UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended September 30, 2024


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

Commission File Number 001-41429

PROMIS NEUROSCIENCES INC.

(Exact name of Registrant as specified in its Charter)


Ontario, Canada		98-0647155
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
Suite 200, 1920 Yonge Street

Toronto, Ontario		M4S 3E2
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: 416-847-6898

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

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Shares, no par value per share

PMN

The Nasdaq Capital Market

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

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

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

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

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

As of November 14, 2024, the registrant had 32,689,190 Common Shares outstanding.

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		Page
PART I	FINANCIAL INFORMATION	3
Item 1.	Condensed Consolidated Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	4
	Condensed Consolidated Statements of Changes in Shareholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	32

PART II	OTHER INFORMATION	33
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	35
Signatures		36

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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains statements that we believe are, or may be considered to be, “forward-looking statements.” Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on current beliefs, expectations or assumptions regarding the future of the business, future plans and strategies, operational results and other future conditions of the Company. All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q regarding the prospects of our industry or our prospects, plans, financial position or business strategy may constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking words such as “plans,” “expects” or “does not expect,” “is expected,” “look forward to,” “budget,” “scheduled,” “estimates,” “forecasts,” “will continue,” “intends,” “the intent of,” “have the potential,” “anticipates,” “does not anticipate,” “believes,” “should,” “should not,” or variations of such words and phrases that indicate that certain actions, events or results “may,” “could,” “would,” “might,” or “will,” “be taken,” “occur,” or “be achieved,” or the negative of these terms or variations of them or similar terms. Furthermore, forward-looking statements may be included in various filings that we make with the Securities and Exchange Commission (“SEC”) or press releases or oral statements made by or with the approval of one of our authorized executive officers. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that these expectations will prove to be correct. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements.

Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to:

●

the anticipated amount, timing and accounting of contingent, milestone, royalty and other payments under licensing or collaboration agreements;

●

tax positions and contingencies;

●

research and development costs;

●

compensation and other selling, general and administrative expense;

●

foreign currency exchange risk;

●

estimated fair value of assets and liabilities; and impairment assessments;

●

patent terms, patent term extensions, patent office actions and expected availability and period of regulatory exclusivity;

●

our plans and investments in our portfolio as well as implementation of our corporate strategy;

●

the risk that the we will maintain sufficient liquidity to execute our business plan and our ability to continue as a going concern;

●

our expected use of proceeds from private or public offerings of our common shares or other common share equivalents, sales of our common shares in “at-the-market” offerings and the period over which such proceeds, together with existing cash, will be sufficient to meet our operating needs;

●

the drivers for growing our business, including our plans and intention to commit resources relating to discovery, research and development programs and business development opportunities as well as the potential benefits and results of, and the anticipated completion of, certain business development transactions;

●

the expectations, development plans and anticipated timelines, including costs and timing of potential clinical trials, filings and approvals, of our products candidates and pipeline programs, including announcement of clinical data results, collaborations with third-parties, as well as the potential therapeutic scope of the development and commercialization of our and our collaborators’ pipeline product candidates, if approved;

●

the timing, outcome and impact of administrative, regulatory, legal and other proceedings related to our patents and other proprietary and intellectual property rights, tax audits, assessments and settlements, pricing matters, sales and promotional practices, product liability and other matters;

●

our ability to finance our operations and business initiatives and obtain funding for such activities;

●

the direct and indirect impact of health crises on our business and operations, including expenses, reserves and allowances, the supply chain, manufacturing, cyber-attacks or other privacy or data security incidents, research and development costs, clinical trials and employees;

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●

the impact of global financial, economic, political and health events, such as rising inflation, market volatility and fluctuating interest rates;

●

the potential impact of healthcare reform in the United States and measures being taken worldwide designed to reduce healthcare costs and limit the overall level of government expenditures, including the impact of pricing actions and reduced reimbursement for our product candidates, if approved;

●

the impact of the continued uncertainty of the credit and economic conditions in certain countries and our collection of accounts receivable in such countries;

