribute
any products that are subject to such litigation. In addition, we
may provoke third parties to assert claims against us. We may not
prevail in any lawsuits that we initiate, and the damages or other
remedies awarded, including attorney fees, if any, may not be
commercially valuable. The occurrence of any of these events could
have a material adverse effect on our business, financial condition
and results of operations.
We may be subject to damages resulting from claims that we or our
employees or contractors have wrongfully used or disclosed alleged
trade secrets of their former employers
Many
of our employees and contractors were previously employed at
universities or other biotechnology or pharmaceutical companies,
including our competitors or potential competitors. Although no
claims against us are currently pending, we may be subject to
claims that we or any employee or contractor has inadvertently or
otherwise used or disclosed trade secrets or other proprietary
information of his or her former employers. Litigation may be
necessary to defend against these claims. If we fail in defending
such claims, in addition to paying monetary damages, we may lose
valuable Intellectual Property rights or personnel. A loss of key
research personnel or their work product could hamper or prevent
our ability to commercialize certain therapeutic candidates, which
could severely harm our business, financial condition and results
of operations. Even if we are successful in defending against these
claims, litigation could result in substantial costs and be a
distraction to management.
If the FDA or comparable foreign regulatory authorities approve
generic versions of any of our products that receive marketing
approval, or such authorities do not grant our products appropriate
periods of exclusivity before approving generic versions of our
products, the sales of our products could be adversely
affected.
Once
a new drug application is approved, the product covered thereby
becomes a “reference listed drug” in the FDA’s publication,
“Approved Drug Products with Therapeutic Equivalence Evaluations,”
commonly known as the Orange Book. Manufacturers may seek approval
of generic versions of reference listed drugs through submission of
abbreviated new drug applications in the United States. In support
of an abbreviated new drug applications, a generic manufacturer
need not conduct clinical trials. Rather, the applicant generally
must show that its product has the same active ingredient(s),
dosage form, strength, route of administration and conditions of
use or labeling as the reference listed drug and that the generic
version is bioequivalent to the reference listed drug, meaning it
is absorbed in the body at the same rate and to the same extent.
Generic products may be significantly less costly to bring to
market than the reference listed drug and companies that produce
generic products are generally able to offer them at lower prices.
Thus, following the introduction of a generic drug, a significant
percentage of the sales of any branded product or reference listed
drug is typically lost to the generic product.
The
FDA may not approve abbreviated new drug applications for a generic
product until any applicable period of non-patent exclusivity for
the reference listed drug has expired. The United States Federal
Food, Drug, and Cosmetic Act provides a period of five years of
non-patent exclusivity for a new drug containing a new chemical
entity (“NCE”). Specifically, in cases where such exclusivity has
been granted, abbreviated new drug applications may not be
submitted to the FDA until the expiration of five years unless the
submission is accompanied by a Paragraph IV certification that a
patent covering the reference listed drug is either invalid or will
not be infringed by the generic product, in which case the
applicant may submit its application four years following approval
of the reference listed drug.
While
we believe that our products contain active ingredients that would
be treated as NCEs by the FDA and, therefore, if approved, should
be afforded five years of data exclusivity, the FDA may disagree
with that conclusion and may approve generic products after a
period that is less than five years. If the FDA were to award NCE
exclusivity to someone other than us, we believe that we would
still be awarded three year “Other” exclusivity protection from
generic competition, which is awarded when an application or
supplement contains reports of new clinical investigations (not
bioavailability studies) conducted or sponsored by an applicant and
essential for approval. Manufacturers may seek to launch these
generic products following the expiration of the applicable
marketing exclusivity period, even if we still have patent
protection for our product. If we do not maintain patent protection
and data exclusivity for our product candidates, our business may
be materially harmed.
Competition
that our products may face from generic versions of our products
could materially and adversely impact our future revenue,
profitability and cash flows and substantially limit our ability to
obtain a return on the investments we have made in those product
candidates.
Patent terms may be inadequate to protect our competitive position
on our product candidates for an adequate amount of
time.
Patents
have a limited lifespan. In the United States, if all maintenance
fees are timely paid, the natural expiration of a patent is
generally 20 years from its earliest United States non-provisional
filing date. Various extensions may be available, but the life of a
patent, and the protection it affords, is limited. Even if patents
covering our product candidates are obtained, once the patent life
has expired, we may be open to competition from competitive
products, including generics or biosimilars. Given the amount of
time required for the development, testing, and regulatory review
of new product candidates, patents protecting such candidates might
expire before or shortly after such candidates are commercialized.
As a result, our owned and licensed patent portfolio may not
provide us with sufficient rights to exclude others from
commercializing products similar or identical to ours.
Risks
Related to Regulations
Changes in legislation and regulations may affect our revenue and
profitability
Existing
and proposed changes in the laws and regulations affecting public
companies may cause the Company to incur increased costs as the
Company evaluates the implications of new rules and responds to new
requirements. Failure to comply with new rules and regulations
could result in enforcement actions or the assessment of other
penalties. New laws and regulations could make it more difficult to
obtain certain types of insurance, including director’s and
officer’s liability insurance, and the Company may be forced to
accept reduced policy limits and coverage or incur substantially
higher costs to obtain the same or similar coverage, to the extent
that such coverage remains available.
The
impact of these events could also make it more difficult for the
Company to attract and retain qualified persons to serve on the
Company’s Board of Directors, or as executive officers. The Company
may be required to hire additional personnel and utilize additional
outside legal, accounting and advisory services, all of which could
cause the Company’s general and administrative costs to increase
beyond what the Company currently has planned. Although the Company
evaluates and monitors developments with respect to new rules and
laws, the Company cannot predict or estimate the amount of the
additional costs the Company may incur or the timing of such costs
with respect to such evaluations and/or compliance and cannot
provide assurances that such additional costs will render the
Company compliant with such new rules and laws.
If we or our licensees are unable to obtain U.S., Canadian and/or
foreign regulatory approval for our product candidates, we will be
unable to commercialize our therapeutic
candidates
To
date, we have not marketed, distributed or sold an approved
product. Our therapeutic candidates are subject to extensive
governmental regulations relating to development, clinical trials,
manufacturing and commercialization of drugs. We may not obtain
marketing approval for any of our therapeutic candidates in a
timely manner or at all. In connection with the clinical trials for
our product candidates and other therapeutic candidates that we may
seek to develop in the future, either on our own or throughout
licensing arrangements, we face the risk that:
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a
product candidate may not prove safe or efficacious; |
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the
results with respect to any product candidate may not confirm the
positive results from earlier preclinical studies or clinical
trials; |
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the
results may not meet the level of statistical significance required
by the FDA, Health Canada or other regulatory authorities;
and |
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the
results will justify only limited and/or restrictive uses,
including the inclusion of warnings and contraindications, which
could significantly limit the marketability and profitability of
the therapeutic candidate. |
Any
delay in obtaining, or the failure to obtain, required regulatory
approvals will materially and adversely affect our ability to
generate future revenues from a particular product candidate. Any
regulatory approval to market a product may be subject to
limitations on the indicated uses for which we may market the
product or may impose restrictive conditions of use, including
cautionary information, thereby limiting the size of the market for
the product. We and our licensees, as applicable, also are, and
will be, subject to numerous foreign regulatory requirements that
govern the conduct of clinical trials, manufacturing and marketing
authorization, pricing and third-party reimbursement. The foreign
regulatory approval process includes all of the risks associated
with the FDA approval process that we describe above, as well as
risks attributable to the satisfaction of foreign requirements.
Approval by the FDA does not ensure approval by regulatory
authorities outside the United States. Foreign jurisdictions may
have different approval processes than those required by the FDA
and may impose additional testing requirements for our therapeutic
candidates.
If the third parties on which we rely to conduct our clinical
trials and clinical development do not perform as contractually
required or expected, we may not be able to obtain regulatory
clearance or approval for, or commercialize, our product
candidates
We do
not have the ability to independently conduct our clinical trials
for our product candidates and we must rely on third parties, such
as contract research organizations, medical institutions, clinical
investigators and contract laboratories to conduct such trials. If
these third parties do not successfully carry out their contractual
duties or regulatory obligations or meet expected deadlines, if
these third parties need to be replaced, or if the quality or
accuracy of the data they obtain is compromised due to the failure
to adhere to our clinical protocols or regulatory requirements or
for other reasons, our pre-clinical development activities or
clinical trials may be extended, delayed, suspended or terminated,
and we may not be able to obtain regulatory clearance for, or
successfully commercialize, our product candidates on a timely
basis, if at all, and our business, operating results and prospects
may be adversely affected. Furthermore, our third-party clinical
trial investigators may be delayed in conducting our clinical
trials for reasons outside of their control.
Modifications to our product candidates, or to any other product
candidates that we may develop in the future, may require new
regulatory clearances or approvals or may require us or our
licensees, as applicable, to recall or cease marketing these
therapeutic candidates until clearances are
obtained
Modifications
to our product candidates, after they have been approved for
marketing, if at all, or to any other pharmaceutical product that
we may develop in the future, may require new regulatory clearance,
or approvals, and, if necessitated by a problem with a marketed
product, may result in the recall or suspension of marketing of the
previously approved and marketed product until clearances or
approvals of the modified product are obtained. The FDA requires
pharmaceutical products manufacturers to initially make and
document a determination of whether or not a modification requires
a new approval, supplement or clearance. A manufacturer may
determine in conformity with applicable regulations and guidelines
that a modification may be implemented without pre-clearance by the
FDA; however, the FDA can
review a manufacturer’s decision and may disagree. The FDA may also
on its own initiative determine that a new clearance or approval is
required. If the FDA requires new clearances or approvals of any
pharmaceutical product or medical device for which we or our
licensees receive marketing approval, if any, we or our licensees
may be required to recall such product and to stop marketing the
product as modified, which could require us or our licensees to
redesign the product and will have a material adverse effect on our
business, financial condition and results of operations. In these
circumstances, we may be subject to significant enforcement
actions.
The results of our clinical trials may not support our product
claims or may result in the discovery of adverse side
effects
Even
if our clinical trials are completed as planned, we cannot be
certain that their results will support our product claims or that
any regulatory authority whose approval we will require in order to
market and sell our products in any territory will agree with our
conclusions regarding them. Success in pre-clinical studies and
early clinical trials does not ensure that later clinical trials
will be successful, and we cannot be sure that clinical trials will
replicate the results of prior trials and pre-clinical studies. The
clinical trial process may fail to demonstrate that our product
candidates are safe and effective for the proposed indicated uses,
which could cause us to abandon a product and may delay development
of others. Any delay or termination of our clinical trials will
delay the filing of our regulatory submissions and, ultimately, our
ability to commercialize our product candidates and generate
revenues. It is also possible that patients enrolled in clinical
trials will experience adverse side effects that are not currently
part of the product candidate’s profile.
Clinical trials involve a lengthy and expensive process with an
uncertain outcome, and results of earlier studies and trials may
not be predictive of future trial results
We
have limited experience in conducting and managing the clinical
trials necessary to obtain regulatory approvals, including FDA
approval. Clinical trials are expensive and complex, can take many
years and have uncertain outcomes. We cannot predict whether we or
our licensees will encounter problems with any of the completed,
ongoing or planned clinical trials that will cause us, our
licensees or regulatory authorities to delay or suspend clinical
trials, or delay the analysis of data from completed or ongoing
clinical trials. We estimate that clinical trials of our most
advanced therapeutic candidates will continue for several years,
but they may take significantly longer to complete. Failure can
occur at any stage of the testing and we may experience numerous
unforeseen events during, or as a result of, the clinical trial
process that could delay or prevent commercialization of our
current or future therapeutic candidates, including but not limited
to:
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delays
in securing clinical investigators or trial sites for the clinical
trials; |
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delays
in obtaining institutional review board and other regulatory
approvals to commence a clinical trial; |
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slower
than anticipated patient recruitment and enrollment; |
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negative
or inconclusive results from clinical trials; |
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unforeseen
safety issues; |
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uncertain
dosing issues; |
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an
inability to monitor patients adequately during or after treatment;
and |
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problems
with investigator or patient compliance with the trial
protocols. |
A
number of companies in the pharmaceutical and biotechnology
industries, including those with greater resources and experience
than us, have suffered significant setbacks in advanced clinical
trials, even after seeing promising results in earlier clinical
trials. Despite the results reported in earlier clinical trials for
our therapeutic candidates, we do not know whether any phase 3 or
other clinical trials we or our licensees may conduct will
demonstrate adequate efficacy and safety to result in regulatory
approval to market our therapeutic candidates. If later-stage
clinical trials of any therapeutic candidate do not produce
favorable results, our ability to obtain regulatory approval for
the therapeutic candidate may be adversely impacted, which will
have a material adverse effect on our business, financial condition
and results of operations.
