Full Press Release Details
EUPRAXIA PHARMACEUTICALS INC.
CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months ended March 31, 2024
(Unaudited and Expressed in U.S. Dollars)
EUPRAXIA PHARMACEUTICALS INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited and Expressed in U.S. Dollars)
| CONSOLIDATED BALANCE SHEETS | 2 | |||
| CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | 3 | |||
| CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY | 4 | |||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | 5 | |||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 6-23 |
EUPRAXIA PHARMACEUTICALS INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited and Expressed in U.S.
Dollars, except share amounts)
| March 31, 2024 | December 31, 2023 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | 35,907,527 | $ | 19,341,756 | ||||
| Prepaid expenses and deposits | 140,928 | 270,710 | ||||||
| Amounts receivable (Note 4) | 167,243 | 190,612 | ||||||
| Total current assets | 36,215,698 | 19,803,078 | ||||||
| Non-current assets | ||||||||
| Prepaid expenses | 5,571 | 6,904 | ||||||
| Property and equipment, net (Note 5) | 381,731 | 409,587 | ||||||
| Right-of-use asset, net (Note 6) | 33,123 | 46,660 | ||||||
| Total assets | $ | 36,636,123 | $ | 20,266,229 | ||||
| LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT) | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities (Note 7) | $ | 3,971,739 | $ | 3,921,875 | ||||
| Loans payable (Note 8) | 42,112 | 62,709 | ||||||
| Lease liability (Note 9) | 37,848 | 53,316 | ||||||
| Payable to Auritec (Note 10) | 5,000,000 | 5,000,000 | ||||||
| Convertible debt (Note 11) | 9,477,704 | 10,336,003 | ||||||
| Total liabilities | 18,529,403 | 19,373,903 | ||||||
| Shareholders equity (deficit) | ||||||||
| Share capital, without par value; unlimited shares authorized; issued and outstanding: 35,622,553 (December 31, 2023 - 27,282,165 (Note 12(b)) | 116,318,245 | 92,913,585 | ||||||
| Additional paid-in capital (Notes 12(b), 12(c) and 12(d)) | 17,509,528 | 17,510,469 | ||||||
| Deficit | (111,544,333 | ) | (105,501,295 | ) | ||||
| Accumulated other comprehensive loss | (2,738,944 | ) | (2,706,552 | ) | ||||
| Equity attributable to the owners of the Company | 19,544,496 | 2,216,207 | ||||||
| Non-controlling interest | (1,437,776 | ) | (1,323,881 | ) | ||||
| Total shareholders equity (deficit) | 18,106,720 | 892,326 | ||||||
| Total liabilities and shareholders equity (deficit) | $ | 36,636,123 | $ | 20,266,229 |
Nature of business and going concern (Note 1)
Commitments (Note 16)
Subsequent event (Note 20)
The accompanying notes are an integral part of these consolidated financial statements.
EUPRAXIA PHARMACEUTICALS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited and Expressed in U.S. Dollars, except share amounts)
| Three months ended March 31, 2024 | Three months ended March 31, 2023 | |||||||
| Expenses | ||||||||
| General and administrative (Note 13) | $ | 2,518,023 | $ | 1,261,836 | ||||
| Research and development (Note 14) | 4,175,453 | 2,274,623 | ||||||
| Total expenses | 6,693,476 | 3,536,459 | ||||||
| Other income/(expenses) | ||||||||
| Interest income | 236,369 | 163,033 | ||||||
| Interest expense (Note 18) | (321,140 | ) | (291,477 | ) | ||||
| Loss on sale of equipment (Note 5) | (138 | ) | ||||||
| Foreign exchange gain (loss) | (143,728 | ) | 23,033 | |||||
| Change in fair value of financial instruments (Note 11) | 770,042 | (314,080 | ) | |||||
| Total other income/(loss) | 541,543 | (419,629 | ) | |||||
| Net loss before tax expense | (6,151,933 | ) | (3,956,088 | ) | ||||
| Tax expense | 5,000 | |||||||
| Net loss for the period | $ | (6,156,933 | ) | $ | (3,956,088 | ) | ||
| Loss attributable to: | ||||||||
| Owners of the Company | $ | (6,043,038 | ) | $ | (3,895,392 | ) | ||
| Non-controlling interest | (113,895 | ) | (60,696 | ) | ||||
| (6,156,933 | ) | (3,956,088 | ) | |||||
| Foreign currency translation adjustment | (32,392 | ) | (5,521 | ) | ||||
| Comprehensive loss for the period | $ | (6,189,325 | ) | $ | (3,961,609 | ) | ||
| Loss per share basic and diluted (Owners of the Company | $ | (0.21 | ) | $ | (0.18 | ) | ||
| Weighted average shares outstanding basic and diluted | 28,812,641 | 21,704,284 |
The accompanying notes are an integral part of these consolidated financial statements.