●

the risk that we become characterized as a passive foreign investment company;

●

our ability to prevent and successfully remediate any significant deficiencies or material weaknesses in internal controls over financial reporting;

●

lease commitments, purchase obligations and the timing and satisfaction of other contractual obligations; and

●

the impact of new laws, including tax, regulatory requirements, judicial decisions and accounting standards.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution readers not to place undue reliance on these statements as a number of important factors could cause the actual results to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates and intentions expressed in such forward-looking statements. Risks, uncertainties and other factors which may cause the actual results, performance or achievements of ProMIS Neurosciences Inc. (the “Company”), as applicable, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information and statements include, but are not limited to, the risks described under the heading “Risk Factors Summary” and in Item 1A—“Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on April 1, 2024 (the “Form 10-K”) as well as the risks described in Item 1A—“Risk Factors” in subsequently filed Quarterly Reports on Form 10-Q.

Readers are cautioned not to place undue reliance on any forward-looking statements contained in this Quarterly Report on Form 10-Q, which reflect management’s opinions only as of the date hereof. Except as required by law, we undertake no obligation to revise or publicly release the results of any revision to any forward-looking statements. You are advised, however, to consult any additional disclosures we make in our reports to the SEC. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this Quarterly Report on Form 10-Q.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

PROMIS NEUROSCIENCES INC.

Condensed Consolidated Balance Sheets

(expressed in US dollars, except share amounts)

(Unaudited)


	September 30,		December 31,
	2024		2023
Assets
Current assets:
Cash	$	21,536,898	$	12,598,146
Short-term investments		32,358		32,358
Prepaid expenses and other current assets		2,941,279		988,641
Total current assets		24,510,535		13,619,145
Total assets	$	24,510,535	$	13,619,145
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	1,575,235	$	7,843,136
Accrued liabilities		1,059,852		1,506,526
Total current liabilities		2,635,087		9,349,662
Share-based compensation liability		340,090		422,002
Warrant liability		14,262,138		94,185
Total liabilities		17,237,315		9,865,849

Commitments and contingencies
Shareholders' equity:
Series 2 Convertible Preferred Shares, no par value, unlimited shares authorized, 0 and 1,166,667 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively		—		—
Common shares, no par value, unlimited shares authorized, 32,689,190 and 18,885,254 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively		—		—
Additional paid-in capital		98,093,270		97,590,426
Accumulated other comprehensive loss		(371,184)		(371,184)
Accumulated deficit		(90,448,866)		(93,465,946)
Total shareholders' equity		7,273,220		3,753,296
Total liabilities and shareholders' equity	$	24,510,535	$	13,619,145

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

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PROMIS NEUROSCIENCES INC.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(expressed in US dollars, except share amounts)

(Unaudited)


	For the		For the		For the		For the
	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
	2024		2023		2024		2023
Operating expenses:
Research and development	$	2,563,774	$	1,142,160	$	6,313,373	$	5,658,127
General and administrative		1,870,903		1,375,380		4,511,660		4,729,969
Total operating expenses		4,434,677		2,517,540		10,825,033		10,388,096
Loss from operations		(4,434,677)		(2,517,540)		(10,825,033)		(10,388,096)

Other income (expense):
Change in fair value of financial instruments		16,969,126		119,019		17,014,080		683,568
Interest expense		—		(75,413)		(76,775)		(124,595)
Other income		235,912		113,286		399,344		197,070
Loss on issuance of common shares, warrants, and pre-funded warrants in July 2024 PIPE		(3,494,536)		—		(3,494,536)		—
Total other income (expense), net		13,710,502		156,892		13,842,113		756,043

Net income (loss)		9,275,825		(2,360,648)		3,017,080		(9,632,053)
Other comprehensive income (loss)
Foreign currency translation adjustment		—		—		—		(175,815)
Comprehensive income (loss)	$	9,275,825	$	(2,360,648)	$	3,017,080	$	(9,807,868)

Net income (loss) per share, basic	$	0.31	$	(0.19)	$	0.13	$	(0.98)
Net income (loss) per share, diluted	$	0.31	$	(0.19)	$	0.13	$	(0.98)

Weighted-average shares outstanding of common shares, basic		30,023,675		12,370,830		22,953,751		9,861,719
Weighted-average shares outstanding of common shares, diluted		30,067,095		12,370,830		23,676,104		9,861,719

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

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PROMIS NEUROSCIENCES INC.

Condensed Consolidated Statements of Changes in Shareholders’ Equity

(expressed in US dollars, except share amounts)

(Unaudited)


												Accumulated
	Series 1 Convertible			Series 2 Convertible						Additional		Other
	Preferred Shares			Preferred Shares			Common Shares			Paid-in		Comprehensive		Accumulated
	Shares	Amount		Shares	Amount		Shares	Amount		Capital		Income (Loss)		Deficit		Total
Balance, July 1, 2023	70,000,000	$	—	—	$	—	8,579,284	$	—	$	79,367,762	$	(371,184)	$	(87,524,869)	$	(8,528,291)
Proceeds from the issuance of common stock, pre-funded warrants and accompanying common warrants in August 2023 PIPE, net of issuance costs of $2,738,558	—		—	—		—	9,945,970		—		17,745,200		—		—		17,745,200
Reclassification of USD denominated warrants from warrant liability to additional paid-in capital due to change in functional currency	—		—	—		—	—		—		1,287,400		—		—		1,287,400
Reclassification of CAD denominated warrants from additional paid-in capital to warrant liability due to change in functional currency	—		—	—		—	—		—		(396,375)		—		—		(396,375)
Reclassification of CAD equity-classified stock options to share-based compensation liability due to change in functional currency	—		—	—		—	—		—		(1,435,913)		—		—		(1,435,913)
Re-measurement of liability-classified CAD stock options as of September 30, 2023	—		—	—		—	—		—		443,516		—		—		443,516
Net loss	—		—	—		—	—		—		—		—		(2,360,648)		(2,360,648)
Balance, September 30, 2023	70,000,000	$	—	—	$	—	18,525,254	$	—	$	97,011,590	$	(371,184)	$	(89,885,517)	$	6,754,889

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									Accumulated
	Series 2 Convertible						Additional		Other
	Preferred Shares			Common Shares			Paid-in		Comprehensive		Accumulated
	Shares	Amount		Shares	Amount		Capital		Income (Loss)		Deficit		Total
Balance, July 1, 2024	1,166,667	$	—	18,961,116	$	—	$	97,818,797	$	(371,184)	$	(99,724,691)	$	(2,277,078)
Share-based compensation expense	—		—	—		—		121,036		—		—		121,036
Conversion of Series 2 Convertible Preferred Shares	(1,166,667)		—	1,166,667		—		—		—		—		—
Issuance of Common Shares, pre-funded warrants and accompanying Common Share warrants in July 2024 PIPE, net of issuance costs of $2,645,487	—		—	9,757,669		—		—		—		—		—
Re-measurement of liability-classified CAD stock options as of September 30, 2024	—		—	—		—		125,398		—		—		125,398
Issuance of Common Shares from exercise of pre-funded warrants	—		—	2,803,738		—		28,039		—		—		28,039
Net income	—		—	—		—		—		—		9,275,825		9,275,825
Balance, September 30, 2024	—	$	—	32,689,190	$	—	$	98,093,270	$	(371,184)	$	(90,448,866)	$	7,273,220

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												Accumulated
	Series 1 Convertible			Series 2 Convertible						Additional		Other
	Preferred Shares			Preferred Shares			Common Shares			Paid-in		Comprehensive		Accumulated
	Shares	Amount		Shares	Amount		Shares	Amount		Capital		Income (Loss)		Deficit		Total
Balance, January 1, 2023	70,000,000	$	—	—	$	—	8,579,284	$	—	$	79,101,061	$	(195,369)	$	(80,253,464)	$	(1,347,772)
Share-based compensation	—		—	—		—	—		—		266,701		—		—		266,701
Foreign currency translation	—		—	—		—	—		—		—		(175,815)		—		(175,815)
Proceeds from the issuance of common stock, pre-funded warrants and accompanying common warrants in August 2023 PIPE, net of issuance costs of $2,738,558	—		—	—		—	9,945,970		—		17,745,200		—		—		17,745,200
Reclassification of USD denominated warrants from warrant liability to additional paid-in capital due to change in functional currency	—		—	—		—	—		—		1,287,400		—		—		1,287,400
Reclassification of CAD denominated warrants from additional paid-in capital to warrant liability due to change in functional currency	—		—	—		—	—		—		(396,375)		—		—		(396,375)
Reclassification of CAD equity-classified stock options to share-based compensation liability due to change in functional currency	—		—	—		—	—		—		(1,435,913)		—		—		(1,435,913)
Re-measurement of liability-classified CAD stock options as of September 30, 2023	—		—	—		—	—		—		443,516		—		—		443,516
Net loss	—		—	—		—	—		—		—		—		(9,632,053)		(9,632,053)
Balance, September 30, 2023	70,000,000	$	—	—	$	—	18,525,254	$	—	$	97,011,590	$	(371,184)	$	(89,885,517)	$	6,754,889


									Accumulated
	Series 2 Convertible						Additional		Other
	Preferred Shares			Common Shares			Paid-in		Comprehensive		Accumulated
	Shares	Amount		Shares	Amount		Capital		Income (Loss)		Deficit		Total
Balance, January 1, 2024	1,166,667	$	—	18,885,254	$	—	$	97,590,426	$	(371,184)	$	(93,465,946)	$	3,753,296
Share-based compensation expense	—		—	—		—		202,619		—		—		202,619
Conversion of Series 2 Convertible Preferred Shares	(1,166,667)		—	1,166,667		—		—		—		—		—
Issuance of Common Shares from ATM Offering, net of issuance costs	—		—	75,862		—		190,274		—		—		190,274
Issuance of Common Shares, pre-funded warrants and accompanying Common Share warrants in July 2024 PIPE, net of issuance costs of $2,645,487	—		—	9,757,669		—		—		—		—		—
Re-measurement of liability-classified CAD stock options as of September 30, 2024	—		—	—		—		81,912		—		—		81,912
Issuance of Common Shares from exercise of pre-funded warrants	—		—	2,803,738		—		28,039		—		—		28,039
Net income	—		—	—		—		—		—		3,017,080		3,017,080
Balance, September 30, 2024	—	$	—	32,689,190	$	—	$	98,093,270	$	(371,184)	$	(90,448,866)	$	7,273,220

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

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PROMIS NEUROSCIENCES INC.

Condensed Consolidated Statements of Cash Flows

(expressed in US dollars)

(Unaudited)


	Nine Months Ended
	September 30,
	2024		2023
Cash flows from operating activities
Net income (loss)	$	3,017,080	$	(9,632,053)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Share-based compensation		202,619		266,701
Foreign currency exchange gain		—		(2,632)
Loss on issuance of common shares, warrants, and pre-funded warrants in July 2024 PIPE		3,494,536		—
Change in fair value of financial instruments		(17,014,080)		(683,568)
Depreciation of property and equipment		—		322
Amortization of intangible assets		—		2,816
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(1,452,638)		38,897
Accounts payable		(6,267,901)		5,439,199
Accrued liabilities		(446,674)		(2,515,120)
Net cash used in operating activities		(18,467,058)		(7,085,438)
Cash flows from financing activities
Proceeds from issuance of Common Shares from ATM Offering, net of issuance costs		190,274		—
Proceeds from issuance of common shares, pre-funded warrants and accompanying common warrants from Private Placements, net of issuance costs		27,187,497		18,259,414
Proceeds from exercise of pre-funded warrants		28,039		—
Net cash provided by financing activities		27,405,810		18,259,414
Effect of exchange rates on cash		—		(181,425)
Net increase in cash		8,938,752		10,992,551

Cash at beginning of year		12,598,146		5,875,796
Cash at end of period	$	21,536,898	$	16,868,347

Noncash financing activities
Conversion of convertible debt and derivative liability to Series 1 Convertible Preferred Shares	$	—	$	5,600,000
Share issuance costs related to August 2023 PIPE included in accrued liabilities as of September 30, 2023	$	—	$	514,214
Reclassification of historical CAD denominated warrants from equity to liability	$	—	$	(396,375)
Reclassification of historical USD warrants from liability to equity	$	—	$	1,287,400
Subscription receivable from July 2024 PIPE	$	500,000	$	—
Decrease in share-based compensation liability on CAD denominated share options increasing additional paid-in-capital	$	81,912	$	—

Supplemental disclosure of cash flow information
Cash paid for interest	$	76,775	$	124,595

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

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PROMIS NEUROSCIENCES INC.

Notes to Unaudited Condensed Consolidated Financial Statements

(expressed in US dollars, except share and per share amounts)

(Unaudited)

1.	DESCRIPTION OF BUSINESS

Business Description

ProMIS Neurosciences Inc. (the “Company” or “ProMIS”) is applying its patented technology platform to build a portfolio of antibody therapies, therapeutic vaccines, and other antibody-based therapies in neurodegenerative diseases and other protein-misfolding diseases, with a focus on Alzheimer’s disease (AD), multiple system atrophy (MSA), and amyotrophic lateral sclerosis (ALS). The Company believes these diseases share a common biologic cause — misfolded versions of proteins, that otherwise perform a normal function, becoming toxic and killing neurons, resulting in disease. ProMIS’ technology platform enables drug discovery through a combination of protein biology, physics and supercomputing. ProMIS believes this platform provides a potential advantage in selectively targeting the toxic misfolded proteins with therapeutics or detecting them with diagnostics.

The Company is developing a pipeline of antibodies aimed at selectively targeting misfolded toxic forms of proteins that drive neurodegenerative diseases without interfering with the essential functions of the same properly folded proteins. The Company's product candidates are PMN310, PMN267, and PMN442. The lead product candidate is PMN310, a monoclonal antibody designed to treat AD by selectively targeting toxic, misfolded oligomers of amyloid-beta. PMN267 is our second lead product candidate targeting ALS. It has been shown in preclinical studies to selectively recognize misfolded, cytoplasmic TDP 43 aggregates without interacting with normal TDP 43. Misfolded TDP 43 is believed to play an important role in the development of ALS. In light of research suggesting that misfolded toxic a-syn is a primary driver of disease in synucleinopathies such as MSA and Parkinson’s disease, our third lead product candidate, PMN442, has shown robust binding to pathogenic a-syn oligomers and seeding fibrils in preclinical studies, with negligible binding to a-syn monomers and physiologic tetramers which are required for normal neuronal function.

The Company was incorporated on January 23, 2004 under the Canada Business Corporations Act (“CBCA”). On July 13, 2023, the Company continued its existence from a corporation incorporated under the CBCA into the Province of Ontario under the Business Corporations Act (Ontario) (the “OBCA”) (the “Continuance”). The Continuance was approved by the Company’s shareholders at the Company’s 2023 Annual Meeting of Shareholders held on June 29, 2023. The Company is located at 1920 Yonge Street, Toronto, Ontario. The Company’s Common Shares are traded on the Nasdaq Capital Market (“Nasdaq”) under the symbol PMN. The Company has a wholly-owned U.S. subsidiary, ProMIS Neurosciences (US) Inc. (“ProMIS USA”), which was incorporated in January 2016 in the State of Delaware. As of September 30, 2024, ProMIS USA has had no material activity and has no material financial impact on the Company’s unaudited condensed consolidated financial statements.

The success of the Company is dependent on obtaining the necessary regulatory approvals of its product candidates, marketing its products, if approved, and achieving profitable operations. The continuation of the research and development activities and the commercialization of its products, if approved, are dependent on the Company’s ability to successfully complete these activities and to obtain additional financing through a combination of financing activities and operations. It is not possible to predict either the outcome of future research and development or commercialization programs, the Company’s ability to fund these programs and the corresponding impact on the Company’s ability to continue as a going concern.

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Liquidity Risk

The accompanying unaudited condensed consolidated financial statements were prepared on a going concern basis, which assumes that the Company will continue its operations for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated revenues from its activities. In July 2024, the Company entered into a Unit Purchase Agreement with certain institutional and accredited investors to sell $30.3 million of Common Share Units and Pre-funded Warrant Units before deducting approximately $2.6 million of placement agent fees and offering costs as described further in the “July 2024 Private Placement” section in Note 6. However, the Company had an operating loss of $4.4 million and $10.8 million for the three and nine months ended September 30, 2024, respectively, and an accumulated deficit of $90.4 million as of September 30, 2024. Management believes these conditions raise substantial doubt about the Company’s ability to continue as a going concern within the next twelve months from the date these unaudited condensed consolidated financial statements are issued. The Company will require additional funding to conduct future clinical activities. The Company will seek additional funding through public and private financings, debt financings, collaboration agreements, strategic alliances and licensing agreements. Although the Company has been successful in raising capital in the past, there is no assurance of success in obtaining such additional financing on terms acceptable to us, if at all, and there is no assurance that the Company will be able to enter into collaborations or other arrangements. If the Company is unable to obtain funding, it could force delays, reduce or eliminate research and development programs, product portfolio expansion or commercialization efforts, which could adversely affect future business prospects, and the ability to continue operations.

The Company may continue to incur net losses for at least the next several years as the Company advances its product candidates. The Company is actively pursuing additional financing to further develop certain of the Company’s scientific initiatives, but there is no assurance these initiatives will be successful, timely or sufficient.

2.	BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the year ended December 31, 2023, which are included with the Company’s Annual Report on Form 10-K and related amendments filed with the United States Securities Exchange Commission (“SEC”). Furthermore, the Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the years ended December 31, 2023 and 2022, included in the Company’s Annual Report on Form 10-K filed with the SEC. Since the date of those audited consolidated financial statements, there have been no changes to the Company’s significant accounting policies.

The accompanying unaudited interim condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and as amended by Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements for the periods presented reflect all adjustments, consisting of only normal recurring adjustments, necessary to fairly present the Company’s financial position, results of operations, and cash flows. The December 31, 2023 condensed consolidated balance sheet was derived from audited financial statements, but does not include all GAAP disclosures. The unaudited condensed consolidated financial statements for the interim periods are not necessarily indicative of results for the full year.

Principles of Consolidation

The accompanying unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All intercompany balances and transactions have been eliminated in consolidation.

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Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates, judgements and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions made in the accompanying unaudited condensed consolidated financial statements include, but are not limited to, the accrual for research and development expenses and the valuation of warrant liabilities. Actual results could differ from those estimates, and such differences could be material to the unaudited condensed consolidated financial statements.

Segment Information

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker (“CODM”), or decision-making group, in making decisions on how to allocate resources and assess performance. The Company has one operating segment and its Chief Executive Officer serves as the CODM. Substantially all of the Company’s assets are located in Canada.

Foreign and Functional Currency

Prior to July 1, 2023, the Company’s functional currency was the Canadian dollar (“C$”). Translation gains and losses from the application of the United States dollar (“US$”) as the reporting currency during the period that the Canadian dollar was the functional currency were included as part of cumulative currency translation adjustment, which is reported as a component of stockholders’ equity (deficit) as accumulated other comprehensive loss.

Following the Company’s voluntary delisting from the Toronto Stock Exchange in July 2023, the Company reassessed its functional currency and determined that, as of July 1, 2023, its functional currency had changed from the C$ to the US$. The Company analysis included various factors, including: the Company’s cash flows and expenses denominated primarily in US$, the primary market for the Company’s Common Shares trading in US$ and a majority ownership by U.S. shareholders. The change in functional currency was accounted for prospectively from July 1, 2023 and consolidated financial statements prior to and including the period ended June 30, 2023 were not restated for the change in functional currency.

For periods commencing July 1, 2023, monetary assets and liabilities denominated in foreign currencies are translated into US$ using exchange rates in effect at the end of the reporting period. Opening balances related to non-monetary assets and liabilities are based on prior period translated amounts, and non-monetary assets acquired, and non-monetary liabilities incurred after July 1, 2023 are translated at the approximate exchange rate prevailing at the date of the transaction. Revenue and expense transactions are translated at the approximate exchange rate in effect at the time of the transaction. Foreign exchange gains and losses are included in the consolidated statement of operations and comprehensive loss within operating expenses.

Emerging Growth Company Status

The Company is an Emerging Growth Company, as defined in Section 2(a) of the Securities Act of 1933, as modified by the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these unaudited condensed consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

Recent Accounting Pronouncements

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (“Subtopic 470-20 ”) and Derivatives and Hedging Contracts in Entity s Own Equity (“Subtopic 815-40 ”): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred shares. Limiting the accounting models results in fewer embedded conversion features being separately recognized from the host contract as compared with

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current GAAP. Convertible instruments that continue to be subject to separation models are (i) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (ii) convertible debt instruments issued with substantial premiums for which the premiums are recorded as additional paid-in capital. ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. ASU 2020-06 will be effective for the Company for fiscal years beginning after December 15, 2023. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company adopted this standard effective January 1, 2024 with no material impact on the Company’s unaudited interim condensed consolidated financial statements.

In 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires public entities to disclose significant segment expenses and other segment items. ASU 2023-07 also requires public entities to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. ASU 2023-07 becomes effective for the annual period starting on January 1, 2024, and for the interim periods starting on January 1, 2025. The Company is in the process of analyzing the impact that the adoption of ASU 2023-07 will have on its unaudited interim condensed consolidated financial statements.

In 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires public entities to disclose in their rate reconciliation table additional categories of information about federal, state and foreign income taxes and to provide more details about the reconciling items in some categories if items meet a quantitative threshold. ASU 2023-09 becomes effective for the annual period starting on January 1, 2025. The Company is in the process of analyzing the impact that the adoption of ASU 2023-09 will have on its income tax disclosures.

In 2024, the FASB issued ASU 2024-01, Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards (“ASU 2024-01”), which clarifies how an entity determines whether a profits interest or similar award (hereafter a “profits interest award”) is (1) within the scope of ASC 718 or (2) not a share-based payment arrangement and therefore within the scope of other guidance. ASU 2024-01 becomes effective for the annual period starting on January 1, 2025. The Company is in the process of analyzing the impact that the adoption of ASU 2024-01 will have on its unaudited interim condensed consolidated financial statements.

3.	FAIR VALUE MEASUREMENTS

The following are the major categories of assets and liabilities measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023:


	As of September 30, 2024
	Level 1		Level 2			Level 3	Total
Assets:
Short-term investments	$	32,358	$	—	$	—	$	32,358
Total assets measured at fair value	$	32,358	$	—	$	—	$	32,358
Liabilities:
Share-based compensation liability	$	—	$	—	$	340,090	$	340,090
Warrant liability	$	—	$	—	$	14,262,138	$	14,262,138
Total liabilities measured at fair value	$	—	$	—	$	14,602,228	$	14,602,228


	As of December 31, 2023
	Level 1		Level 2			Level 3	Total
Assets:
Short-term investments	$	32,358	$	—	$	—	$	32,358
Total assets measured at fair value	$	32,358	$	—	$	—	$	32,358
Liabilities:
Share-based compensation liability	$	—	$	—	$	422,002	$	422,002
Warrant liability		—		—		94,185		94,185
Total liabilities measured at fair value	$	—	$	—	$	516,187	$	516,187

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No transfers between levels have occurred in either reporting period presented. Refer to Note 6 below for disclosures related to the warrant liability and Note 8 for disclosures related to share-based compensation liability.

4.	PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of the following:


	September 30,		December 31,
	2024		2023
Upfront research payments	$	1,777,249	$	146,851
Accrued interest and other receivables

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company