Full Press Release Details
CONDENSED CONSOLIDATED INTERIM FINANCIAL
(Expressed in United States dollars)
FOR THE NINE MONTHS ENDED JUNE 30, 2016
CONDENSED CONSOLIDATED INTERIM STATEMENTS
OF FINANCIAL POSITION
(Expressed in United States dollars)
| June 30, 2016 | September 30, 2015 | October 1, 2014 | ||||||||||
| (Note 2) | (Note 2) | |||||||||||
| ASSETS | ||||||||||||
| Current | ||||||||||||
| Cash | $ | 12,378,814 | $ | 1,579,288 | $ | 3,699,980 | ||||||
| Receivables | 30,260 | 3,849,605 | 64,503 | |||||||||
| Prepaids (Note 4) | 857,618 | 1,661,335 | 62,408 | |||||||||
| 13,266,692 | 7,090,228 | 3,826,891 | ||||||||||
| Equipment (Note 5) | 139,736 | 165,464 | 14,102 | |||||||||
| Intangible assets (Note 6) | 260,197 | 284,081 | 360,840 | |||||||||
| Total assets | $ | 13,666,625 | $ | 7,539,773 | $ | 4,201,833 | ||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||
| Current | ||||||||||||
| Accounts payable and accrued liabilities | $ | 2,053,040 | $ | 2,091,162 | $ | 587,353 | ||||||
| Derivative liability (Note 7) | 8,350,043 | 993,099 | - | |||||||||
| Product development and relocation grant (Note 15) | - | - | 1,640,352 | |||||||||
| Total liabilities | 10,403,083 | 3,084,261 | 2,227,705 | |||||||||
| Shareholders' equity | ||||||||||||
| Share capital (Note 8) | 25,974,712 | 19,419,004 | 4,193,735 | |||||||||
| Preferred shares (Note 8) | - | - | 2,836,268 | |||||||||
| Reserves (Note 9) | 3,369,175 | 2,401,020 | 966,837 | |||||||||
| Accumulated other comprehensive loss | (2,076,479 | ) | (1,738,716 | ) | (73,503 | ) | ||||||
| Deficit | (24,003,866 | ) | (15,625,796 | ) | (5,949,209 | ) | ||||||
| 3,263,542 | 4,455,512 | 1,974,128 | ||||||||||
| Total liabilities and shareholders' equity | $ | 13,666,625 | $ | 7,539,773 | $ | 4,201,833 |
| On behalf of the Board on August 12, 2016 | |||
| "David Parkinson" | Director | "Franklin Berger" | Director |
The accompanying notes are an integral part
of these condensed consolidated interim financial statements.
CONDENSED CONSOLIDATED INTERIM STATEMENTS
OF LOSS AND COMPREHENSIVE LOSS
| Three months ended June 30, 2016 | Three months ended June 30, 2015 | Nine months ended June 30, 2016 | Nine months ended June 30, 2015 | |||||||||||||
| (Note 2) | (Note 2) | |||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Research and development, net of recoveries (Note 16) | $ | 3,362,948 | $ | 2,590,652 | $ | 9,108,402 | $ | 5,767,750 | ||||||||
| Financing costs (Notes 8 and 9) | - | 15,669 | 937,845 | 62,418 | ||||||||||||
| General and administration, net of recoveries (Note 16) | 1,305,780 | 1,065,563 | 4,407,245 | 3,081,978 | ||||||||||||
| Total operating expenses | (4,668,728 | ) | (3,671,884 | ) | (14,453,492 | ) | (8,912,146 | ) | ||||||||
| Foreign exchange | (10,682 | ) | (214,577 | ) | 77,024 | 779,173 | ||||||||||
| Interest income | - | 154 | - | 154 | ||||||||||||
| Gain (loss) on derivative liability (Note 7) | 867,734 | (1,402,345 | ) | 5,533,529 | (2,031,494 | ) | ||||||||||
| Net loss for the period before taxes | (3,811,676 | ) | (5,288,652 | ) | (8,842,939 | ) | (10,164,313 | ) | ||||||||
| Income tax expense | (54,081 | ) | - | (60,081 | ) | - | ||||||||||
| Net loss for the period | (3,865,757 | ) | (5,288,652 | ) | (8,903,020 | ) | (10,164,313 | ) | ||||||||
| OTHER COMPREHENSIVE LOSS | ||||||||||||||||
| Cumulative translation adjustment | - | 430,252 | (337,763 | ) | (708,332 | ) | ||||||||||
| Comprehensive loss for the period | $ | (3,865,757 | ) | $ | (4,858,400 | ) | $ | (9,240,783 | ) | $ | (10,872,645 | ) | ||||
| Basic and diluted loss per common share | $ | (0.13 | ) | $ | (0.29 | ) | $ | (0.34 | ) | $ | (0.60 | ) | ||||
| Weighted average number of common shares outstanding | 29,080,966 | 18,163,071 | 26,167,480 | 17,070,193 |
The accompanying notes are an integral part
of these condensed consolidated interim financial statements.
CONDENSED CONSOLIDATED INTERIM STATEMENTS
(Expressed in United States dollars)
| 2016 | 2015 | |||||||
| (Note 2) | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Loss for the period | $ | (8,903,020 | ) | $ | (10,164,313 | ) | ||
| Items not affecting cash: | ||||||||
| Amortization | 49,601 | 23,979 | ||||||
| (Gain) loss on derivative liability | (5,533,529 | ) | 2,031,494 | |||||
| Financing costs | 910,101 | - | ||||||
| Product development and relocation grant | - | (1,640,352 | ) | |||||
| Unrealized foreign exchange | (139,018 | ) | 591,027 | |||||
| Share-based payments (Note 9) | 810,607 | 955,436 | ||||||
| Changes in non-cash working capital items: | ||||||||
| Receivables | 34,157 | 21,038 | ||||||
| Prepaid expenses | 804,703 | (1,031,908 | ) | |||||
| Accounts payable and accrued liabilities | 58,895 | 658,286 | ||||||
| Net cash used in operating activities | (11,907,503 | ) | (8,555,313 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Acquisition of equipment | (9,983 | ) | (114,303 | ) | ||||
| Net cash used in investing activities | (9,983 | ) | (114,303 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Advance on product development and relocation grant | 3,786,667 | - | ||||||
| Proceeds on private placement | 19,999,992 | 13,208,937 | ||||||
| Issuance costs | (1,080,219 | ) | (869,641 | ) | ||||
| Options exercised | 36,465 | 77,937 | ||||||
| Warrants exercised | 1,194 | 163,318 | ||||||
| Net cash provided by financing activities | 22,744,099 | 12,580,551 | ||||||
| Effect of foreign exchange on cash | (27,087 | ) | (1,414,142 | ) | ||||
| Change in cash for the period | 10,799,526 | 2,496,793 | ||||||
| Cash, beginning of period | 1,579,288 | 3,699,980 | ||||||
| Cash, end of period | $ | 12,378,814 | $ | 6,196,773 |
Supplemental Cash Flow Information (Note
The accompanying notes are an integral part
of these condensed consolidated interim financial statements.
CONDENSED CONSOLIDATED INTERIM STATEMENT
OF CHANGES IN SHAREHOLDERS' EQUITY
| Reserves | ||||||||||||||||||||||||||||||||
| Share capital | Preferred shares | Special warrants | Share-based payments | Warrants | Cumulative translation adjustment | Deficit | Total | |||||||||||||||||||||||||
| Balance, October 1, 2014 (Note 2) | $ | 4,193,735 | $ | 2,836,268 | $ | - | $ | 905,853 | $ | 60,984 | $ | (73,503 | ) | $ | (5,949,209 | ) | $ | 1,974,128 | ||||||||||||||
| Private placement | - | - | 1,208,944 | - | - | - | - | 1,208,944 | ||||||||||||||||||||||||
| Issuance costs | - | - | (169,800 | ) | - | 44,434 | - | - | (125,366 | ) | ||||||||||||||||||||||
| Conversion of special warrants | - | 1,039,144 | (1,039,144 | ) | - | - | - | - | - | |||||||||||||||||||||||
| Private placement - special warrants | - | - | 11,999,994 | - | - | - | - | 11,999,994 | ||||||||||||||||||||||||
| Issuance costs | - | - | (1,026,564 | ) | - | - | - | - | (1,026,564 | ) | ||||||||||||||||||||||
| Conversion of preferred shares | 3,872,737 | (3,875,412 | ) | 2,675 | - | - | - | - | - | |||||||||||||||||||||||
| Conversion of special warrants | 201,588 | - | (201,588 | ) | - | - | - | - | - | |||||||||||||||||||||||
| Options exercised | 134,288 | - | - | (56,350 | ) | - | - | - | 77,938 | |||||||||||||||||||||||
| Warrants exercised | 224,595 | - | - | - | (57,828 | ) | - | - | 166,767 | |||||||||||||||||||||||
| Share-based payments | - | - | - | 955,436 | - | - | - | 955,436 | ||||||||||||||||||||||||
| Foreign currency adjustment | - | - | - | - | - | (708,332 | ) | - | (708,332 | ) | ||||||||||||||||||||||
| Loss for the period | - | - | - | - | - | - | (10,164,313 | ) | (10,164,313 | ) | ||||||||||||||||||||||
| Balance, June 30, 2015 (Note 2) | $ | 8,626,943 | $ | 3,875,412 | $ | 10,774,517 | $ | 1,804,939 | $ | 47,590 | $ | (781,835 | ) | $ | (16,113,522 | ) | $ | 4,358,632 | ||||||||||||||
| Conversion of special warrants | 10,774,517 | - | (10,774,517 | ) | - | - | - | - | - | |||||||||||||||||||||||
| Options exercised | 10,997 | - | - | (4,849 | ) | - | - | - | 6,148 | |||||||||||||||||||||||
| Warrants exercised | 6,547 | - | - | - | (1,766 | ) | - | - | 4,781 | |||||||||||||||||||||||
| Share-based payments | - | - | - | 555,106 | - | - | - | 555,106 | ||||||||||||||||||||||||
| Foreign currency adjustment | - | - | - | - | - | (956,881 | ) | - | (956,881 | ) | ||||||||||||||||||||||
| Loss for the period | - | - | - | - | - | - | 487,726 | 487,726 | ||||||||||||||||||||||||
| Balance, September 30, 2015 (Note 2) | $ | 19,419,004 | $ | - | $ | - | $ | 2,355,196 | $ | 45,824 | $ | (1,738,716 | ) | $ | (15,625,796 | ) | $ | 4,455,512 | ||||||||||||||
| Private placement | 6,581,815 | - | - | - | - | - | - | 6,581,815 | ||||||||||||||||||||||||
| Issuance costs | (170,121 | ) | - | - | - | - | - | - | (170,121 | ) | ||||||||||||||||||||||
| Options exercised | 142,386 | - | - | (105,921 | ) | - | - | - | 36,465 | |||||||||||||||||||||||
| Warrants exercised | 1,628 | - | - | - | (434 | ) | - | - | 1,194 | |||||||||||||||||||||||
| Share-based payments | - | - | - | 810,607 | - | - | - | 810,607 | ||||||||||||||||||||||||
| Foreign currency adjustment | - | - | - | - | - | (54,574 | ) | - | (54,574 | ) | ||||||||||||||||||||||
| Effect of functional currency change | - | - | - | - | 263,903 | (283,189 | ) | 524,950 | 505,664 | |||||||||||||||||||||||
| Loss for the period | - | - | - | - | - | - | (8,903,020 | ) | (8,903,020 | ) | ||||||||||||||||||||||
| Balance, June 30, 2016 | $ | 25,974,712 | $ | - | $ | - | $ | 3,059,882 | $ | 309,293 | $ | (2,076,479 | ) | $ | (24,003,866 | ) | $ | 3,263,542 |
The accompanying notes are an integral part
of these condensed consolidated interim financial statements.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
(Expressed in United States dollars)
Nature of Operations
ESSA Pharma Inc. (the "Company")
was incorporated under the laws of the Province of British Columbia on January 6, 2009. The Company's head office address
is Suite 720 - 999 West Broadway, Vancouver, BC, V5Z 1K5. The registered and records office address is the 26th
Floor at 595 Burrard Street, Three Bentall Centre, Vancouver, BC, V7X 1L3. The Company is listed on the NASDAQ Capital Market under
the symbol "EPIX", and on the TSX Exchange under the symbol "EPI".
The Company is focused on the
development of small molecule drugs for the treatment of prostate cancer. The Company has acquired a license to certain patents
(the "NTD Technology") which were the joint property of the British Columbia Cancer Agency and the University of British
Columbia. As at June 30, 2016, no products are in commercial production or use.
Change in Presentation Currency
The Company has retroactively
changed its presentation currency to the United States dollar ("US$") from the Canadian dollar ("C$").
The change is detailed in Note 2.
These financial statements have
been prepared in accordance with International Financial Reporting Standards ("IFRS") assuming the Company will continue
on a going-concern basis. The Company has incurred losses and negative operating cash flows since inception. The Company incurred
a loss of $8,903,020 during the nine months ended June 30, 2016 and has an accumulated deficit of $24,003,866. The ability of the
Company to continue as a going concern in the long-term depends upon its ability to develop profitable operations and to continue
to raise adequate financing. During the nine months ended June 30, 2016, the Company completed two private placements for
total gross proceeds of approximately $20,000,000 (Note 8). As at June 30, 2016, the Company has not advanced its research into
a commercially viable product. The Company's continuation as a going concern is dependent upon the successful development
of its NTD Technology to a commercial standard.
Statement of Compliance
These condensed consolidated
interim financial statements, including comparatives, have been prepared in accordance with International Accounting Standards
("IAS") 34 Interim Financial Reporting' ("IAS 34") using accounting policies consistent with
International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB")
and Interpretations of the International Financial Reporting Interpretations Committee ("IFRIC").
The condensed consolidated interim
financial statements do not include all the information and disclosures required in the annual consolidated financial statements
and should be read in conjunction with the Company's annual consolidated financial statements for the year ended September
Basis of Presentation
The condensed consolidated interim
financial statements have been prepared on a historical cost basis except for certain financial assets measured at fair value.
In addition, these condensed consolidated interim financial statements have been prepared using the accrual basis of accounting,
except for cash flow information.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
(Expressed in United States dollars)
Functional and Presentation
The Company makes estimates and
assumptions about the future that affect the reported amounts of assets and liabilities. Estimates and judgments are continually
evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable
under the circumstances. In the future, actual results may differ from these estimates and assumptions.
The effect of a change in an
accounting estimate is recognized prospectively by including it in comprehensive income in the period of the change, if the change
affects that period only, or in the period of the change and future periods, if the change affects both. Significant assumptions
about the future and other sources of estimation uncertainty that management has made at the statement of financial position date,
that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results
differ from assumptions that have been made, relate to the following key estimates:
The application of the Company's
accounting policy for intangible assets expenditures requires judgment in determining whether it is likely that future economic
benefits will flow to the Company, which may be based on assumptions about future events or circumstances. Estimates and assumptions
may change if new information becomes available. If, after expenditures are capitalized, information becomes available suggesting
that the recovery of expenditures is unlikely, the amount capitalized is written off in profit or loss in the period the new information
Following initial recognition,
the Company carries the value of intangible assets at cost less accumulated amortization and any accumulated impairment losses.
Amortization is recorded on a straight-line basis based upon management's estimate of the useful life and residual value.
The estimates are reviewed at least annually and are updated if expectations change as a result of technical obsolescence or legal
and other limits to use. A change in the useful life or residual value will impact the reported carrying value of the intangible
assets resulting in a change in related amortization expense.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
(Expressed in United States dollars)
Product development and relocation
Pursuant to the terms of the
Company's grant from the Cancer Prevention Research Institute of Texas ("CPRIT"), the Company must meet certain
terms and conditions to qualify for the grant funding. The Company has assessed its performance relative to these terms as detailed
in Note 15 and has judged that there is reasonable assurance the Company will meet the terms of the grant and qualify for the funding.
The Company has therefore taken into income a portion of the grant that represents expenses the Company has incurred to date under