EUPRAXIA PHARMACEUTICALS INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
(Unaudited and Expressed in U.S. Dollars, except share amounts)
| Number of shares | Amount | Additional paid-in capital | Deficit | Accumulated other comprehensive income | Non-controlling interest | Total | ||||||||||||||||||||||
| Balance, December 31, 2022 | 21,593,145 | 71,003,225 | 16,850,165 | (77,280,499 | ) | (2,786,366 | ) | (578,671 | ) | 7,207,854 | ||||||||||||||||||
| Share-based payments | 317,419 | 317,419 | ||||||||||||||||||||||||||
| Redemption of warrants | 150,000 | 263,127 | (33,591 | ) | 229,536 | |||||||||||||||||||||||
| Redemption of options | 500 | 1,132 | (438 | ) | 694 | |||||||||||||||||||||||
| Net loss for the period | (3,895,392 | ) | (60,696 | ) | (3,956,088 | ) | ||||||||||||||||||||||
| Foreign currency translation adjustment | (5,521 | ) | (5,521 | ) | ||||||||||||||||||||||||
| Balance, March 31, 2023 | 21,743,645 | 71,267,484 | 17,133,555 | (81,175,891 | ) | (2,791,887 | ) | (639,367 | ) | 3,793,894 | ||||||||||||||||||
| Non-brokered private placement, net of transaction costs (Note 12(b)(iii)) | 3,282,936 | 15,886,537 | 15,886,537 | |||||||||||||||||||||||||
| Share-based payments (Note 12(c)) | 1,094,838 | 1,094,838 | ||||||||||||||||||||||||||
| Redemption of warrants (Notes 12(b)(i) and 12(d)) | 2,235,484 | 5,711,861 | (699,586 | ) | 5,012,275 | |||||||||||||||||||||||
| Redemption of options (Notes 12(b)(ii) and 12(c)) | 20,100 | 47,703 | (18,338 | ) | 29,365 | |||||||||||||||||||||||
| Net loss for the year | (24,325,404 | ) | (684,514 | ) | (25,009,918 | ) | ||||||||||||||||||||||
| Foreign Currency translation adjustment | 85,335 | 85,335 | ||||||||||||||||||||||||||
| Balance, December 31, 2023 | 27,282,165 | $ | 92,913,585 | $ | 17,510,469 | $ | (105,501,295 | ) | $ | (2,706,552 | ) | $ | (1,323,881 | ) | $ | 892,326 | ||||||||||||
| Overnight marketed public offering, net of transaction costs (Note 12(b)(vi)) | 8,260,435 | 22,853,391 | 22,853,391 | |||||||||||||||||||||||||
| Share-based payments (Note 12(c)) | 213,130 | 213,130 | ||||||||||||||||||||||||||
| Redemption of warrants (Notes 12(b)(iv) and 12(d)) | 79,943 | 551,246 | (214,062 | ) | 337,184 | |||||||||||||||||||||||
| Redemption of options (Notes 12(b)(v) and 12(c)) | 10 | 23 | (9 | ) | 14 | |||||||||||||||||||||||
| Net loss for the year | (6,043,038 | ) | (113,895 | ) | (6,156,933 | ) | ||||||||||||||||||||||
| Foreign currency translation adjustment | (32,392 | ) | (32,392 | ) | ||||||||||||||||||||||||
| Balance, March 31, 2024 | 35,622,553 | 116,318,245 | 17,509,528 | (111,544,333 | ) | (2,738,944 | ) | (1,437,776 | ) | 18,106,720 |
The accompanying notes are an integral part of these consolidated financial statements.
