Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  News  >  Companies  >  All News

News : Companies
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance ProfessionalsCalendarSectors

EDESA BIOTECH, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

share with twitter share with LinkedIn share with facebook
share via e-mail
0
08/14/2019 | 04:21pm EDT

The following management's discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed interim consolidated financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q as of June 30, 2019 and our audited consolidated financial statements for the year ended December 31, 2018 included in our Current Report on Form 8-K/A, filed with the Securities and Exchange Commission on August 14, 2019.

This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act) and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act) and, as such, may involve known and unknown risks, uncertainties and assumptions. Forward-looking statements are based upon our current expectations, speak only as of the date hereof, are subject to change and include statements concerning our financial performance, including expectations to incur additional losses and plans to fund the Company. Forward-looking statements are those that predict or describe future events or trends and that do not relate solely to historical matters. You can generally identify forward-looking statements as those statements containing the words "anticipate," "believe," "plan," "estimate," "expect," "intend," "may," "will," "would," "could," "should," "might," "potential," "continue" or other similar expressions. You should not rely on our forward-looking statements as they are not a guarantee of future performance. There can be no assurance that forward-looking statements will prove to be accurate because the matters they describe are subject to assumptions, known and unknown risks, uncertainties and other unpredictable factors, many of which are beyond our control. Our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors, including the risks described in our Annual Report on Form 10-K for the year ended September 30, 2018, and Part II Item 1A in this Quarterly Report on Form 10-Q and other reports we file with the Securities and Exchange Commission. Risks and uncertainties include, among others, our ability to obtain regulatory approval for or successfully commercialize any of our product candidates, the risk that access to sufficient capital to fund our operations may not be available or may be available on terms that are not commercially favorable to us, the risk that our product candidates may not be effective against the diseases tested in their clinical trials, the risk that we fail to comply with the terms of license agreements with third parties and as a result lose the right to use key intellectual property in our business, our ability to protect our intellectual property and the timing and success of submission, acceptance and approval of regulatory filings. Except as required by law, we undertake no obligation to update forward-looking statements.

The discussion and analysis of our financial condition and results of operations are based on our unaudited condensed interim consolidated financial statements as of June 30, 2019 and December 31, 2018, and for the three months and six months ended June 30, 2019 and 2018 included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which we have prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate such estimates and judgments, including those described in greater detail below. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Overview

We are a biopharmaceutical company focused on acquiring, developing and commercializing clinical stage drugs for dermatological and gastrointestinal indications with clear unmet medical needs. Our lead product candidate, EB01, is a novel sPLA2 inhibitor for the topical treatment of chronic allegoric contact dermatitis (ACD). An investigational new drug application for EB01 was accepted by the U.S. Food and Drug Administration in November 2018, and we are planning to conduct a Phase 2B clinical study evaluating EB01.

We also intend to expand the utility of our sPLA2 inhibitor technology, which forms the basis for EB01, across multiple indications. For example, we are planning to evaluate EB02, an sPLA2 inhibitor, in a proof-of-concept study to treat hemorrhoids. In addition, we have licensed technology to treat other indications, and we are in discussions with third parties to expand our portfolio with assets to treat other serious skin and gastrointestinal conditions. As a clinical-stage company, we have not generated revenue from our product candidates to date.


                                       17


Recent Developments

Completion of Business Combination and Reverse Share Split

On June 7, 2019, we completed a business combination with Edesa Biotech Research, Inc., formerly known as Edesa Biotech Inc., a company organized under the laws of the province of Ontario, in accordance with the terms of the Share Exchange Agreement, dated March 7, 2019, by and among Stellar, Edesa and the shareholders of Edesa. At the closing of the transaction, Stellar acquired the entire issued share capital of Edesa, with Edesa becoming a wholly owned subsidiary of Stellar. Also, on June 7, 2019, in connection with and following the completion of the reverse acquisition, we effected a 1-for-6 reverse split of our common shares and changed our name to "Edesa Biotech, Inc." Our primary business is now the development of innovative therapeutics for dermatological and gastrointestinal indications with clear unmet medical needs. Over the course of the next 18 months, we intend to sell or wind down the principal assets and operations of Stellar's legacy business.

Significant Accounting Policies and Estimates

Edesa's significant accounting policies are described in Note 3 and Note 4 to its audited financial statements for the years ended December 31, 2018 and 2017 are included in Form 8-K/A filed with the Securities and Exchange Commission (SEC) on August 14, 2019. There are no significant changes in those policies for the quarter ended June 30, 2019.

Results of Operations

Comparison of the Six Months Ended June 30, 2019 and 2018

Our total revenues were not material for the six months ended June 30, 2019 and June 30, 2018 as we continued to focus on developing and obtaining regulatory approval for our product candidates.

Our total operating expenses increased by $1.01 million to $1.86 million for the six months ended June 30, 2019 compared to $0.85 million for the same period last year:


?

Our research and development expenses increased by $0.03 million to $0.61 million for the six months ended June 30, 2019 compared to $0.58 million for the same period last year primarily due to an increase in clinical research expenses associated with the Phase 2B clinical study of our EB01 product candidate as well as higher patent fees and personnel expenses.


