EDESA BIOTECH, INC. The following management's discussion and analysis of our financial condition
and results of operations should be read in conjunction with the unaudited
condensed interim consolidated financial statements and notes thereto included
in Part I, Item 1 of this Quarterly Report on Form 10-Q as of
This Quarterly Report on Form 10-Q contains forward-looking statements. When
used in this report, the words "expects," "anticipates," "suggests," "believes,"
"intends," "estimates," "plans," "projects," "continue," "ongoing," "potential,"
"expect," "predict," "believe," "intend," "may," "will," "should," "could,"
"would" and similar expressions are intended to identify forward-looking
statements. You should not place undue reliance on these forward-looking
statements. Our actual results could differ materially from those anticipated in
the forward-looking statements for many reasons, including the risks described
in our Annual Report on Form 10-K for the year ended
The discussion and analysis of our financial condition and results of operations
are based on our unaudited condensed interim consolidated financial statements
as of
Overview
We are a biopharmaceutical company focused on acquiring, developing and commercializing clinical-stage drugs for inflammatory and immune-related diseases with clear unmet medical needs. Our two lead product candidates, EB05 and EB01, are in later stage clinical studies.
EB05 is a monoclonal antibody therapy that we are developing as a treatment for
Acute Respiratory Distress Syndrome (ARDS), a life-threatening form of
respiratory failure. ARDS can be caused by viral diseases (including Covid-19),
bacterial pneumonia, sepsis, chest injury and other causes. Specifically, EB05
inhibits toll-like receptor 4 (TLR4), a key immune signaling protein and an
important mediator of inflammation that has been shown to be activated by
SARS-COV2 as well as other respiratory infections such as influenza. In multiple
third-party studies, high serum levels of alarmins (damage signaling molecules)
that bind to and activate TLR4 are associated with poor outcomes and disease
progression in Covid-19 patients. Since EB05 has demonstrated the ability to
block signaling irrespective of the presence or concentration of the various
molecules that frequently bind with TLR4, we believe that EB05 could ameliorate
TLR4-mediated inflammation cascades in ARDS patients, thereby reducing lung
injury, ventilation rates and mortality. In
In addition to EB05, we are developing an sPLA2 inhibitor, designated as EB01, as a topical treatment for chronic allergic contact dermatitis (ACD), a common, potentially debilitating condition and occupational illness. EB01 employs a novel, non-steroidal mechanism of action and in two clinical studies has demonstrated statistically significant improvement of multiple symptoms in ACD patients. EB01 is currently being evaluated in a Phase 2b clinical study.
In addition to our current clinical programs, we intend to expand the utility of our technologies and clinical-stage assets across other indications.
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Recent Developments
EB01 Clinical Study
Based on current enrollment trends, we anticipate that we will complete enrollment of the 210 subjects planned for our Phase 2b clinical study in chronic ACD by the fourth calendar quarter of 2022, with preliminary topline data available as early as the first calendar quarter of 2023.
EB05 Clinical Study
During the quarter, we initiated enrollment for a second cohort of patients in
the Phase 3 part of our Phase 2/3 study evaluating EB05 in hospitalized Covid-19
patients. The company's first study cohort is recruiting the most critically
severe patients receiving mechanical ventilation plus additional organ support,
including extracorporeal membrane oxygenation (ECMO) therapy, also known as
Level 7 patients under the
Results of Operations
Comparison of the Three Months Ended
Total operating expenses decreased by
· Research and development expenses increased by $0.08 million to $4.55
million for the three months ended June 30, 2022 compared to $4.46 million
for the same period last year primarily due to a contractual payment for
bulk drug product of EB05, which was substantially offset by decreased
external research expenses related to our ongoing clinical studies and
drug manufacturing.
· General and administrative expenses decreased by $0.36 million to $1.25
million for the three months ended June 30, 2022 compared to $1.61 million
for the same period last year primarily due to a decrease in noncash
share-based compensation.
Total other income decreased by
For the three months ended
Comparison of the Nine Months Ended
Total operating expenses decreased by
· Research and development expenses decreased by $2.28 million to $11.54
million for the nine months ended June 30, 2022 compared to $13.82 million
for the same period last year primarily due to decreased milestone
payments, which were partially offset by higher external research expenses
related to our ongoing clinical studies, and increased personnel expenses.
· General and administrative expenses decreased by $0.39 million to $3.99
million for the nine months ended June 30, 2022 compared to $4.38 million
for the same period last year primarily due to a decrease in noncash
share-based compensation.
Total other income decreased by
For the nine months ended
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Capital Expenditures
Our capital expenditures primarily consist of computer and office equipment.
There were no significant capital expenditures for the nine months ended
Liquidity and Capital Resources
As a clinical-stage company we have not generated significant revenue, and we
expect to incur operating losses as we continue our efforts to acquire, develop,
seek regulatory approval for and commercialize product candidates and execute on
our strategic initiatives. Our operations have historically been funded through
issuances of common shares, exercises of common share purchase warrants,
convertible preferred shares, convertible loans, government grants and tax
incentives. For the nine-month periods ended
On
On
Under our contribution agreement with the Canadian government's
On
For the year ended
At
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Research and Development
Our primary business is the development of innovative therapeutics for inflammatory and immune-related diseases with clear unmet medical needs. We focus our resources on research and development activities, including the conduct of clinical studies and product development, and expense such costs as they are incurred. Our research and development expenses have primarily consisted of employee-related expenses, including salaries, benefits, taxes, travel, and share-based compensation expense for personnel in research and development functions; expenses related to process development and production of product candidates paid to contract manufacturing organizations, including the cost of acquiring, developing, and manufacturing research material; costs associated with clinical activities, including expenses for contract research organizations; and clinical trials and activities related to regulatory filings for our product candidates, including regulatory consultants.
Research and development expenses, which have historically varied based on the
level of activity in our clinical programs, are significantly influenced by
study initiation expenses and patient recruitment rates, and as a result are
expected to continue to fluctuate, sometimes substantially. Our research and
development costs were
Off Balance Sheet Arrangements
We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.
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