EUPRAXIA PHARMACEUTICALS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and Expressed
| Three Months ended March 31, 2024 | Three Months ended March 31, 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | (6,156,933 | ) | $ | (3,956,088 | ) | ||
| Items not affecting cash | ||||||||
| Accrued interest on convertible debt, net of interest paid (Note 11) | 158,944 | 154,691 | ||||||
| Depreciation (Note 5 and 6) | 37,418 | 37,456 | ||||||
| Interest lease liability | 1,998 | 3,594 | ||||||
| Loss on sale of equipment | 138 | |||||||
| Share-based payments (Note 12(c)) | 213,130 | 317,420 | ||||||
| Change in fair value of financial instruments (Note 11) | (770,042 | ) | 314,080 | |||||
| Unrealized foreign exchange (gain) loss | 144,913 | (19,601 | ) | |||||
| Changes in operating assets and liabilities | ||||||||
| Accounts payable and accrued liabilities | 107,712 | (1,472,094 | ) | |||||
| Prepaid expenses | 125,202 | 51,420 | ||||||
| Amounts receivable | 17,201 | 1,688 | ||||||
| Cash used in operating activities | (6,120,457 | ) | (4,567,296 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Acquisition of equipment | (6,789 | ) | (8,068 | ) | ||||
| Cash used in investing activities | (6,789 | ) | (8,068 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Overnight marketed public offering (net of transaction costs) (Note 12(b)(vi)) | 22,853,391 | |||||||
| Redemption of warrants (Note 12(d)) | 337,184 | 229,536 | ||||||
| Redemption of options (Note 12 (c)) | 14 | 694 | ||||||
| Repayment of loans (Note 8) | (20,547 | ) | (19,400 | ) | ||||
| Lease payments (Note 9) | (16,269 | ) | (16,220 | ) | ||||
| Cash provided by financing activities | 23,153,773 | 194,610 | ||||||
| Increase in cash and cash equivalents | 17,026,527 | (4,380,754 | ) | |||||
| Foreign exchange effect on cash and cash equivalents | (460,756 | ) | 45,073 | |||||
| Cash, beginning of period | 19,341,756 | 18,263,397 | ||||||
| Cash, end of period | $ | 35,907,527 | $ | 13,927,716 |
Supplemental disclosure with respect to cash flows (Note 19)
The accompanying notes are an integral part of these consolidated financial statements.
EUPRAXIA PHARMACEUTICALS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited and Expressed in U.S. Dollars, except share amounts)
Eupraxia Pharmaceuticals Inc. (the Company ) was incorporated under the laws of the province of Alberta on May 12, 2011, under
the name Plaza Capital Partners Inc. On May 11, 2012, the Company changed its name to Eupraxia Pharmaceuticals Inc. and continued from the province of Alberta to the province of British Columbia.
On October 10, 2012, Eupraxia Holdings, Inc. ( Holdings ) was incorporated under the laws of the State of Delaware, USA. On
November 16, 2012, Holdings was registered as an extra-provincial corporation under the laws of the province of British Columbia, Canada. On October 10, 2012, Eupraxia Pharmaceuticals USA, LLC ( Eupraxia USA ) was incorporated under
the laws of the State of Delaware. On November 16, 2012, Eupraxia USA was registered as an extra-provincial corporation under the laws of the province of British Columbia. On January 7, 2021, Eupraxia Pharma, Inc. ( Eupraxia
Pharma ) was incorporated under the laws of the State of Delaware. On July 4, 2022, Eupraxia Pharmaceuticals Australia Pty Ltd. ( Eupraxia Australia ) was incorporated under the laws of the state of Victoria, Australia. On
May 17, 2023, Eupraxia Pharma USA Inc. ( Eupraxia Pharma USA ) was incorporated under the laws of the State of Delaware.