?

Our general and administrative expenses increased by $0.97 million to $1.25 million for the six months ended June 30, 2019 compared to $0.28 million for the same period last year primarily due to increased legal and professional fees related to the company's reverse acquisition, increased personnel expenses and the initiation of public company expenses, which we did not incur as a privately held company.

Our total other income increased by $0.01 million to $0.04 million for the six months ended June 30, 2019 compared to $0.03 million for the same period last year primarily due to foreign exchange gain due to fluctuations in Canadian exchange rates. Interest income was relatively unchanged.

Our net loss for the six months ended June 30, 2019 was $1.82 million, or $0.48 per basic share, compared to a net loss of $0.83 million, or $0.26 per basic share, for the six months ended June 30, 2018.

Comparison of the Three Months Ended June 30, 2019 and 2018

Our total revenues were not material for the three months ended June 30, 2019 and June 30, 2018 as we continued to focus on developing and obtaining regulatory approval for our product candidates.

Our total operating expenses increased by $0.90 million to $1.32 million for the three months ended June 30, 2019 compared to $0.42 million for the same period last year:


?

Our research and development expenses increased by $0.20 million to $0.50 million for the three months ended June 30, 2019 compared to $0.30 million for the same period last year primarily due to an increase in clinical research expenses associated with the Phase 2B clinical study of our EB01 product candidate as well as higher personnel expenses.


?

Our general and administrative expenses increased by $0.70 million to $0.82 million for the three months ended June 30, 2019 compared to $0.12 million for the same period last year primarily due to increased legal and professional fees related to the company's reverse acquisition, increased personnel expenses and the initiation of public company expenses, which we did not incur as a privately held company.

Our total other income increased by $0.02 million to $0.03 million for the three months ended June 30, 2019 compared to $0.01 million for the same period last year primarily due to foreign exchange gain due to fluctuations in Canadian exchange rates as well as gain on the disposition of property and equipment. Interest income was relatively unchanged.

                                       18

Our net loss for the three months ended June 30, 2019 was $1.29 million, or $0.30 per basic share, compared to a net loss of $0.41 million, or $0.13 per basic share, for the three months ended June 30, 2018.

Capital Expenditures

Our capital expenditures primarily consist of purchases of computer and office equipment. There were no significant capital expenditures for the three months and six months ended June 30, 2019 and 2018.

Liquidity and Capital Resources

Our operations have historically been funded by the issuance of preferred shares, loans that were converted into common shares and government grants. As a clinical-stage company, we have not generated any revenue from product sales since our inception. As of June 30, 2019, we had an accumulated deficit of $5.78 million and we expect to continue 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. We plan to finance company operations over the course of the next twelve months with cash and investments on hand. Management has flexibility to adjust planned expenditures based on a number of factors including, among other options, the nature and timing of technology acquisitions, staffing levels and the size and scope of our clinical studies. To help fund our operations and meet our obligations, we may also seek additional financing through the sale of equity, debt financings or other capital sources, including potential future licensing, collaboration or similar arrangements with third parties or other strategic transactions.

At June 30, 2019, we had cash and cash equivalents of $6.36 million, working capital of $6.11 million and shareholders' equity of $6.21 million.


                                       19


Research and Development

Our primary business is now the development of innovative therapeutics for dermatological and gastrointestinal indications 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 productcandidates, including regulatory consultants. Our research and development costs were $0.61 million and $0.58 million for the six months ended June 30, 2019 and 2018, respectively, and $0.50 million and $0.30 million for the three months ended June 30, 2019 and 2018, respectively. The increase was due primarily to an increase in clinical research expenses associated with the Phase 2B clinical study of our EB01 product candidate as well as higher personnel expenses.

Off-Balance Sheet Arrangements

We have no 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.

© Edgar Online, source Glimpses

share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news "Companies"
02:26pSALESFORCE COM : How Salesforce Accelerates New Customer Onboarding Using Journey Builder
PU
02:26pTRANSAT A T : 2019-08-23 — Special meeting of shareholders closing speech by Jean-Marc Eustache
PU
02:26pTRANSAT A T : 2019-08-23 — Special meeting of shareholders opening speech by Jean-Marc Eustache
PU
02:25pCourt affirms alternative Keystone XL oil pipeline route through Nebraska
RE
02:25pMACY'S : Macy's, Inc. Board Declares Quarterly Dividend
BU
02:20pDEADLINE REMINDER : The Law Offices of Howard G. Smith Reminds Investors of Looming Deadline in the Class Action Lawsuit Against NetApp, Inc. (NTAP)
BU
02:17p2Q GDP Revision Expected to Show Little Change -- Data Week Ahead
DJ
02:17pSinclair Eyes More Regional Sports Networks as Disney Deal Closes
DJ
02:16pFEDERAL HOME LOAN MORTGAGE : Self-Employed Mortgage Application Tips
PU
02:16pCISCO : Groupe T2i Streamlines Operations, Integrates with IBM and VMWare with Cisco Data Center Anywhere
PU
Latest news "Companies"
Advertisement