The pharmaceutical business is subject to increasing government
price controls and other restrictions on pricing, reimbursement and
access to drugs, which could adversely affect our future revenues
and profitability
To
the extent our products are developed, commercialized, and
successfully introduced to market, they may not be considered
cost-effective and third-party or government reimbursement might
not be available or sufficient. Globally, governmental and other
third-party payors are becoming increasingly aggressive in
attempting to contain health care costs by strictly controlling,
directly or indirectly, pricing and reimbursement and, in some
cases, limiting or denying coverage altogether on the basis of a
variety of justifications, and we expect pressures on pricing and
reimbursement from both governments and private payors inside and
outside the U.S. to continue.
In
the U.S., we are subject to substantial pricing, reimbursement, and
access pressures from state Medicaid programs, private insurance
programs and pharmacy benefit managers, and implementation of U.S.
health care reform legislation is increasing these pricing
pressures. The Patient Protection and Affordable Care Act, as
amended by the Health Care and Education Affordability
Reconciliation Act (collectively, the “PPACA” or the
“Affordable Care Act”), instituted comprehensive
health care reform, and includes provisions that, among other
things, reduce and/or limit Medicare reimbursement, require all
individuals to have health insurance (with limited exceptions), and
impose new and/or increased taxes. The future of the Affordable
Care Act and its constituent parts are uncertain at this
time.
In
almost all markets, pricing and choice of prescription
pharmaceuticals are subject to governmental control. Therefore, the
price of our products and their reimbursement in Europe and in
other countries is and will be determined by national regulatory
authorities. Reimbursement decisions from one or more of the
European markets may impact reimbursement decisions in other
European markets. A variety of factors are considered in making
reimbursement decisions, including whether there is sufficient
evidence to show that treatment with the product is more effective
than current treatments, that the product represents good value for
money for the health service it provides, and that treatment with
the product works at least as well as currently available
treatments.
The
continuing efforts of government and insurance companies, health
maintenance organizations, and other payors of health care costs to
contain or reduce costs of health care may affect our future
revenues and profitability or those of our potential customers,
suppliers, and collaborative partners, as well as the availability
of capital.
United States federal and state privacy laws, and equivalent laws
of other nations, may increase our costs of operation and expose us
to civil and criminal sanctions
The
Health Insurance Portability and Accountability Act of 1996, as
amended, and the regulations that have been issued under it, or
collectively HIPAA, and similar laws outside the United States,
contain substantial restrictions and requirements with respect to
the use and disclosure of individuals’ protected health
information. The HIPAA privacy rules prohibit “covered entities,”
such as healthcare providers and health plans, from using or
disclosing an individual’s protected health information, unless the
use or disclosure is authorized by the individual or is
specifically required or permitted under the privacy rules. Under
the HIPAA security rules, covered entities must establish
administrative, physical and technical safeguards to protect the
confidentiality, integrity and availability of electronic protected
health information maintained or transmitted by them or by others
on their behalf. While we do not believe that we will be a covered
entity under HIPAA, we believe many of our customers will be
covered entities subject to HIPAA. Such customers may require us to
enter into business associate agreements, which will obligate us to
safeguard certain health information we obtain in the course of our
relationship with them, restrict the manner in which we use and
disclose such information and impose liability on us for failure to
meet our contractual obligations.
In
addition, under The Health Information Technology for Economic and
Clinical Health Act of 2009, or HITECH, which was signed into law
as part of the U.S. stimulus package in February 2009, certain of
HIPAA’s privacy and security requirements are now also directly
applicable to “business associates” of covered entities and subject
them to direct governmental enforcement for failure to comply with
these requirements. We may be deemed as a “business associate” of
some of our customers. As a result, we may be subject as a
“business associate” to civil and criminal penalties for failure to
comply with applicable privacy and security rule requirements.
Moreover, HITECH created a new requirement obligating “business
associates” to report any breach of unsecured, individually
identifiable health information to their covered entity customers
and imposes penalties for failing to do so.
In
addition to HIPAA, most U.S. states have enacted patient
confidentiality laws that protect against the disclosure of
confidential medical information, and many U.S. states have adopted
or are considering adopting further legislation in this area,
including privacy safeguards, security standards, and data security
breach notification requirements. These U.S. state laws, which may
be even more stringent than the HIPAA requirements, are not
preempted by the federal requirements, and we are therefore
required to comply with them to the extent they are applicable to
our operations.
These
and other possible changes to HIPAA or other U.S. federal or state
laws or regulations, or comparable laws and regulations in
countries where we conduct business, could affect our business and
the costs of compliance could be significant. Failure by us to
comply with any of the standards regarding patient privacy,
identity theft prevention and detection, and data security may
subject us to penalties, including civil monetary penalties and in
some circumstances, criminal penalties. In addition, such failure
may damage our reputation and adversely affect our ability to
retain customers and attract new customers.
The
protection of personal data, particularly patient data, is subject
to strict laws and regulations in many countries. The collection
and use of personal health data in the EU is governed by the
provisions of Directive 95/46/EC of the European Parliament and of
the Council of 24 October 1995 on the protection of individuals
with regard to the processing of personal data and on the free
movement of such data, commonly known as the Data Protection
Directive. The Directive imposes a number of requirements including
an obligation to seek the consent of individuals to whom the
personal data relates, the information that must be provided to the
individuals, notification of data processing obligations to the
competent national data protection authorities of individual EU
Member States and the security and confidentiality of the personal
data. The Data Protection Directive also imposes strict rules on
the transfer of personal data out of the EU to the U.S. Failure to
comply with the requirements of the Data Protection Directive and
the related national data protection laws of the EU Member States
may result in fines and other administrative penalties and harm our
business. We may incur extensive costs in ensuring compliance with
these laws and regulations, particularly if we are considered to be
a data controller within the meaning of the Data Protection
Directive.
If we fail to comply with the U.S. federal Anti-Kickback Statute
and similar state and foreign country laws, we could be subject to
criminal and civil penalties and exclusion from federally funded
healthcare programs including the Medicare and Medicaid programs
and equivalent third country programs, which would have a material
adverse effect on our business and results of
operations
A
provision of the Social Security Act, commonly referred to as the
federal Anti-Kickback Statute, prohibits the knowing and willful
offer, payment, solicitation or receipt of any form of
remuneration, directly or indirectly, in cash or in kind, to induce
or reward the referring, ordering, leasing, purchasing or arranging
for, or recommending the ordering, purchasing or leasing of, items
or services payable, in whole or in part, by Medicare, Medicaid or
any other federal healthcare program. Although there are a number
of statutory exemptions and regulatory safe harbors to the federal
Anti-Kickback Statute protecting certain common business
arrangements and activities from prosecution or regulatory
sanctions, the exemptions and safe harbors are drawn narrowly, and
practices that do not fit squarely within an exemption or safe
harbor may be subject to scrutiny. The federal Anti-Kickback
Statute is very broad in scope and many of its provisions have not
been uniformly or definitively interpreted by existing case law or
regulations. In addition, most of the states have adopted laws
similar to the federal Anti-Kickback Statute, and some of these
laws are even broader than the federal Anti-Kickback Statute in
that their prohibitions may apply to items or services reimbursed
under Medicaid and other state programs or, in several states,
apply regardless of the source of payment. Violations of the
federal Anti-Kickback Statute may result in substantial criminal,
civil or administrative penalties, damages, fines and exclusion
from participation in federal healthcare programs.
All
of our future financial relationships with U.S. healthcare
providers, purchasers, formulary managers, and others who provide
products or services to federal healthcare program beneficiaries
will potentially be governed by the federal Anti-Kickback Statute
and similar state laws. We believe our operations will be in
compliance with the federal Anti-Kickback Statute and similar state
laws. However, we cannot be certain that we will not be subject to
investigations or litigation alleging violations of these laws,
which could be time-consuming and costly to us and could divert
management’s attention from operating our business, which in turn
could have a material adverse effect on our business. In addition,
if our arrangements were found to violate the federal Anti-Kickback
Statute or similar state laws, the consequences of such violations
would likely have a material adverse effect on our business,
results of operations and financial condition.
There
are other federal and state laws that may affect our ability to
operate, including the federal civil False Claims Act, which
prohibits, among other things, individuals or entities from
knowingly presenting, or causing to be presented, a false or
fraudulent claim for payment of government funds or knowingly
making, using or causing to be made or used, a false record or
statement material to an obligation to pay money to the government
or knowingly concealing or knowingly and improperly avoiding,
decreasing, or concealing an obligation to pay money to the federal
government. Moreover, we may be subject to other federal false
claim laws, including, among others, federal criminal healthcare
fraud and false statement statutes that extend to non-government
health benefit programs. Moreover, there are analogous state laws.
Violations of these laws can result in substantial criminal, civil
or administrative penalties, damages, fines and exclusion from
participation in federal healthcare programs.
Moreover,
the provisions of the Foreign Corrupt Practices Act of 1997 and
other similar anti-bribery laws in other jurisdictions generally
prohibit companies and their intermediaries from providing money or
anything of value to officials of foreign governments, foreign
political parties, or international organizations with the intent
to obtain or retain business or seek a business advantage.
Recently, there has been a substantial increase in anti-bribery law
enforcement activity by U.S. regulators, with more aggressive and
frequent investigations and enforcement by both the SEC and the
Department of Justice. A determination that our operations or
activities violated U.S. or foreign laws or regulations could
result in imposition of substantial fines, interruption of
business, loss of supplier, vendor or other third-party
relationships, termination of necessary licenses and permits, and
other legal or equitable sanctions. In addition, lawsuits brought
by private litigants may also follow as a consequence.
Risks
Related to Our Securities and this Offering
This is a reasonable efforts offering, no minimum amount of
securities is required to be sold, and we may not raise the amount
of capital we believe is required for our business
plans
The placement agent has agreed to use its reasonable efforts to
solicit offers to purchase the securities in this offering. The
placement agent has no obligation to buy any of the securities from
us or to arrange for the purchase or sale of any specific number or
dollar amount of the securities. There is no required minimum
number of securities that must be sold as a condition to completion
of this offering. Because there is no minimum offering amount
required as a condition to the closing of this offering, the actual
offering amount, placement agent fees and proceeds to us are not
presently determinable and may be substantially less than the
maximum amounts set forth above. We may sell fewer than all of the
securities offered herein, which may significantly reduce the
amount of proceeds received by us, and investors in this offering
will not receive a refund in the event that we do not sell an
amount of securities sufficient to pursue the business plans
outlined in this prospectus. Thus, we may not raise the amount of
capital we believe is required for our business and may need to
raise additional funds, which may not be available or available on
terms acceptable to us.
An active trading market for our common shares may not develop on
the OTCQB and our security holders may not be able to resell their
common shares
Our common shares are quoted on the OTCQB and listed on the TSXV
and Frankfurt Stock Exchange and an active trading market for our
common shares has not developed on the OTCQB or on the Frankfurt
Stock Exchange.
There is no guarantee that our common shares will remain listed on
the TSXV after this Offering. We cannot predict the extent to which
an active market for our common shares will develop or be sustained
on the OTCQB after this Offering. If an active trading market for
our common shares does not develop after this Offering, the market
price and liquidity of our common shares may be materially and
adversely affected.
If our common shares are delisted from the TSXV after this
offering, management would expect to arrange for listing of our
common shares on an alternative stock exchange. However, we cannot
guarantee that we will be able to list on the alternative stock
exchange in a timely manner or at all. If our common shares do not
trade on an alternative stock exchange, shareholders could face
reduced liquidity and potential corporate governance and tax
considerations (see also “Dispositions of Securities - Certain
Canadian Federal Income Tax Considerations For United States
Residents”).
There is no public market for the Pre-Funded Warrants or Warrants
being offered by us in this offering
There
is no established public trading market for the Pre-Funded Warrants
or Warrants being offered in this offering, and we do not expect a
market to develop. In addition, we do not intend to apply to list
the Pre-Funded Warrants or Warrants on any national securities
exchange or other nationally recognized trading system, including
the OTCQB or the TSXV. Without an active market, the liquidity of
the Pre-Funded Warrants and Warrants will be very
limited.
The Warrants may not have any value
The
Warrants will be exercisable for five years from the date of
initial issuance at an initial exercise price equal to 125% of the
public offering price per unit set forth on the cover page of this
prospectus. There can be no assurance that the market price of the
common shares will ever equal or exceed the exercise price of the
Warrants. In the event that the share price of our common shares
does not exceed the exercise price of the Warrants during the
period when the Warrants are exercisable, the Warrants may not have
any value.
Holders of Pre-funded Warrants and Warrants purchased in this
offering will have no rights as common shareholders until such
holders exercise their Pre-funded Warrants or Warrants and acquire
our common shares
Until
holders of Pre-funded Warrants or Warrants acquire common shares
stock upon exercise thereof, such holders will have no rights with
respect to the common shares underlying the Pre-funded Warrants and
the Warrants. Upon exercise of the Pre-funded Warrants or Warrants,
the holders will be entitled to exercise the rights of a common
shareholder only as to matters for which the record date occurs
after the exercise date.
Antidilution provisions in the Warrants may affect the interests of
our common stockholders.
The
Warrants contain price protection provisions that could be
triggered by our issuance of common shares in the future, if the
offering price for any such future issuance is less than the
then-applicable Warrant exercise price. Adjustments to the exercise
price of the Warrants pursuant to the antidilution provisions may
result in additional dilution to the interests of our shareholders
and may adversely affect the market price of our common shares. The
antidilution provisions may also limit our ability to obtain
additional financing on terms favorable to us.
Future issuance of our common shares could dilute the interests of
existing shareholders
We
may issue additional common shares in the future. The issuance of a
substantial number of common shares could have the effect of
substantially diluting the interests of our shareholders. In
addition, the sale of a substantial amount of common shares in the
public market, in the initial issuance, in a situation in which we
acquire a company and the acquired company receives common shares
as consideration and the acquired company subsequently sells its
common shares, or by investors who acquired such common shares in a
private placement, could have an adverse effect on the market price
of our common shares.
We have a significant number of options and warrants outstanding,
and while these options and warrants are outstanding, it may be
more difficult to raise additional equity
capital
As of
May 27, 2020, we had outstanding options and warrants to purchase
213,119 common shares, respectively. The holders of these options
and warrants are given the opportunity to profit from a rise in the
market price of our common shares. We may find it more difficult to
raise additional equity capital while these options and warrants
are outstanding. At any time during which these warrants are likely
to be exercised, we may be unable to obtain additional equity
capital on more favorable terms from other sources. Additionally,
the exercise of these options and warrants will cause the increase
of our outstanding common shares, which could have the effect of
substantially diluting the interests of our current
shareholders.
Sales of a substantial number of shares of our common shares in the
public market by our existing shareholders could cause our share
price to fall
Sales
of a substantial number of shares of our common shares in the
public market, or the perception that these sales might occur,
could depress the market price of our common shares and could
impair our ability to raise capital through the sale of additional
equity securities. We are unable to predict the effect that sales
may have on the prevailing market price of our common shares. All
of the shares owned by our directors and officers are subject to
lock-up agreements with the placement agent of this offering that
restrict such shareholders’ ability to transfer our common shares
for at least six months from the date of this offering. All of our
outstanding shares held by our directors and officers will become
eligible for unrestricted sale upon expiration of the lockup
period. In addition, shares issued or issuable upon exercise of
options and warrants vested as of the expiration of the lock-up
period will be eligible for sale at that time. Sales of shares by
these shareholders could have a material adverse effect on the
trading price of our common shares. We intend to register the
offering, issuance, and sale of all common shares that we may issue
under our equity compensation plans. Once we register these shares,
they can be freely sold in the public market upon issuance, subject
to volume limitations applicable to affiliates and the lock-up
agreements.
We are an Emerging Growth Company, which may reduce the amount of
information available to investors
The
Jumpstart Our Business Start-ups Act, or the JOBS Act, and our
status as a foreign private issuer will allow us to postpone the
date by which we must comply with some of the laws and regulations
intended to protect investors and to reduce the amount of
information we provide in our reports filed with the SEC, which
could undermine investor confidence in our company and adversely
affect the market price of our common shares.
For
as long as we remain an “emerging growth company” as defined in the
JOBS Act, we intend to take advantage of certain exemptions from
various requirements that are applicable to public companies that
are not emerging growth companies including:
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the
provisions of the Sarbanes-Oxley Act requiring that our independent
registered public accounting firm provide an attestation report on
the effectiveness of our internal control over financial
reporting; |
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any
rules that may be adopted by the Public Company Accounting
Oversight Board requiring mandatory audit firm rotation or a
supplement to the auditor’s report on the financial
statements. |
We
intend to take advantage of these exemptions until we are no longer
an “emerging growth company.” We will remain an emerging growth
company until the earlier of (1) the last day of the fiscal year of
the fifth anniversary of the consummation of this offering, (b) in
which we have total annual gross revenue of at least US$ 1.07
billion, or (c) in which we are deemed to be a large accelerated
filer, which means the market value of our common shares that is
held by non-affiliates exceeds US$ 700 million as of the prior June
30, and (2) the date on which we have issued more than US$ 1.0
billion in non-convertible debt during the prior three-year
period.
We cannot predict if investors will find our common shares or
Warrants less attractive because we may rely on these exemptions.
If some investors find our common shares or Warrants less
attractive as a result, there may be a less active trading market
for our common shares, and our common shareprice may be more
volatile and may decline.
We are a foreign private issuer and, as a result, we are not
subject to U.S. proxy rules and are subject to reporting
obligations that, to some extent, are more lenient and less
frequent than those applicable to a U.S. issuer
Because
we qualify as a foreign private issuer under the Exchange Act, we
are exempt from certain provisions of the Exchange Act that are
applicable to U.S. publicly reporting companies, including (i) the
sections of the Exchange Act regulating the solicitation of
proxies, consents or authorizations in respect of a security
registered under the Exchange Act, (ii) the sections of the
Exchange Act requiring insiders to file public reports of their
stock ownership and trading activities and liability for insiders
who profit from trades made in a short period of time, and (iii)
the rules under the Exchange Act requiring the filing with the SEC
of quarterly reports on Form 10-Q containing unaudited financial
and other specified information, or current reports on Form 8-K,
upon the occurrence of specified significant events. In addition,
while U.S. domestic issuers that are not large accelerated filers
or accelerated filers are required to file their annual reports on
Form 10-K within 90 days after the end of each fiscal year, foreign
private issuers are not required to file their annual report on
Form 20-F until 120 days after the end of each fiscal year. Foreign
private issuers are also exempt from the Regulation Fair
Disclosure, aimed at preventing issuers from making selective
disclosures of material information.
We have never paid cash dividends on our capital stock and we do
not anticipate paying any dividends in the foreseeable future.
Consequently, any gains from an investment in our common shares
will likely depend on whether the price of our Common shares
increases, which may not occur
We
have not paid cash dividends on any capital stock to date and we
currently intend to retain our future earnings, if any, to fund the
development and growth of our business. Consequently, in the
foreseeable future, you will likely only experience a gain from
your investment in our common shares if the price of our common
shares increases beyond the price in which you originally acquired
the common shares.
In the event a market develops for our common shares, the
market price of our common shares may be volatile
In
the event a market develops for our common shares, the market price
of our common shares may be highly volatile. Some of the factors
that may materially affect the market price of our common shares
are beyond our control, such as changes in financial estimates by
industry and securities analysts, conditions or trends in the
industry in which we operate or sales of our common shares. These
factors may materially adversely affect the market price of our
common shares, regardless of our performance. In addition, the
public stock markets have experienced extreme price and trading
volume volatility. This volatility has significantly affected the
market prices of securities of many companies for reasons
frequently unrelated to the operating performance of the specific
companies. These broad market fluctuations may adversely affect the
market price of our common shares.
Our executive officers, directors and principal shareholders will
maintain the ability to exert significant control over matters
submitted to our shareholders for approval
Assuming the sale by us of 1,000,000 Common Units in this offering,
our executive officers, directors and principal shareholders who
owned more than 5% of our outstanding common shares before this
offering will, in the aggregate, beneficially own shares
representing approximately 14.04% of our share capital following
the completion of this offering. As a result, if these shareholders
were to act together, they would be able to control all matters
submitted to our shareholders for approval, as well as our
management and affairs. For example, these persons, if they act
together, would control the election of directors and approval of
any merger, consolidation or sale of all or substantially all of
our assets. This concentration of voting power could delay or
prevent an acquisition of our company on terms that other
shareholders may desire or result in management of our company that
our public shareholders disagree with.
If you purchase our Common Units or Pre-funded Units in this
offering, you will incur immediate and substantial dilution in the
book value of your shares
The public offering price of our Common Units and Pre-funded Units
will be substantially higher than the net tangible book value per
share of our common shares. Therefore, if you purchase securities
in this offering, you will pay a price per share that substantially
exceeds our net tangible book value per share after this offering.
To the extent outstanding options and warrants are exercised, you
will incur further dilution. Based on the assumed public offering
price of US$4.00 per Common Unit, assuming no sale of Pre-funded
Units and no exercise of the Warrants being offered in this
offering, you will experience immediate dilution of US$3.72 per
share, representing the difference between our as adjusted net
tangible book value per share after giving effect to this offering
at the assumed offering price per Common Unit. In addition, all
purchasers of Common Units, assuming no sale of Pre-funded Units
and no exercise of the Warrants being offered in this offering,
will own only approximately 58% of our common shares outstanding
after this offering.
Our management will have broad discretion in the use of the net
proceeds from this offering and may allocate the net proceeds from
this offering in ways that you and other shareholders may not
approve
Our
management will have broad discretion in the use of the net
proceeds, including for any of the purposes described in the
section titled “Use of Proceeds,” and you will not have the
opportunity as part of your investment decision to assess whether
the net proceeds are being used appropriately. Because of the
number and variability of factors that will determine our use of
the net proceeds from this offering, their ultimate use may vary
substantially from their currently intended use.
If we are or become classified as a passive foreign investment
company, our U.S. shareholders may suffer adverse tax consequences
as a result
Generally,
for any taxable year, if at least 75% of our gross income is
passive income, or at least 50% of the value of our assets is
attributable to assets that produce passive income or are held for
the production of passive income, including cash, we would be
characterized as a passive foreign investment company, or PFIC, for
U.S. federal income tax purposes. For purposes of these tests,
passive income includes dividends, interest gains from commodities
and securities transactions, the excess of gains over losses from
the disposition of assets which produce passive income (including
amounts derived by reason of the temporary investment of funds
raised in offerings of our shares) and rents and royalties other
than rents and royalties which are received from unrelated parties
in connection with the active conduct of a trade or business. If we
are characterized as a PFIC, our U.S. shareholders may suffer
adverse tax consequences, including having gains realized on the
sale of our common shares treated as ordinary income, rather than
capital gain, the loss of the preferential rate applicable to
dividends received on our common shares by individuals who are U.S.
holders, and having interest charges apply to distributions by us
and gains from the sales of our shares.
Our status
as a PFIC will depend on the nature and composition of our income
and the nature, composition and value of our assets. Asset value is
based on which the fair market value of each asset, including
goodwill and going concern value (which may be determined by
reference to the market value of our common shares, which may be
volatile). Our status will also depend, in part, on when and how we
utilize the cash proceeds from this offering in our business. Based
upon the value of our assets, including any goodwill, and the
nature and composition of our income and assets, we believe that we
will be classified as a PFIC for the taxable year ending July 31,
2020 and possibly for succeeding years. However, even if we are
classified as a PFIC for the year ending July 31, 2020, under an
exception to the PFIC classification rules, we may be able to avoid
such classification altogether if we can meet certain conditions
set forth in the exception. (See the discussion of PFIC status
under “Taxation, U.S. Federal Income Taxation”, below. Because the
determination of whether we are a PFIC for any taxable year is a
factual determination made annually after the end of each taxable
year, there can be no assurance as to our status as a PFIC in any
taxable year.
The
tax consequences that would apply if we are classified as a PFIC
would also be different from those described above if a U.S.
shareholder were able to make a valid qualified electing fund, or
QEF, election. If we are classified as a PFIC then we expect to
provide U.S. shareholders with the information necessary for a U.S.
shareholder to make a QEF election but there is no assurance that
we will do so. See the discussion of PFIC status under
“Taxation, U.S. Federal Income Taxation”, below.
If securities or industry analysts do not publish or cease
publishing research or reports about us, our business or our
market, or if they adversely change their recommendations or
publish negative reports regarding our business or our shares, our
share price and trading volume could decline
The
trading market for our securities will be influenced by the
research and reports that industry or securities analysts may
publish about us, our business, our market or our competitors. We
do not have any control over these analysts and we cannot provide
any assurance that analysts will cover us or provide favorable
coverage. If any of the analysts who may cover us adversely change
their recommendation regarding our shares, or provide more
favorable relative recommendations about our competitors, the
market value of our securities would likely decline. If any analyst
who may cover us were to cease coverage of our company or fail to
regularly publish reports on us, we could lose visibility in the
financial markets, which in turn could cause the price of our
common shares and Warrants and our trading volume to
decline.
Certain Canadian legislation contain provisions that may have the
effect of delaying or preventing a change in
control
Canadian
legislation could discourage potential acquisition proposals, delay
or prevent a change in control and limit the price that certain
investors may be willing to pay for our subordinate voting shares.
For instance, a non-Canadian must file an application for review
with the Minister responsible for the Investment Canada Act
and obtain approval of the Minister prior to acquiring control of a
“Canadian business” within the meaning of the Investment Canada
Act, where prescribed financial thresholds are exceeded.
Furthermore, limitations on the ability to acquire and hold our
subordinate voting shares and multiple voting shares may be imposed
by the Competition Act (Canada). This legislation permits
the Commissioner of Competition, or Commissioner, to review any
acquisition or establishment, directly or indirectly, including
through the acquisition of shares, of control over or of a
significant interest in us. Otherwise, there are no limitations
either under the laws of Canada or British Columbia, or in our
articles on the rights of non-Canadians to hold or vote our
subordinate voting shares and multiple voting shares. Any of these
provisions may discourage a potential acquirer from proposing or
completing a transaction that may have otherwise presented a
premium to our shareholders. See “Description of Securities—Certain
Important Provisions of Our Articles and the BCBCA.”
Because we are a corporation incorporated in British Columbia and
some of our directors and officers are resident in Canada, it may
be difficult for investors in the United States to enforce civil
liabilities against us based solely upon the federal securities
laws of the United States. Similarly, it may be difficult for
Canadian investors to enforce civil liabilities against our
directors and officers residing outside of
Canada
We
are a corporation incorporated under the laws of British Columbia
with our principal place of business in West Vancouver. Some of our
directors and officers and the auditors or other experts named
herein are residents of Canada and all or a substantial portion of
our assets and those of such persons are located outside the United
States. Consequently, it may be difficult for U.S. investors to
effect service of process within the United States upon us or our
directors or officers or such auditors who are not residents of the
United States, or to realize in the United States upon judgments of
courts of the United States predicated upon civil liabilities under
the Securities Act. Investors should not assume that Canadian
courts: (1) would enforce judgments of U.S. courts obtained in
actions against us or such persons predicated upon the civil
liability provisions of the U.S. federal securities laws or the
securities or blue sky laws of any state within the United States
or (2) would enforce, in original actions, liabilities against us
or such persons predicated upon the U.S. federal securities laws or
any such state securities or blue sky laws.
Similarly,
some of our directors and officers are residents of countries other
than Canada and all or a substantial portion of the assets of such
persons are located outside Canada. As a result, it may be
difficult for Canadian investors to initiate a lawsuit within
Canada against these non-Canadian residents. In addition, it may
not be possible for Canadian investors to collect from these
non-Canadian residents judgments obtained in courts in Canada
predicated on the civil liability provisions of securities
legislation of certain of the provinces and territories of Canada.
It may also be difficult for Canadian investors to succeed in a
lawsuit in the United States, based solely on violations of
Canadian securities laws.
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
Some
discussions in this prospectus may contain forward-looking
statements that involve risks and uncertainties. These statements
relate to future events or future financial performance. A number
of important factors could cause our actual results to differ
materially from those expressed in or implied by any
forward-looking statements made by us in this prospectus.
Forward-looking statements are often identified by words like:
“believe,” “expect,” “estimate,” “anticipate,” “intend,” “project,”
“may,” “will,” “should,” “plans,” “predicts,” “potential” or
“continue” or the negative of these terms or other comparable
terminology. These statements are only predictions and involve
known and unknown risks, uncertainties and other factors, including
the risks in the section titled “Risk Factors” beginning on
page 18, that may cause our or our industry’s actual results,
levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance
or achievements expressed or implied by these forward-looking
statements. In addition, you are directed to factors discussed in
the “Description of Business” section beginning on page 48,
the “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” section beginning on page 41, as
well as those discussed elsewhere in this prospectus.
Although
we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results,
levels of activity, or achievements. Except as required by
applicable law, including the securities laws of the United States
and Canada, we do not intend to update any of the forward-looking
statements to conform these statements to actual
results.
USE OF PROCEEDS
We estimate that the net proceeds from this offering will be
approximately US$3,000,000, assuming we sell only Common Units in
this offering, after deducting the estimated placement agent fees
and estimated offering expenses payable by us, based on the assumed
public offering price of US$4.00 per Common Unit.
Assuming net proceeds of US$3,000,000, we intend to use
US$1,500,000 of the net proceeds from this offering for clinical
trials of Bria-IMT™, which should allow us to advance Bria-IMT™
through phase IIa to an “End of Phase II” meeting with the FDA,
permitting us to determine the design of a registration study and
negotiate with the FDA to obtain a “Special Protocol Assessment”
(SPA) of the registration study. Under the SPA, the FDA would agree
with the design and endpoints of a registration study and if these
endpoints are met, would agree to grant marketing approval of the
drug. Initiation of the registration study will require additional
capital. In addition, US$150,000 will be devoted to the further
development of Bria-OTS™, which should progress Bria-OTS™ through
CMC manufacturing and an IND Filing. There will be $105,000 devoted
to the development of novel immunotherapy cell lines and novel
immunostimulators for the SARS-CoV-2, which would allow cGMP
manufacturing and an IND Filing. An additional $100,000 will be
used for the development of novel antibody-based therapeutics for
SARS-CoV-2 which will allow candidate selection and toxicology
testing through to opening an IND. The remainder will be for
Discovery Research and manufacturing (CMC) costs (approximately
US$540,000) and working capital and general corporate purposes
(approximately US$600,000).
We would receive additional gross proceeds of $5,000,000 if all of
the Warrants included in the units are exercised. We intend to use
any such proceeds for working capital and general corporate
purposes. General corporate purposes may include capital
expenditures.
We
may also use a portion of the net proceeds from this offering to
acquire or invest in complementary products, technologies or
businesses, although we have no present agreements or commitments
to do so.
Although
we currently anticipate that we will use the net proceeds from this
offering as described above, there may be circumstances where a
reallocation of funds is necessary. Due to the uncertainties
inherent in the clinical development and regulatory approval
process, it is difficult to estimate with certainty the exact
amounts of the net proceeds from this offering that may be used for
any of the above purposes on a stand-alone basis. Amounts and
timing of our actual expenditures will depend upon a number of
factors, including our sales, marketing and commercialization
efforts, regulatory approval and demand for our product candidates,
operating costs and other factors described under “Risk
Factors” in this prospectus. Accordingly, our management will
have flexibility in applying the net proceeds from this offering.
An investor will not have the opportunity to evaluate the economic,
financial or other information on which we base our decisions on
how to use the proceeds.
DILUTION
If
you invest in our Common Units in this offering, your interest will
be immediately diluted to the extent of the difference between the
public offering price per Common Unit in this offering and the as
further adjusted net tangible book value per common share after
this offering. Dilution results from the fact that the public
offering price per Common Unit is substantially in excess of the
net tangible book value per common share. As of January 31, 2020,
we had a historical net tangible book value of (negative $3.32
million, or negative $4.60 per common share). Our net tangible book
value per share represents total tangible assets less total
liabilities, divided by the number of common shares outstanding on
January 31, 2020.
After giving effect to the sale of Common Units in this offering at
an assumed public offering price of US$4.00 per Common Unit, after
deducting the estimated placement agent fees and estimated offering
expenses, assuming no sale of Pre-funded Units in the offering, our
as adjusted net tangible book value at January 31, 2020 would have
been $0.37 per share. This represents an immediate increase in as
adjusted net tangible book value of $4.97 per share to existing
shareholders and immediate dilution of $ 4.92 per share to new
investors.
The
following table illustrates this dilution per common
share:
Assumed
public offering price per Common Unit
(US$)(1) |
|
|
|
|
|
US$ |
4.00
|
|
|
|
|
|
|
|
|
|
|
Public
offering price per Common Unit(1) |
|
|
|
|
|
$ |
5.29
|
|
Historical
net tangible book value per common share as of January 31,
2020 |
|
$ |
(4.60 |
) |
|
|
|
|
Increase
in as adjusted net tangible book value per common share
attributable to the net proceeds from new investors |
|
$ |
4.97 |
|
|
|
|
|
As
adjusted net tangible book value per common share after this
offering |
|
|
|
|
|
$ |
0.37
|
|
Dilution
per common share to new investors participating in this
offering |
|
|
|
|
|
$ |
4.92
|
|
(1) U.S
Dollar amounts converted into Canadian dollars ($) as set out in
“Currency and Exchange Rates”.
We
may choose to raise additional capital due to market conditions or
strategic considerations even if we believe we have sufficient
funds for our current or future operating plans. To the extent that
we raise additional capital through the sale of equity or
convertible debt securities, the issuance of these securities could
result in further dilution to our equity holders.
The
above discussion and tables are based on 721,962 shares of common
stock outstanding as of January 31, 2020 and excludes the
following:
|
● |
178,528
shares of
common stock issuable upon the exercise of outstanding warrants, at
a weighted average exercise price of $44.49; |
|
|
|
|
● |
13,790
shares of common stock issuable upon the exercise of outstanding
compensation warrants, at a weighted average exercise price of
$42.00; |
|
|
|
|
● |
912 shares
of common stock issuable upon the granting of 912 warrants arising
from the exercise of 912 compensation warrants at a weighted
average exercise price of $90.00; |
|
|
|
|
● |
21,302 shares of common stock issuable upon the exercise of
outstanding options, at a weighted average exercise price of
$50.00; and
|
|
|
|
|
● |
an
estimated 1,000,000 common shares issuable upon exercise of the
Warrants included in the Common Units and an estimated 50,000
common shares issuable upon exercise of the placement agent
warrants.
|
DIVIDEND POLICY
We do
not anticipate that we will declare or pay dividends in the
foreseeable future on our common shares. Instead, we anticipate
that all of our earnings will be used for the operation and growth
of our business. Any future determination to declare cash dividends
would be subject to the discretion of our Board of Directors and
would depend upon various factors, including our results of
operations, financial condition and liquidity requirements,
restrictions that may be imposed by applicable law and our
contracts and other factors deemed relevant by our Board of
Directors.
CAPITALIZATION
The
following table sets forth our consolidated capitalization as of
January 31, 2020:
|
- |
on an
actual basis, as determined in accordance with IFRS;
and |
|
|
|
|
- |
on
an as-adjusted basis to reflect the net proceeds from our sale of
1,000,000 Common Units in this offering at the assumed public
offering price of US$4.00 per Common Unit, after deducting the
placement agent fees and the estimated offering expenses, assuming
no sale of Pre-funded Units.
|
This
table should be read in conjunction with the “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” and “Use of Proceeds” sections, as well as
our audited financial statements, included elsewhere in this
prospectus.
|
|
As of January 31, 2020 |
|
|
|
Actual |
|
|
Pro Forma Adjustments |
|
|
Pro Forma As Adjusted(2) |
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents, and short term investments |
|
$ |
93,692 |
|
|
|
3,911,409
|
(1) |
|
$ |
4,058,033 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, no par
value; unlimited number of shares authorized, 721,962 shares issued
and outstanding, actual; unlimited number of shares authorized,
1,721,962 shares issued and outstanding, pro forma; |
|
|
15,065,961 |
|
|
|
2,501,613 |
(1) |
|
|
17,598,082 |
|
Share based payment
reserve |
|
|
793,871 |
|
|
|
|
|
|
|
793,871 |
|
Warrant reserve |
|
|
2,271,911 |
|
|
|
1,838,811 |
(1) |
|
|
4,133,146 |
|
Accumulated other
comprehensive loss |
|
|
(135,490 |
) |
|
|
|
|
|
|
(135,490 |
) |
Retained
deficit |
|
|
(20,985,083 |
) |
|
|
(429,015 |
)(1) |
|
|
(414,098 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
stockholders’ equity (deficit) |
|
|
(2,988,830 |
) |
|
|
|
|
|
|
922,579
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
capitalization |
|
$ |
(2,988,830 |
) |
|
|
|
|
|
$ |
922,579
|
|
(1) |
Reflects assumed raise of US$4,000,000 and an assumed stock price
of US$3.68 per share net of transaction related fees and converted
into Canadian dollars as set out in “Currency and Exchange
Rates”.
|
|
|
(2) |
The
pro forma as adjusted information discussed above is illustrative
only and will be adjusted based on the actual public offering price
and other terms of our initial public offering determined at
pricing. |
Holders
We
had 50 holders of record for our common shares as of May 27,
2020.
ENFORCEMENT OF CIVIL
LIABILITIES
We are incorporated under the laws of British Columbia. Some of our
directors and officers, and some of the experts named in this
prospectus, are residents of Canada or otherwise reside outside of
the United States, and all or a substantial portion of their
assets, and all or a substantial portion of our assets, are located
outside of the United States. We have appointed an agent for
service of process in the United States, but it may be difficult
for shareholders who reside in the United States to effect service
within the United States upon those directors, officers and experts
who are not residents of the United States. It may also be
difficult for shareholders who reside in the United States to
realize in the United States upon judgments of courts of the United
States predicated upon our civil liability and the civil liability
of our directors, officers and experts under the United States
federal securities laws. There can be no assurance that U.S.
investors will be able to enforce against us, members of our Board
of Directors, officers or certain experts named herein who are
residents of Canada or other countries outside the United States,
any judgments in civil and commercial matters, including judgments
under the federal securities laws.
SELECTED CONSOLIDATED FINANCIAL
DATA
The
selected financial information set forth below has been derived
from our unaudited condensed consolidated interim financial
statements for the six months ended January 31, 2020 and our
audited financial statements for the fiscal years ended July 31,
2019, 2018, 2017, 2016 and 2015. You should read the following
summary financial data for the six months ended January 31, 2020
and the years ended July 31, 2019 and 2018 together with our
historical financial statements and the notes thereto included
elsewhere in this prospectus and with the information set forth in
the section titled “Management’s Discussion and Analysis of
Financial Conditions and Results of Operations”. The audited
financial statements for the years ended July 31, 2017, 2016 and
2015 are not included in this prospectus.
|
|
As of
January 31, |
|
|
As of July
31, |
|
|
|
2020 |
|
|
2019 |
|
|
2018 |
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
Balance
Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
|
93,692 |
|
|
|
192,916 |
|
|
|
938,448 |
|
|
|
1,264,429 |
|
|
|
171,865 |
|
|
|
464,732 |
|
Total
Assets |
|
|
631,852 |
|
|
|
546,259 |
|
|
|
2,977,140 |
|
|
|
2,039,199 |
|
|
|
1,091,587 |
|
|
|
1,660,288 |
|
Total
Liabilities |
|
|
3,620,682 |
|
|
|
1,392,396 |
|
|
|
1,745,850 |
|
|
|
1,104,147 |
|
|
|
63,470 |
|
|
|
152,425 |
|
Total
Shareholders’ Equity (deficit) |
|
|
(2,988,830 |
) |
|
|
(846,137 |
) |
|
|
1,231,290 |
|
|
|
935,052 |
|
|
|
1,028,117 |
|
|
|
1,507,863 |
|
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The
following discussion and analysis should be read in conjunction
with our financial statements and related notes included elsewhere
in this prospectus. This discussion and other parts of this
prospectus contain forward-looking statements based upon current
expectations that involve risks and uncertainties. Our actual
results and the timing of selected events could differ materially
from those anticipated in these forward-looking statements as a
result of several factors, including those set forth under “Risk
Factors” and elsewhere in this prospectus.
The
preparation of financial statements in conformity with these
accounting principles requires us to make estimates and assumptions
that affect the reported amounts of assets and liabilities,
disclosure of contingent liabilities at the financial statement
date and reported amounts of revenue and expenses during the
reporting period. On an on-going basis, we review our estimates and
assumptions. The estimates were based on historical experience and
other assumptions that we believe to be reasonable under the
circumstances. Actual results are likely to differ from those
estimates or other forward-looking statements under different
assumptions or conditions, but we do not believe such differences
will materially affect our financial position or results of
operations. Our actual results may differ materially as a result of
many factors, including those set forth under the headings entitled
“Special Note Regarding Forward-Looking Statements” and
“Risk Factors”.
Recent
Developments
Conversion
of Certain Convertible Notes
During
the year ended July 31, 2019, 22,488 shares were issued at $30.00
per share in respect of the partial conversion of certain
Convertible Notes. Upon exercise of these Convertible Notes,
Noteholders received 22,488 warrants with an exercise price of
$42.00, expiring within three years. On April 23, 2019, the Company
revised the exercise price of these warrants from $42 to $36, and
all future warrants to be issued in respect of the conversion of
the balance of the Convertible Notes.
Repayment
of Convertible Notes
On
September 10, 2019, the Convertible Notes were repaid in the total
amount of $477,216 (US$ 362,819).
Changes
in warrants, compensation warrants and options
During
year ended July 31, 2019, 3,333 shares were issued in respect of
3,333 warrants that were exercised at an exercise price of $42.00
for gross proceeds of $140,000.
On
August 19, 2019, 28,333 warrants and 1,983 compensation warrants
expired.
On
September 9, 2019, the Company issued a total of 166 stock options
to a consultant, which vested immediately and expire on September
9, 2024.
On
November 1, 2019, 2,107 stock options expired and on December 21,
2019, 3,405 warrants expired.
On
February 14, 2020, 833 stock options expired and on March 22, 2020,
500 stock options expired.
Private
Placements
On
February 26, 2019, BriaCell announced a non-brokered private
placement financing of 16,667 common shares of the Company at a
price of $30.00 per common share for gross proceeds of $500,000.
Recently-appointed Director of the Company, Jamieson Bondarenko,
purchased the 16,667 common shares. Upon closing of the offering,
Mr. Bondarenko had a beneficial ownership of an aggregate of 76,902
common shares, representing approximately 13.7% of BriaCell’s
issued and outstanding common shares.
On
April 1, 2019, BriaCell announced that it completed a non-brokered
private placement of 99,117 common shares of the Company at a price
of $30.00 per common share for gross proceeds of $2,973,524 (the
“Private Placement”) which includes Mr. Bondarenko’s $500,000
equity investment.
On
September 9, 2019, the Company closed its previously-announced
non-brokered private placement (the “September Offering”) of common
shares in the capital of the Company. Under the September Offering,
the Company issued a total of 40,300 common shares at a price of
$21.00 per common share for gross proceeds of $846,300.49
(“September 2019 Private Placement”).
On
October 15, 2019, the Company completed non brokered private
placement of 27,069 common shares at a price of $21.00 per common
share for gross proceeds of $568,444 (“October 2019 Private
Placement”).
Loan
agreements
On
December 3, 2019, the Company received an unsecured US$100,000 loan
from a third party, which bears interest at 2.5% annually. The loan
was repayable on or before March 26, 2020, after which the interest
rate increases to 15% annually.
On
January 27, 2020, the Company received an unsecured US$50,000 loan
from a third party, which bears interest at 2.5% annually. The loan
was repayable on or before March 26, 2020, after which the interest
rate increases to 15% annually.
On
February 20, 2020, the Company received an unsecured US$50,000 loan
from a third party, which bears interest at 2.5% annually. The loan
was repayable on or before March 26, 2020, after which the interest
rate increases to 15% annually.
On
April 24, 2020, the Company received a $40,000 loan from the Canada
Emergency Business Account (“CEBA Loan”). The CEBA Loan bears 0%
interest until December 31, 2022. If the balance is not repaid by
December 31, 2022, the remaining balance will be converted to a
3-year term loan at 5% annual interest, paid monthly, effective
January 1, 2023. The full balance must be repaid by no later than
December 31, 2025. No principal payments are required until
December 31, 2022. Principal repayments can be voluntarily
made at any time without fees or penalties. $10,000 of the CEBA
Loan may be forgiven provided that the outstanding balance is
$40,000 as at December 31, 2020, and that $30,000 is repaid
between January 1, 2021 and December 31,
2022.
On
May 1, 2020 the Company received US$127,030 as a loan from the
Paycheck Protection Program in the United States (the “Program”).
The terms of the Program provide that a portion of the loan may be
forgiven, to the extent that the amounts spent during the eight
week period following the first disbursement of the loan are
incurred as follows: (i) payroll costs, (ii) interest payments on
mortgages incurred before February 15, 2020, (iii) rent payments on
leases in effect before February 15, 2020, and (iv) utility
payments for which service began before February 15, 2020. The
unforgiven part of the loan must be repaid within two years and
bears interest at 1% per annum.
New
Board Composition
In
February and March 2019, the Company’s Board of Directors was
substantially restructured with the appointment of Jamieson
Bondarenko, Dr. Rebecca Taub and Vaughn C. Embro-Pantalony to
replace three resigning directors. Additionally, on August 12,
2019, Richard Berman was appointed to our Board of Directors. After
these restructuring events, the current Board of Directors consists
of:
|
● |
Dr.
William V. Williams, Director and Chief Executive
Officer; |
|
|
|
|
● |
Jamieson
Bondarenko, Director and Chairman of the Board; |
|
|
|
|
● |
Dr.
Charles Wiseman, Director; |
|
|
|
|
● |
Dr.
Rebecca Taub, Director |
|
|
|
|
● |
Vaughn
C. Embro-Pantalony, Director; and |
|
|
|
|
● |
Richard
Berman, Director |
Overview
Critical
Accounting Policies and Estimates
1. |
Critical Estimates and Judgements |
The
preparation of these consolidated financial statements requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the
financial statements and reported amounts of expenses during the
reporting period. Actual outcomes could differ from these
estimates. The financial statements include estimates which, by
their nature, are uncertain. The impacts of such estimates are
pervasive throughout the financial statements, and may require
accounting adjustments based on future occurrences. Revisions to
accounting estimates are recognized in the period in which the
estimate is revised and also in future periods when the revision
affects both current and future periods.
The
critical judgments and significant estimates in applying accounting
policies that have the most significant effect on the amounts
recognized in the consolidated financial statements are:
|
● |
The
series of loans made to the subsidiary company are considered part
of the parent company’s net investment in a foreign operation as
the Company does not plan to settle these balances in the
foreseeable future. As a result of this assessment, the unrealized
foreign exchange gains and losses on the intercompany loans are
recorded through comprehensive loss. If the Company determined that
settlement of these amounts was planned or likely in the
foreseeable future, the resultant foreign exchange gains and losses
would be recorded through profit or loss. |
|
● |
The
change in the fair value of the unsecured convertible loan is based
on an estimate determined by the Black-Scholes Model. |
|
● |
Preparation
of the consolidated financial statement on going concern basis,
which contemplates the realization of assets and payments of
liabilities in the ordinary course of business. Should the Company
be unable to continue as a going concern, it may be unable to
realize the carrying value of its assets and to meet its
liabilities as they become due. |
2. |
New Accounting Policies Adopted |
During
the year ended July 31, 2019, the following new accounting policies
were adopted.
IFRS
9 – Financial instruments (“IFRS 9”) was issued by the IASB its
final form in July 2014 and will replace IAS 39 Financial
Instruments: Recognition and Measurement (“IAS 39”). IFRS 9 uses a
single approach to determine whether a financial asset is measured
at amortized cost or fair value, replacing the multiple rules in
IAS 39. The approach in IFRS 9 is based on how an entity manages
its financial instruments in the context of its business model and
the contractual cash flow characteristics of the financial assets.
Most of the requirements in IAS 39 for classification and
measurement of financial liabilities were carried forward unchanged
to IFRS 9. The new standard also requires a single impairment
method to be used, replacing the multiple impairment methods in
IAS39. The standard is effective for annual periods beginning on or
after January 1, 2018. Management adopted the standard as August 1,
2018 and assed that the adoption of IFRS 9 did not have a
significant impact to the consolidated financial
statements.
IFRS
15 - Revenue from contracts with customers (“IFRS 15”) proposes to
replace IAS 18 – Revenue, IAS 11 – Construction contracts and some
revenue-related interpretations. The standard contains a single
model that applies to contracts with customers and two approaches
to recognizing revenue: at a point in time or over time. The model
features a contract-based five step analysis of transaction to
determine whether, how much and when revenue is recognized. New
estimates and judgmental thresholds have been introduced, which may
affect the amount and/or timing of revenue recognized. IFRS 15 is
effective for annual periods beginning on or after January 1, 2018.
Earlier adoption is permitted. The Company adopted the standard as
of August 1, 2019. Since then has not yet generated any revenues,
the Company was no impact to the consolidated financial statements
as a result of the adoption of this standard.
3. |
Accounting Standards Issued but Not Yet Effective |
Certain
pronouncements were issued by the IASB or the IFRIC that are
mandatory for future accounting periods. Many are not applicable to
or do not have a significant impact on BriaCell and have been
excluded from the list below. The following have not yet been
adopted and are being evaluated to determine their impact on
BriaCell.
IFRS
16 - Leases (“IFRS 16”) replaces IAS 17, Leases (“IAS 17”). The new
model requires the recognition of almost all lease contracts on a
lessee’s statement of financial position as a lease liability
reflecting future lease payments and a ‘right-of-use asset’ with
exceptions for certain short-term leases and leases of low-value
assets. In addition, the lease payments are required to be
presented on the statement of cash flow within operating and
financing activities for the interest and principal portions,
respectively. IFRS 16 is effective for annual periods beginning on
or after January 1, 2019, with early adoption permitted if IFRS 15,
Revenue from Contracts with Customers, is also applied. Based on
the information currently available, the Company estimates that it
will recognize a lease liability and right to use asset as at
August 1, 2019. The Company is on track to complete its
implementation of IFRS 16 effective August 1, 2019.
Results
of Operations
Comparison of the three months ended January, 2020, compared to the
three months ended January, 2019
Research
Costs
Research
costs are comprised primarily of (i) salaries and wages to Company
employees at our laboratory, (ii) clinical trials and
investigational drug costs, which include the testing and
manufacture of our investigational drugs and costs of our clinical
trials, (iii) licensing of our immunotherapy and (iv) legal fees in
respect of maintaining and expanding our portfolio of
patents.
For
the three-month period ended January 31, 2020, research costs
amounted to $1,216,051, as compared to $1,556,074 for the
three-month period ended January 31, 2019.
General
and Administrative Expenses
For
the three-month period ended January 31, 2020, general and
administrative expenses amounted to $662,611, as compared to
$174,609 for the three-month period ended January 31, 2019. The
increase is primarily due to an increase of professional fees
incurred as part of our financing efforts, offset by a decrease in
shareholder communication expenses.
For
the three-month period ended January 31, 2020, share based
compensation amounted to $nil, as compared to $58,835 for the
three-month period ended January 31, 2019.
Interest
Income
For
the three-month period ended January 31, 2020, interest income
amounted to $nil, as compared to $7,013 for the three-month period
ended January 31, 2019. Interest income earned during each quarter
is a function of the amount of funds held in interest bearing
accounts.
Interest
expense
For
the three-month period ended January 31, 2020, interest expense
amounted to $3,952, as compared to $9,849 for the three-month
period ended January 31, 2019. Interest expense during the current
period relates to credit card interest charges and interest on the
short term loan. Interest expense in the prior period was incurred
as a result of the issuance of interest bearing convertible debt in
March 2018. The decrease in the period in 2020 is as a result of a
decrease in the amount of outstanding debt and the repayment of the
convertible debt in September 2019.
Change
in fair value of convertible debt
For
the three-month period ended January 31, 2020, the increase in fair
value of convertible debt amounted to $nil, as compared $208,746
for the three-month period ended January 31, 2019. The movement
during each period is based on the fair value at the end of the
period. In September 2019, the Company repaid the convertible
debt.
Foreign
Exchange Loss
For
the three-month period ended January 31, 2020, our foreign exchange
loss was $332, as compared to $nil for the three-month period ended
January 31, 2019. The Company is exposed to financial risk related
to the fluctuation of foreign exchange rates. The Company operates
in the United States and Canada, most of its monetary assets are
held in Canadian dollars and most of its expenditures are made in
US dollars. The Company has not hedged its exposure to currency
fluctuations.
Loss
for the period
The Company reported a loss of $1,882,946 for the three-month
period ended January 31, 2020, as compared to a loss of $1,583,608
for the three-month period ended January 31, 2019. The primary
reason for increase in the loss in 2020 is primarily due to
increased general and administration costs.
Comprehensive
loss for the period
The
Company reported a comprehensive loss of $1,895,900 for the
three-month period ended January 31, 2020, as compared to a
comprehensive loss of $1,566,309 for the three-month period ended
January 31, 2020. The primary reason for the increase in the
loss in 2020 is due to the increased general and administration
costs incurred in connection with professional fees.
The
difference between net loss and comprehensive loss results from the
foreign currency translation adjustment that arises upon the
translation of the accounting records of the Company’s US
subsidiary, whose functional currency is the US dollar into
Canadian dollars for financial statement presentation
purposes.
Comparison of the six months ended January 31, 2020, compared to
the six months ended January 31, 2019
Research
Costs
Research
costs are comprised primarily of (i) salaries and wages to Company
employees at our laboratory, (ii) clinical trials and
investigational drug costs, which include the testing and
manufacture of our investigational drugs and costs of our clinical
trials, (iii) licensing of our immunotherapy and (iv) legal fees in
respect of maintaining and expanding our portfolio of
patents.
For
the six-month period ended January 31, 2020, research costs
amounted to $2,220,697, as compared to $2,549,275 for the six-month
period ended January 31, 2019.
General
and Administrative Expenses
For
the six-month period ended January 31, 2020, general and
administrative expenses amounted to $1,220,122, as compared to
$465,637 for the six month period ended January 31, 2019. The
increase is primarily due to an increase of professional fees
incurred as part of our financing efforts, offset by a decrease in
shareholder communication expenses.
For
the six-month period ended January 31, 2020, share based
compensation was $1,779, as compared to $60,521 for the six-month
period ended January 31, 2019. The current charge relates to the
fair value of the options that were issued during this
period.
Interest
Income
For
the six-month period ended January 31, 2020, interest income
amounted to $nil, as compared to $11,327 for the six-month period
ended January 31, 2019. Interest income earned during each quarter
is a function of the amount of funds held in interest bearing
accounts.
Interest
expense
For
the six-month period ended January 31, 2020, interest expense
amounted to $6,208, as compared to $23,148 for the six-month period
ended January 31, 2019. Interest expense during the current period
relates to credit card interest charges and interest on the short
term loan. Interest expense in the prior period was incurred as a
result of the issuance of interest bearing convertible debt in
March 2018. The decrease in the period in 2020 is as a result of a
decrease in the amount of outstanding debt and the repayment of the
convertible debt in September 2019.
Change
in fair value of convertible debt
For
the six-month period ended January 31, 2020, the increase in fair
value of convertible debt amounted to $79,119, as compared to a
decrease of $456,119 for the six-month period ended January 31,
2019. The movement during each period is based on the fair value at
the end of the period. In September 2019, the Company repaid the
convertible debt.
Foreign
Exchange Loss
For
the six-month period ended January 31, 2020, the foreign exchange
loss of $20,096, as compared to $nil for the six-month period ended
January 31, 2019. The Company is exposed to financial risk related
to the fluctuation of foreign exchange rates. The Company operates
in the United States and Canada, most of its monetary assets are
held in Canadian dollars and most of its expenditures are made in
US dollars. The Company has not hedged its exposure to currency
fluctuations.
Loss
for the period
The
Company reported a loss of $3,548,021 for the six-month period
ended January 31, 2020, as compared to a loss of $2,631,135 for the
six-month period ended January 31, 2019. The primary reason for the
increase in the loss in 2020 is due to the increased general and
administration costs.
Comprehensive
loss for the period
The
Company reported a comprehensive loss of $3,559,216 for the
six-month period ended January 31, 2020, as compared to a
comprehensive loss of $2,607,796 for the six-month period ended
January 31, 2020. The primary reason for the increase in the loss
in 2020 is due to the increased general and administration
costs.
The
difference between net loss and comprehensive loss results from the
foreign currency translation adjustment that arises upon the
translation of the accounting records of the Company’s US
subsidiary, whose functional currency is the US dollar into
Canadian dollars for financial statement presentation
purposes.
Comparison of the year ended July 31, 2019, compared to the year
ended July 31, 2018
Research
Costs
Research
costs are comprised primarily of (i) salaries and wages to Company
employees at our laboratory, (ii) clinical trials and
investigational drug costs, which include the testing and
manufacture of our investigational drugs and costs of our clinical
trials, (iii) licensing of our immunotherapy, and (iv) legal fees
in respect of maintaining and expanding our portfolio of
patents.
For
the year ended July 31, 2019, research costs amounted to
$4,917,287, as compared to $3,112,579 for the year ended July 31,
2018. The increase in research costs is as a result of supporting
the Company’s ongoing Phase I/IIa clinical trial and relates
primarily to increased clinical trial expenses, including the
development of new Bria-IMT™ cell banks. BriaCell also has
contracted with a second supplier of Bria-IMT™ and there is ongoing
formulation work to develop a more user-friendly formulation that
does not require culturing cells and same day
irradiation.
Work
also has begun on the development of Bria-OTSTM and
BriaCell has submitted five grant applications, applying for
non-dilutive funding to support our research efforts, using our
grant consultant, the FreeMind Group.
General
and Administrative Expenses
For
the year ended July 31, 2019, general and administrative expenses
amounted to $1,244,471, as compared to $1,387,713 for the year
ended July 31, 2018. The decrease is primarily due to decrease of
consulting fees.
Share
based Compensation
For
the year ended July 31, 2019, share based compensation of $60,586,
as compared to $476,211 for the year ended July 31, 2018. The
current charge relates to the tail end of the fair value of the
options that were issued during prior periods.
Interest
Income
For
the year ended July 31, 2019, interest income amounted to $12,004,
as compared to $15,991 for the year ended July 31, 2018. Interest
income earned during each quarter is a function of the amount of
funds held in interest bearing accounts.
Interest
expense
For
the year ended July 31, 2019, interest expense amounted to $31,317,
as compared to $20,364 for the year ended July 31, 2018. Interest
expense is incurred as a result of the issuance of interest bearing
convertible notes in March 2018. The prior period includes the
issuance costs of the convertible debt.
Change
in fair value of convertible debt
For
the year ended July 31, 2019, the increase in fair value of the
convertible debt amounted to $420,58,5 as compared to a decrease of
$407,709 for the year ended July 31, 2018.
Foreign
Exchange Gain
For
the year ended July 31, 2019, the foreign exchange gain of $31,410,
as compared to a loss of $24,078 for the year ended July 31, 2018.
The Company is exposed to financial risk related to the fluctuation
of foreign exchange rates. The Company operates in the United
States and Canada, most of its monetary assets are held in Canadian
dollars and most of its expenditures are made in US dollars. The
Company has not hedged its exposure to currency
fluctuations.
Loss
for the year
The
Company reported a loss for the year ended July 31, 2019 of
$5,789,662, as compared to a loss of $5,412,663 for the year ended
July 31, 2018. The primary reason for increase in the loss during
the current period is due to the increased research activities
compared to the prior period.
Comprehensive
loss for the year
The
Company reported a comprehensive loss of $5,808,443 for the year
ended July 31, 2019, as compared to a comprehensive loss of
$5,446,003 for the year ended July 31, 2018. The primary reason for
the increase in the loss during the current period is due to the
increased research activities compared to the prior
period.
The
difference between net loss and comprehensive loss results from the
foreign currency translation adjustment that arises upon the
translation of the accounting records of the Company’s US
subsidiary, whose functional currency is the US dollar into
Canadian dollars for financial statement presentation
purposes.
Comparison
of the year ended July 31, 2018 to the year ended July 31,
2017
Research
Costs
For
the year ended July 31, 2018, research costs amounted to $3,112,579
as compared to $2,125,941 for the year ended July 31, 2017. The
increase in research costs is as a result of supporting the
Company’s ongoing Phase I/IIa clinical trial and relates primarily
to increased clinical trial expenses, including the development of
new BriaVax™ (a.k.a. Bria-IMT™) cell banks. BriaCell also has
contracted with a second supplier of BriaVax™ (a.k.a. Bria-IMT™)
and there is ongoing formulation work to develop a more
user-friendly formulation that does not require culturing cells and
same day irradiation. Work also has begun on the development of
second generation BriaVax™ (a.k.a. Bria-IMT™) and BriaCell has
submitted five grant applications, applying for non-dilutive
funding to support our research efforts, using our grant
consultant, the FreeMind Group.
General
and Administrative Expenses
For
the year ended July 31, 2018, general and administrative expenses
amounted to $1,387,713, as compared to $820,281 for the year ended
July 31, 2017. The increase is primarily to an increase in
consulting, professional fees and Shareholder communications
incurred in 2018 as compared to 2017 and is in line with the
Companies increased research activities and increase investor
relations activities. In addition, we incurred certain expenses in
connection with the debt financing.
Share-based
Compensation
For
the year ended July 31, 2018, share-based compensation amounted to
$476,211, as compared to $272,014 for the year ended July 31, 2017.
The increase in share-based compensation in the current period is
as a result of increased number of stock options granted in the
year ended July 31, 2018 as compared to the prior year.
Interest
Income
For
the year ended July 31, 2018, interest income amounted to $15,991,
as compared to $6,428 for the year ended July 31, 2017. Interest
income earned during each quarter is a function of the amount of
funds held in interest bearing accounts.
Interest
expense
For
the year ended July 31, 2018, interest expense amounted to $20,364,
as compared to $nil for the year ended July 31, 2017. Interest
expense was incurred from the convertible notes.
Change
in fair value of convertible debt
For
the year ended July 31, 2018, change in fair value of convertible
debt amounted to $407,709, as compared to $nil for the year ended
July 31, 2017.
Foreign
Exchange Gain
For
the year ended July 31, 2018, the foreign exchange loss amounted to
$24,078, as compared to a loss of $8,913 for the year ended July
31, 2017. The Company is exposed to financial risk related to the
fluctuation of foreign exchange rates. The Company operates in the
United States and Canada, most of its monetary assets are held in
Canadian dollars and most of its expenditures are made in US
dollars. The Company has not hedged its exposure to currency
fluctuations.
Loss
for the year
The
Company reported a loss of $5,412,663 for the year ended July 31,
2018, as compared to a loss of $3,220,721 for the year ended July
31, 2017. The primary reason for increase in the loss in 2018 is
due to the increase in research activities, general and
administrative expenses and share-based compensation.
Comprehensive
loss for the year
The
Company reported a comprehensive loss of $5,446,003 for the year
ended July 31, 2018, as compared to a comprehensive loss of
$3,178,893 for the year ended July 31, 2017. The primary reason for
increase in the loss in 2018 is due to the increase in research
activities, General and Administrative Expenses and Share-based
Compensation.
The
difference between net loss and comprehensive loss results from
Foreign currency translation adjustment that arises upon the
translation of the accounting records of BTC who’s functional
currency is the US dollar into Canadian dollars for financial
statement presentation purposes.
Going
Concern Uncertainty
The
financial statements have been prepared on a going concern basis
which assumes that the Company will be able to realize its assets
and discharge its liabilities in the normal course of business for
the foreseeable future. The continuing operations of the Company
are dependent upon its ability to continue to raise adequate
financing and to commence profitable operations in the
future.
As at
July 31, 2019, the Company has total assets of $546,259 (July 31,
2018 - $2,977,140) and a negative working capital balance of
$1,185,354 (July 31, 2018 positive - $700,350).
It is
management’s opinion that the Company will require additional
funding, either through debt or equity issuances, in order to
maintain its research and developmental activities. To this end,
the company is currently raising funds to continue to funds its
operation. These uncertainties may cast significant doubt on the
Company’s ability to continue as a going concern.
Liquidity
and Capital Resources
Changes
in capital resources during the three months ended January 31, 2020
and the year ended July 31, 2019 are described below.
The
accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. As of
January 31, 2020 and July 31, 2019, the Company had cash and cash
equivalents of $93,692 and $192,916, respectably and negative
working capital of $3,318,676 and $1,185,354, respectively. The
Company has incurred significant operating losses since inception
and continues to generate losses from operations and as of January
31, 2020 and July 31, 2019, the Company has an accumulated deficit
of $20.9 million and $18.1 million. These matters raise substantial
doubt about the Company’s ability to continue as a going concern
within one year after the date such financial statements are
issued. The condensed interim consolidated financial statements for
the three and six months ended January 31, 2020 and the audited
financial statements for the year ended July 31, 2019 do not
include any adjustments relating to the recoverability and
classification of asset amounts or the classification of
liabilities that might be necessary should the Company be unable to
continue as a going concern.
Historically,
the Company has financed its operation through private and public
placement of equity securities, as well as debt financing. The
Company’s ability to fund its longer term cash requirements is
subject to multiple risks, many of which are beyond its control.
The Company intends to raise additional capital, either through
debt or equity financings in order to achieve its business plan
objectives. Management believes that it can be successful in
obtaining additional capital; however, no assurance can be provided
that the Company will be able to do so. There is no assurance that
any funds raised will be sufficient to enable the Company to attain
profitable operations or continue as a going concern. To the extent
that the Company is unsuccessful, the Company may need to curtail
or cease its operations and implement a plan to extend payables or
reduce overhead until sufficient additional capital is raised to
support further operations. There can be no assurance that such a
plan will be successful
Six
months
ended January 31, 2020
During
the six-month period ended January 31, 2020, the Company’s overall
position of cash and cash equivalents decreased by $90,285 from the
year ended July 31, 2019. This decrease in cash can be attributed
to the following:
The
Company’s net cash used in operating activities during the
six-month period ended January 31, 2020 was $1,226,477, as compared
to $2,061,617 for the six-month period ended January 31, 2019. This
decrease is contributed mostly to an increase in accounts payable
and accrued liabilities.
Cash
provided from investing activities during the six-month period
ended January 31, 2020 was $nil, as compared to cash provided to
investment activities of $1,300,000 for the six-month period ended
January 31, 2019. The cash provided in 2019 was due to the release
of short-term investments.
Cash
provided by financing activities for the six-month period ended
January 31, 2020 was $1,136,192, as compared to $140,000 for the
six-month period ended January 31, 2019. Cash provided in 2020
resulted from two private placements and a short term loan offset
by the repayment of the unsecured convertible loan.
Year
ended July 31, 2019
During
the year ended July 31, 2019, the Company’s overall position of
cash and cash equivalents decreased by $758,068, as compared to a
decrease of $258,314 for the year ended July 31, 2018. This
decrease in cash can be attributed to the following:
The
Company’s net cash used in operating activities during the year
ended July 31, 2019 was $5,094,895, as compared to $4,958,593 for
the year ended July 31, 2018. This increase in 2019 is primarily
due to the increase in research costs.
Cash
provided from investing activities during the year ended July 31,
2019 was $1,341,043, as compared to cash used to investment
activities of $591,043 for the year ended July 31, 2018. The cash
provided in 2019 was due to the release of short-term investments
compared to the investment of cash in short-term investments in
2018.
Cash
provided by financing activities for the year ended July 31, 2019
was $2,995,784, as compared to $5,291,322 for the year ended July
31, 2018. Cash provided in 2019 resulted from a private placement
and exercise of warrants and the cash provided in 2018 resulted
from private placements and the issuance of Convertible
Notes.
Off-balance
Sheet Arrangements
None.
Tabular
Disclosure of Contractual Obligations
The
following table summarizes our contractual obligations as of July
31, 2019 and the effect those commitments are expected to have on
our liquidity and cash flow.
|
|
|
|
|
Payments
due by periods |
|
|
|
Total |
|
|
Less than
1 year |
|
|
1-3
years |
|
|
3-5
years |
|
|
More than
5 years |
|
Unsecured
Convertible Loans(1) |
|
$ |
396,224 |
|
|
$ |
396,224 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
Office
lease |
|
|
42,000 |
|
|
|
42,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total |
|
$ |
438,224 |
|
|
$ |
438,224 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
(1)
The unsecured convertible loans may be converted into common stock
of the company or repaid in cash. The loan was repaid in September
2019.
DESCRIPTION OF
BUSINESS
Overview
of the Company
BriaCell
is an immuno-oncology biotechnology company with a strong focus on
cancer immunotherapy. Immunotherapies have come to the forefront in
the fight against cancer. They harness the body’s own immune system
to recognize and destroy cancer cells. BriaCell owns the US patent
to SV-BR-1-GM (Bria-IMT™), a whole-cell targeted immunotherapy for
cancer (U.S. Patent No. 7,674,456), as well as patents related to
PKCδ inhibitors (U.S. Patent Nos. 9,364,460 and 9,572,793). The
Company is currently advancing its targeted immunotherapy program
by prioritizing a Phase I/IIa clinical trial with Bria-IMT™ in
combination with an immune checkpoint inhibitor and a companion
diagnostic test, BriaDx™, to identify patients most likely to
benefit from Bria-IMT™. The Bria-IMT™ regimen was evaluated in 4
patients in a prior study in 2004 – 2006 by Dr. Charles Wiseman,
the scientific founder and member of the Board of Directors.
Encouraging results were obtained, especially in a patient who
matched Bria-IMT™ at the HLA-DRB3 allele and had a grade II tumor.
In 2017-2018 BriaCell evaluated 23 patients with advanced breast
cancer with the Bria-IMT™ regimen and obtained confirmation of the
ability of the Bria-IMT™ regimen to induce regression of metastatic
breast cancer in patients who match Bria-IMT™ at least at one HLA
allele especially if they had grade I or grade II tumors. A
combination study with the immune checkpoint inhibitor Keytruda®
was initiated and the first patient dosing in the “combination
therapy” clinical trial occurred in September 2018. BriaCell
purchased the Keytruda for this study as BriaCell does not have an
agreement with Merck for the supply of Keytruda. Eleven patients
had been dosed in the combination therapy trial with Bria-IMT™ and
the immune checkpoint inhibitor Keytruda and subsequently dosing
with this combination was discontinued. The study was modified
under an amended protocol which evaluates the combination of the
Bria-IMT™ regimen with Incyte Corporation experimental drugs
INCMGA00012 (anti-PD-1 antibody similar to pembrolizumab) and
epacadostat (an inhibitor of the immune checkpoint enzyme
indoleamine dioxygenase (IDO)). The study is ongoing. Pending
consummation of the offering, Bria-IMT™ will also be evaluated in
an investigator-initiated Phase I/IIa study in combination with
pembrolizumab (Keytruda) by Dr. Saveri Bhattacharya, Principal
Investigator, in women with advanced breast cancer at Thomas
Jefferson University. Dr. Bhattacharya has been selected to receive
a grant from the Merck Investigator Studies Program for this study.
Merck will provide Keytruda to Thomas Jefferson University and Dr.
Saveri Bhattacharya for use in the combination study. BriaCell does
not have an agreement with Merck for the supply of Keytruda. The
Company has entered into the Study Agreement with Thomas Jefferson
University providing for the investigator-initiated Phase I/IIa
study by Dr. Bhattacharya and the Company’s supply of Bria-IMT™ to
Thomas Jefferson University and Dr. Bhattacharya. As consideration,
the Company shall pay Thomas Jefferson University a total budget of
$3,049,322.50. The FDA and Thomas Jefferson University’s internal
review board have approved the clinical protocol. Patients with
advanced breast cancer who have at least HLA that matches with
Bria-IMT™ will be eligible for the trial. Pending consummation of
the offering the study is expected to initiate in June 2020 with
safety and efficacy data to be released during 2021 and
2022.
The
Company was incorporated under the Business Corporations Act
(British Columbia) (“BCBCA”) on July 26, 2006 as Ansell Capital
Corp. The Company is listed on the TSX Venture Exchange (“TSXV”),
is quoted on the OTCQB marketplace and is also listed on the
Frankfurt Stock Exchange. The Company is developing a new therapy
for advanced breast cancer. The address for the Company’s
headquarters is Suite 300 – 235 15th Street, West Vancouver,
British Columbia, V7T 2X1. The Company’s corporate offices in the
United States are located at 820 Heinz Avenue, Berkley, California
94710. The Company’s two wholly owned subsidiaries BriaCell
Therapeutics Corp., a Delaware corporation (“BTC”) and Sapientia
Pharmaceuticals Inc., a Delaware corporation (“Sapientia”), were
formed on April 3, 2014 and September 20, 2012, respectively. The
Company’s registered agent in the United States is Paracorp
Incorporated located at 2804 Gateway Oaks Drive #100, Sacramento,
CA 95833.
On
July 24, 2017, the Company entered into a definitive share exchange
agreement (the “Share Exchange Agreement”) between BTC, Sapientia
and all the shareholders of Sapientia. Sapientia is a biotechnology
company based in Havertown, PA, that is developing novel targeted
therapeutics for multiple indications including several cancers and
fibrotic diseases. Pursuant to the terms of the Share Exchange
Agreement, BTC acquired from the Sapientia Shareholders all of the
issued and outstanding shares in the capital of Sapientia. As
consideration, the Sapientia Shareholders, received an aggregate of
8,333 common shares in the capital of BriaCell on a pro-rata basis,
which were issued on September 5, 2017. As part of the share
exchange, BriaCell acquired all rights, including composition of
matter patents, and preclinical study data to a novel therapeutic
technology platform, known as protein kinase C delta (PKCδ)
inhibitors, which represents a unique, highly-targeted approach to
treat cancer and to boost the immune system.
Market
It is
estimated that in 2019, approximately 268,600 women will be
diagnosed with breast cancer in the United States. According to the
National Breast Cancer Foundation, on every two minutes an American
woman is diagnosed with breast cancer and more than 40,500 die each
year. Although about 100 times less common than in women, breast
cancer also affects men. It is estimated that the lifetime risk of
men getting breast cancer is about 1 in 1,000, and the ACS
estimates that approximately 2,670 new cases of invasive male
breast cancer will be diagnosed and approximately 500 men will die
from breast cancer in 2019.
According
to the May 2019 “Global Oncology Trends 2019” report by the IQVIA
Institute, the global market for cancer drugs (including
immunotherapy drugs) is expected to reach nearly $240 billion by
the end of 2023, growing at a compound annual growth rate, or CAGR
of 9-12% between 2019 and 2023.
About
12.8% percent of women will be diagnosed with breast cancer at some
point during their lifetime. As of January 2019, there are over 3
million U.S. women who have been diagnosed with breast cancer.
Approximately 80% of cases present as invasive breast cancer. 6-10%
of new breast cancer diagnoses are Stage IV (metastatic or MBC,
cancer which has already spread to other organs). 20-30% of all
women diagnosed with breast cancer will develop MBC. Breast cancer
can be subdivided based on receptor status – the hormone receptors
for estrogen (ER) and progesterone (PR), collectively referred to
as hormone receptors (HR), and the Her2/neu growth factor receptor
(HER2). In one large study of breast cancer, 72.7% were found to be
HR+/HER2−, 12.2% were triple-negative (HR−/HER2−), 10.3% were
HR+/HER2+, and 4.6% were HR−/HER2+.1
1
Howlader, N.; Altekruse, S. F.; Li, C. I.; Chen, V. W.; Clarke, C.
A.; Ries, L. A.; Cronin, K. A., US incidence of breast cancer
subtypes defined by joint hormone receptor and HER2 status. J Natl
Cancer Inst 2014, 106 (5).
It is
estimated that over 150,000 women in the US are living with
metastatic breast cancer2. For those with metastatic
disease at diagnosis, their 5-year survival is 27%. 3
For patients who develop MBC after initially having localized
disease, if they had a good response to treatment (disease-free
interval of >24 months), their survival is similar to that of
patients with MBC at initial diagnosis, but if their disease-free
interval is <24 months, their prognosis is worse.4 We
currently propose that Bria-IMT’s indication will be for the
treatment of patients with metastatic breast cancer (MBC) who have
failed at least two lines of therapy. Similarly, another study
showed that the median overall survival among patients with de novo
stage IV MBC was 39.2 months while for patients with and relapsed
disease it was 27.2 months.5 Median progression free
survival after first-line therapy is only 9 months and the survival
benefit decreases with subsequent lines of therapy.6 A
recent study showed that of 386 patients with MBC, 374 (97%)
received first-line therapy, 254 (66%) received second-line
therapy, 175 (45%) received third-line therapy, and 105 (27%)
received therapy beyond third-line.7
Figure:
Overview of current drugs for breast cancer, demonstrating the
pattern of novel therapeutic introductions and significant market
uptake. These precedents demonstrate a strong market pull for
Bria-IMT™.
Drug |
|
Technology |
|
Company |
|
Indication |
|
2018
Sales US (Mil US$) |
|
|
2018
Sales Ex-US (Mil US$) |
|
|
2018
Sales WW (Mil US$) |
|
HERCEPTIN® (trastuzumab) |
|
Monoclonal
antibody |
|
Roche |
|
HER2+BC
& HER2+ metastatic gastric cancer |
|
|
2,955 |
|
|
|
4,140 |
|
|
|
7,096 |
|
IBRANCE® (palbociclib) in combination with fluvestrant or aromatase
inhibitor |
|
CDK
4/6 inhibitor |
|
Pfizer |
|
HR+/HER2-
MBC |
|
|
2,922 |
|
|
|
1,196 |
|
|
|
4,118 |
|
PERJETA® (pertuzumab) in combination with Herceptin® (trastuzumab)
and chemotherapy |
|
HER2/neu
receptor antagonist |
|
Roche |
|
HER2+
early BC that has a high likelihood of recurrence |
|
|
1,347 |
|
|
|
1,499 |
|
|
|
2,846 |
|
FASLODEX® (fulvestrant) |
|
Estrogen
receptor antagonist |
|
AstraZeneca |
|
HR+/HER2-
MBC |
|
|
537 |
|
|
|
491 |
|
|
|
1,028 |
|
KADCYLA® (ado-trastuzumab emtansine) |
|
HER2
targeted antibody & microtubule inhibitor conjugate |
|
Roche |
|
HER2+BC |
|
|
365 |
|
|
|
630 |
|
|
|
995 |
|
LYNPARZA® (olaparib) |
|
Poly
(ADP-ribose) polymerase (PARP) inhibitor |
|
AstraZeneca |
|
BC
& Ovarian cancer |
|
|
345 |
|
|
|
302 |
|
|
|
647 |
|
Verzenio® (abemaciclib) monotherapy or in combination with
fulvestrant or aromatase inhibitor |
|
CDK
4/6 inhibitor |
|
Eli
Lilly |
|
HR+/HER2-
MBC |
|
|
255 |
|
|
|
- |
|
|
|
255 |
|
KISQALI® (ribociclib) in combination with fluvestrant or aromatase
inhibitor |
|
CDK
4/6 inhibitor |
|
Novartis |
|
HR+/HER2-
MBC |
|
|
235 |
|
|
|
- |
|
|
|
235 |
|
2 Mariotto AB, Etzioni R, Hurlbert M, Penberthy L, Mayer
M. Estimation of the Number of Women Living with Metastatic Breast
Cancer in the United States. Cancer Epidemiol Biomarkers Prev. 2017
Jun;26(6):809-815.
3 Breast Cancer Facts
& Figures 2017-2018. Atlanta: American Cancer Society, Inc.
2017.
4 Lobbezoo, D. J. A.
et al. Prognosis of metastatic breast cancer subtypes: the hormone
receptor/HER2-positive subtype is associated with the most
favorable outcome. Breast Cancer Res. Treat. 141, 507–514
(2013).
5 Dawood S, Broglio
K, Ensor J, Hortobagyi GN, Giordano SH. Survival differences among
women with de novo stage IV and relapsed breast cancer. Ann Oncol.
2010 Nov; 21(11):2169–74.
6 Bonotto M,
Gerratana L, Iacono D, Minisini AM, Rihawi K, Fasola G, Puglisi F.
Treatment of Metastatic Breast Cancer in a Real-World Scenario: Is
Progression-Free Survival With First Line Predictive of Benefit
From Second and Later Lines? Oncologist.
7 Kotsakis A,
Ardavanis A, Koumakis G, Samantas E, Psyrri A, Papadimitriou C.
Epidemiological characteristics, clinical outcomes and management
patterns of metastatic breast cancer patients in routine clinical
care settings of Greece: Results from the EMERGE multicenter
retrospective chart review study. BMC Cancer. 2019 Jan
18;19(1):88.
The
best response to Bria-IMT™ to date is in patients who matched
Bria-IMT™ at 1 or more HLA alleles, with higher response rates for
patients with 2+ HLA allele matches. If one HLA allele match is
found to be sufficient, we will be able to treat ~50-60% of the
patient population, while patients with 2+ HLA matches constitutes
~15-35% of cases.8 We also saw higher clinical benefit
rates for patients with grade I/II tumors. Tumor differentiation in
breast cancer cell lines is often described by their classification
as Luminal, Basal A and Basal B subtypes, with Luminal representing
well differentiated and Basal B poorly differentiated tumors, and
Basal A an intermediate stage (“moderately” differentiated) (Neve
RM, Chin K, Fridlyand J, et al. A collection of breast cancer cell
lines for the study of functionally distinct cancer subtypes.
Cancer Cell. 2006;10(6):515-527. doi:10.1016/j.ccr.2006.10.008).
Yao and colleagues in 2005 identified a 9-gene signature (AURKB,
CENPI, DEPDC1, DEPDC1B, FAM83D, FGD3, NCAPH, TNFRSF18, FCGR1A)
discriminating poorly (grade 3) from moderately (grade 2)
differentiated tumors. (Yao F, Zhang C, Du W, Liu C, Xu Y.
Identification of gene-expression signatures and protein markers
for breast cancer grading and staging. PLoS One. 2015;10(9).
doi:10.1371/journal.pone.0138213) To understand the place of
SV-BR-1-GM in this model, we compared its RNA expression profile
with those of three other cell lines representing Luminal (MCF-7),
Basal A (MDA-MB-468) and Basal B (MDA-MB-231), using a 10-gene
signature (AURKB, CENPI, DEPDC1, DEPDC1B, FAM83D, FGD3, NCAPH,
DLGAP, KIF2C, VAV3) derived from those by Yao and colleagues. The
results, shown in Figure: Bria-IMTTM Clinical Experience in Grade
I/II Tumors below, demonstrate that Bria-IMT™ most closely clusters
with MDA-MB-468 and as such is considered a “moderately
differentiated” cell line.

Based on a
recent publication of patients with relapsed breast cancer, we
estimate that this will account for ~40% of relapsed metastatic
breast cancer cases (33% grade II and 7% grade I) (Sundquist M, Brudin L, Tejler G. Improved
survival in metastatic breast cancer 1985-2016. Breast. 2017
Feb;31:46-50. doi: 10.1016/j.breast.2016.10.005. Epub 2016 Nov 2).
In patients with relapsed disease, the overall survival following
relapse appears similar for those with grade II and grade III
tumors3. The market for breast cancer drugs is a
multibillion-dollar market with new drugs being approved on an
ongoing basis, indicating the shortage of safe and effective
treatments for this deadly disease. The Figure summarizes current
drugs on the market utilized in combination therapy along with
their reported market sales, which further supports market
potential for Bria-IMTTM to be used for combination
therapy for breast cancer patients.
We
propose the following calculation in order to show the rationale
behind the number of patients that we anticipate can be currently
treated by SV-BR-1-GM:
|
● |
There
are ~150,000 women with metastatic breast cancer in the
US9 |
|
● |
45%
will receive third line therapy10 = 68,000 patients
available |
|
● |
68,000
x ~50% (matched for 1 HLA allele group)11 = ~34,000
patients available for treatment12 |
|
● |
40% have
grade I/II tumors3
= ~13,600 patients available for
treatment |
These
assumptions above are limited to third or later lines of therapy.
There is also potential to move into second-line and first-line
treatment, which would markedly expand the population to be
treated.
Treatment
with a combination therapy comprised of Bria-IMT™ + checkpoint
inhibitor is expected to provide a new therapeutic option in
patients who currently have no effective therapeutic options. The
parallel development of BriaDx™ (companion diagnostic) by BriaCell,
as a strategy to identify those patients most likely to respond to
Bria-IMT™, may eventually lead to even higher response rates —
potentially substantially higher than currently achievable by other
treatments for breast cancer.
BriaCell
is in contact with several large pharmaceutical companies for
potential collaborations for the development of a combination
therapy with Bria-IMT™ and immune checkpoint inhibitors, and
already has in place a collaboration with Incyte Corporation. We
will continue to pursue these discussions with the goal of using
Bria-IMT™ in combination with checkpoint inhibitors. This will also
help increase the visibility of our therapy and may lead to
additional funding sources for future clinical trials.
Competition
Currently available therapeutic options for breast cancer offer
some hope for patients, but there is much room for improvement.
Comparable studies looking primarily at second line or later
treatment are shown in the Table. Evaluating response rates
(partial and complete responses = ORR), progression free survival
(PFS) and overall survival (OS) from clinical trials in similar
subjects with metastatic or recurrent breast cancer indicate that
response rates range from 6.9% up to 59%, depending on the
population studied and the intervention (median 24%). PFS ranges
from 8 weeks to 12 months (median 5 months) and OS from 6 months to
31 months (median 13 months).
8
Gragert, Loren, Abeer Madbouly, John Freeman, and Martin Maiers.
2013. “Six-Locus High Resolution HLA Haplotype Frequencies Derived
from Mixed-Resolution DNA Typing for the Entire US Donor Registry.”
Human Immunology.
9
Mariotto AB, Etzioni R, Hurlbert M, Penberthy L, Mayer M.
Estimation of the Number of Women Living with Metastatic Breast
Cancer in the United States. Cancer Epidemiol Biomarkers
Prev. 2017 Jun;26(6):809-815.
10
Kotsakis A, Ardavanis A, Koumakis G, Samantas E, Psyrri A,
Papadimitriou C. Epidemiological characteristics, clinical outcomes
and management patterns of metastatic breast cancer patients in
routine clinical care settings of Greece: Results from the EMERGE
multicenter retrospective chart review study. BMC Cancer. 2019 Jan
18;19(1):88.
11
Gragert, Loren, Abeer Madbouly, John Freeman, and Martin Maiers.
2013. “Six-Locus High Resolution HLA Haplotype Frequencies Derived
from Mixed-Resolution DNA Typing for the Entire US Donor Registry.”
Human Immunology.
12
Momenimovahed Z, Salehiniya H. Epidemiological characteristics of
and risk factors for breast cancer in the world. Breast Cancer
(Dove Med Press). 2019 Apr 10;11:151-164. SEER Cancer Statistics
Factsheets: Female Breast Cancer. National Cancer Institute.
Bethesda, MD; American Cancer Society. Breast Cancer Facts &
Figures 2017-2018. Atlanta: American Cancer Society, Inc.
2017.
Table:
Studies evaluating second-line or later treatment options. Data
depict an unpredictable response rate to treatment ranging from
6.9-59%, therefore establishing and confirming the opportunity for
Bria-IMT™. |
|
Study |
|
Treatment
& Design |
|
# of
Pts |
|
|
ORR |
|
|
PFS/TTP |
|
|
OS |
|
Perez13 |
|
Paclitaxel
Monotherapy |
|
|
212 |
|
|
|
21.5 |
% |
|
|
4.7
mo |
|
|
|
12.8
mo |
|
Seidman14 |
|
Gemcitabine
Monotherapy |
|
|
160 |
|
|
|
26 |
% |
|
|
|
|
|
|
|
|
Zelek15 |
|
Vinorelbine
Monotherapy |
|
|
40 |
|
|
|
25 |
% |
|
|
|
|
|
|
6
mo |
|
Licchetta16 |
|
Cyclophosphamide
and megestrol acetate |
|
|
29 |
|
|
|
31 |
% |
|
|
7.4
mo |
|
|
|
13.4
mo |
|
Harvey17 |
|
Docetaxel
Monotherapy 60 mg/m2 |
|
|
122 |
|
|
|
22.1 |
% |
|
|
12.7
wk |
|
|
|
10.6
mo |
|
|
|
Docetaxel
Monotherapy 75 mg/m2 |
|
|
146 |
|
|
|
23.3 |
% |
|
|
15.0
wk |
|
|
|
10.3
mo |
|
|
|
Docetaxel
Monotherapy 100 mg/m2 |
|
|
139 |
|
|
|
36.0 |
% |
|
|
16.6
wk |
|
|
|
12.3
mo |
|
Rivera18 |
|
Docetaxel
Monotherapy q3wk |
|
|
59 |
|
|
|
35.6 |
% |
|
|
5.7
mo |
|
|
|
18.3
mo |
|
|
|
Docetaxel
Monotherapy qwk |
|
|
59 |
|
|
|
20.3 |
% |
|
|
5.5
mo |
|
|
|
18.6
mo |
|
Gradishar19 |
|
ABI-007
(Nab paclitaxel) |
|
|
229 |
|
|
|
33 |
% |
|
|
23.0
wk |
|
|
|
65.0
wk |
|
|
|
Paclitaxel
Monotherapy |
|
|
225 |
|
|
|
19 |
% |
|
|
16.9
wk |
|
|
|
55.7
wk |
|
|
|
ABI-007
(Nab paclitaxel) 2nd line |
|
|
132 |
|
|
|
27 |
% |
|
|
20.9
wk |
|
|
|
56.4
wk |
|
|
|
Paclitaxel
Monotherapy 2nd line |
|
|
136 |
|
|
|
13 |
% |
|
|
16.1
wk |
|
|
|
46.7
wk |
|
Perez20 |
|
Ixabepilone
Monotherapy |
|
|
126 |
|
|
|
11.5 |
% |
|
|
3.1
mo |
|
|
|
8.6
mo |
|
Leyland-Jones21 |
|
Trastuzumab
with paclitaxel |
|
|
32 |
|
|
|
59 |
% |
|
|
12.2
mo |
|
|
|
|
|
von
Minckwitz22 |
|
Trastuzumab
with capecitabine |
|
|
78 |
|
|
|
48.1 |
% |
|
|
8.2
mo |
|
|
|