March 9, 2021, the Company completed its initial public offering on the Toronto Stock Exchange ( TSX ) and began trading under the symbol EPRX . On April 5, 2024, the Company began trading on the Nasdaq Capital Market
under the symbol EPRX .
The Company is a clinical stage biotechnology company leveraging its proprietary Diffusphere technology to optimize drug delivery for applications with significant unmet medical need. The address of the Company s corporate office and principal place of business is 201- 2067 Cadboro
Bay Road, Victoria, British Columbia, Canada.
These consolidated financial statements have been prepared on a going concern basis with the
assumption that the Company will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. At March 31, 2024, the Company had cash of $35,907,527. The Company has not yet generated revenue
from operations. The Company incurred a net loss of $6,156,933 during the three months ended March 31, 2024, and as of that date, the Company s accumulated deficit was $111,544,333. As the Company is in the research and development stage,
the recoverability of the costs incurred to date is dependent upon the ability of the Company to obtain the necessary funding to complete the research and development of its projects and upon future commercialization or proceeds from the
monetization of research activities. The Company will periodically have to raise funds to continue operations and raised gross proceeds of $25,026,073 (CDN$33,867,784) through an overnight marketed public offering of 8,260,435 common shares in March
2024. Although it has been successful in doing so in the past, there is no assurance it will be able to do so in the future, especially with the ongoing conflicts in the Ukraine and the Middle East affecting the global capital markets. Recent
developments with Silicon Valley Bank ( SVB ) have not impacted the Company s outlook for cash runway. The Company holds no amounts on deposit with SVB and the convertible debt (see Note 11 Convertible Debt) which matures in
June 2024 remains in good standing, is fully drawn and is not callable by SVB. The Company is active in its pursuit of additional funding through potential partnering and other strategic activities as well as grants to fund future research and
development activities, and additional equity financing.
The continued operations of the Company are dependent on its ability to generate
future cash flows or obtain additional funding. There is a risk that in the future, additional financing will not be available on a timely basis or on terms acceptable to the Company. These events and conditions may cast substantial doubt about the
Company s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that might be necessary should the Company be unable to
continue in business.
EUPRAXIA PHARMACEUTICALS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited and Expressed in U.S. Dollars, except share amounts)
These unaudited interim consolidated financial statements are presented in U.S. dollars and have been prepared in accordance with United States
generally accepted accounting principles ( U.S. GAAP ) which the Company transitioned to in 2023. These unaudited interim consolidated financial statements include the accounts of the Company and the accounts of its subsidiaries. All
significant intercompany transactions and balances have been eliminated upon consolidation.
The accompanying unaudited interim
consolidated financial statements have been prepared in accordance with U.S. GAAP and pursuant to the rules and regulations of the United States Securities and Exchange Commission ( SEC ) for interim financial information. Accordingly,
these consolidated financial statements do does not include all the information and footnotes required for complete consolidated financial statements and should be read in conjunction with the audited consolidated financial statements and notes for
the year ended December 31, 2023 included in the Company s 2023 40-F filed with SEC and on SEDAR+ on April 1, 2024.
These unaudited interim consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, which, in the
opinion of management, are necessary for a fair presentation of results for the interim periods presented. The results of operations for the three months ended March 31, 2024, and 2023 are not necessarily indicative of results that can be
expected for a full year. These unaudited interim consolidated financial statements follow the same significant accounting policies as those described in the notes to the audited consolidated financial statements of the Company included in the
Company s 2023 Form 40-F for the year ended December 31, 2023.
Comparative figures for the three months ended March 31, 2023, which were previously prepared in accordance with IFRS Accounting
Standards as issued by the International Accounting Standards Board ( IASB ), have been adjusted as required to be compliant with the Company s accounting policies under U.S. GAAP.
Change in Reporting Currency to the US Dollar
Effective December 31, 2023, the Company changed its reporting currency to the US dollar ( USD ) from the Canadian dollar
( CDN ). As such, all prior amounts originally reported in CDN are now reported in USD. The change in reporting currency was made to enhance comparability of the Company s results with other publicly traded companies in the life
sciences industry. The Canadian dollar continues to be the functional currency of the Company.
In accordance with ASC 830, the unaudited
interim consolidated financial statements of the Company are translated into U.S. dollars using the current rate method. Assets and liabilities are translated at the rate of exchange prevailing at the consolidated balance sheet date.
Shareholders equity is translated at the applicable historical rate. Revenue, expense and cash flow items are translated at the exchange rate in effect on the transaction dates. Translation gains and losses are reported as a separate component
of shareholders equity titled Accumulated Other Comprehensive Income.
The financial information for all prior periods is presented
in U.S. dollars as if the U.S. dollar had been used as the reporting currency during those periods.
The Company has reviewed recent accounting pronouncements and concluded that they are either not applicable to the Company or that there was no
material impact or no material impact is expected in the condensed consolidated financial statements as a result of future adoption.
EUPRAXIA PHARMACEUTICALS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited and Expressed in U.S. Dollars, except share amounts)
| March 31, 2024 | December 31, 2023 | |||||||
| GST/HST recoverable | $ | 66,991 | $ | 85,879 | ||||
| Other refundable tax credits (1) | 100,252 | 104,733 | ||||||
| Total | $ | 167,243 | $ | 190,612 |
Property and equipment consisted of the following:
| Computers | Office furniture and equipment | Leasehold Improvements | Lab Equipment | Total | ||||||||||||||||
| Cost | ||||||||||||||||||||
| As at December 31, 2022 | 70,578 | 66,399 | 125,744 | 473,553 | 736,274 | |||||||||||||||
| Additions | 18,534 | 54,843 | 73,377 | |||||||||||||||||
| Disposals | (5,488 | ) | (16,124 | ) | (21,612 | ) | ||||||||||||||
| Foreign currency adjustments | 2,001 | 1,597 | 3,023 | 12,992 | 19,613 | |||||||||||||||
| As at December 31, 2023 | 85,625 | 67,996 | 128,767 | 525,264 | 807,652 | |||||||||||||||
| Additions | 6,789 | 6,789 | ||||||||||||||||||
| Foreign currency adjustments | (2,048 | ) | (1,626 | ) | (3,079 | ) | (12,584 | ) | (19,337 | ) | ||||||||||
| As at March 31, 2024 | 83,577 | 66,370 | 125,688 | 519,469 | 795,104 | |||||||||||||||
| Accumulated Depreciation | ||||||||||||||||||||
| As at December 31, 2022 | 42,505 | 44,026 | 99,301 | 106,978 | 292,810 | |||||||||||||||
| Depreciation | 17,612 | 4,492 | 13,849 | 76,930 | 112,883 | |||||||||||||||
| Disposals | (5,162 | ) | (11,604 | ) | (16,766 | ) | ||||||||||||||
| Foreign currency adjustments | 1,226 | 1,149 | 2,666 | 4,097 | 9,138 | |||||||||||||||
| As at December 31, 2023 | 56,181 | 49,667 | 115,816 | 176,401 | 398,065 | |||||||||||||||
| Depreciation | 3,248 | 899 | 3,463 | 17,330 | 24,940 | |||||||||||||||
| Foreign currency adjustments | (1,358 | ) | (1,192 | ) | (2,785 | ) | (4,297 | ) | (9,632 | ) | ||||||||||
| As at March 31, 2024 | 58,071 | 49,374 | 116,494 | 189,434 | 413,373 | |||||||||||||||
| Net Book Value | ||||||||||||||||||||
| As at December 31, 2023 | $ | 29,444 | $ | 18,329 | $ | 12,951 | $ | 348,863 | $ | 409,587 | ||||||||||
| As at March 31, 2024 | $ | 25,506 | $ | 16,996 | $ | 9,194 | $ | 330,035 | $ | 381,731 |
During the three months ended March 31, 2024 and 2023, depreciation expense of $24,940 and $26,804,
respectively, was recognized with $8,877 included in general and administrative and $16,063 included in research and development ($3,023 and $23,781 for general and administrative, and research and development in 2023, respectively).
EUPRAXIA PHARMACEUTICALS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited and Expressed in U.S. Dollars, except share amounts)
The following table presents details of movement in the carrying value of the right-of-use asset: