Helix BioPharma Corp. - Management Reports 2021

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Management’s Discussion and Analysis of Financial Condition and Results of Operations For the years ended July 31, 2021 and 2020

December 8, 2021

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the annual consolidated financial statements of Helix BioPharma Corp. (the “Company” or “Helix”) for the years ended July 31, 2021 and 2020 and the accompanying notes thereto. This MD&A is based on the annual consolidated financial statements which have been prepared in accordance with International Financial Reporting Standards (“IFRS”). All amounts are depicted in Canadian currency unless otherwise noted.

Additional information relating to the Company can be found in the Company’s Annual Information Form, which is available on SEDAR at www.sedar.com.

FORWARD-LOOKING INFORMATION

This MD&A contains “forward-looking statements” and “forward-looking information” within the meaning of applicable Canadian securities laws (collectively, “forward-looking information”). Forward-looking information means disclosure regarding possible events, conditions or financial performance that is based on assumptions about future economic conditions and courses of action and includes financial projections and estimates; statements regarding plans, goals, objectives, intentions and expectations with respect to the Company’s future business, operations, research and development, including the focus of the Company’s primary drug product candidate L-DOS47 and other information relating to future periods. Forward-looking information includes, without limitation, statements concerning: (i) the Company’s ability to continue to operate on a going concern basis being dependent mainly on obtaining additional financing; (ii) the Company’s growth and future prospects being dependent mainly on the success of L-DOS47; (iii) the Company’s priority continuing to be L-DOS47; (iv) the Company’s development programs, including but not limited to, the extension of the current drug candidate(s) to other indications and the identification and development of further tumour-targeting antibodies for DOS47; (v) the nature, design and anticipated timeline for completion of enrollment and other matters relating to the Company’s ongoing clinical study programs such as the Investigational New Drug (“IND”) Phase Ib/II combination study combination with doxorubicin for previously treated advanced pancreatic cancer patients by the U.S Food and Drug Administration (“FDA”); (vi) the Company’s seeking of strategic partner support and therapeutic market opportunities; (vii) future expenditures, insufficiency of the Company’s current cash resources and the need for financing and the Company’s possible response for such matters; (viii) future financing requirements, the seeking of additional funding and anticipated future operating losses; (ix) future evaluation and changes to the Company’s disclosure controls and procedures related to internal controls over financial reporting and informing the public of such changes; (x) industry performance, competition (including potential developments relating to immunotherapies and the Company’s possible response to such developments), prospects, and general prevailing business and economic conditions; (xi) the Company’s technology and research and development objectives, including development milestones, estimated costs, schedules for completion and probability of success; (xii) the Company’s expectation that it can in a timely manner, or at all, produce the appropriate preclinical, and if necessary, clinical data required; (xiii) the Company’s plans to develop L-DOS47 and the estimated incremental costs (including the status, cost and timing of achieving the development milestones disclosed herein); (xiv) the Company’s intentions with respect to initiating marketing activities following receipt of the applicable regulatory approvals; (xv) the Company’s seeking of licensing opportunities to expand its intellectual property portfolio; (xvi) the Company’s expectation that it will be able to finance its continuing operations by accessing public markets for its securities; (xvii) the Company’s intended use of proceeds of any offering of its securities; and (xviii) the Company’s intention with respect to not paying any cash dividends on its common shares in the capital of the Company (“Common Shares”) in the foreseeable future. Forward-looking information can further be identified by the use of forward-looking terminology such as “expects”, “plans”, “designed to”, “potential”, “believe”, “intended”, “continues”, “opportunities”, “anticipated”, “2021”, “2022”, “2023”, “next”, “ongoing”, “seek”, “objective”, “estimate”, “future”, or the negative thereof or any other variations thereon or comparable terminology referring to future events or results, or that events or conditions “will”, “may”, “could”, “would”, or “should” occur or be achieved, or comparable terminology referring to future events or results.

Forward-looking information includes statements about the future and are inherently uncertain and are necessarily based upon a number of estimates and assumptions that are also uncertain. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Forward-looking information, including financial outlooks, are intended to provide information about management’s current plans and expectations regarding future operations, including without limitation, future financing requirements, and may not be appropriate for other purposes. The Company’s actual results could differ materially from those anticipated in the forward-looking information contained in this MD&A as a result of numerous known and unknown risks and uncertainties, including, but not limited to:

the Company’s lack of operating income and need for additional capital which may not be available in a timely manner or at all;
the Company’s history of losses and expectations regarding incurring additional losses for the foreseeable future;
rapid technological change and competition from pharmaceutical companies, biotechnology companies and universities, which may make the Company’s technology or products obsolete or uncompetitive;
the Company’s dependence on a drug platform with only a single drug product candidate, L-DOS47 currently in clinical trials, uncertainty as to the size and existence of a market opportunity for, and market acceptance of the Company’s drug product candidate including as a result of possible changes in the market for the Company’s drug candidates resulting from development in immunotherapies or other future cancer treatments;

the possibility that the market may never accept L-DOS47 or any other drug product candidate from the Company’s DOS47 platform technology;
uncertainty as to product development milestones and, in particular, whether the Company’s drug product candidate(s), especially L-DOS47, will be successfully developed and marketed;
intellectual property risks, including the possibility that patent applications may not result in issued patents, that issued patents may be circumvented or challenged and ultimately struck down, that any expiry of an issued patent, may negatively impact the further development or commercialization of the underlying technology, and that the Company may not be able to protect its confidential proprietary information;
risks relating to patent litigation;
risks relating to security breaches and other disruptions which may compromise the Company’s information and expose the Company to liability and cause the Company’s business and reputation to suffer;
risks related to the potential infringement by the Company of the intellectual property rights of third parties, and the possibility that such parties may commence legal proceedings to protect or enforce such rights, the outcome of which would be uncertain and could harm the Company’s business;
risks associated with claims, or potential claims, of infringement of third-party intellectual property and other proprietary rights;
risks relating to lawsuits or other proceedings commenced by the Company to protect or enforce the Company’s patents or other intellectual property, and their potential effect on the Company;
risks relating to potential claims of third parties that the Company’s employees, collaborators, consultants or independent contractors have wrongfully used or disclosed the confidential information of third parties, or that the Company’s employees have wrongfully used or disclosed alleged trade secrets of their former employers;
research and development risks, including without limitation, the fact that the Company’s drug product candidate(s) are complex compounds, and the Company faces difficult challenges in connection with the manufacture of clinical batches, and the risk of obtaining negative findings or factors that may become apparent during the course of research or development, any of which may result in the delay or discontinuation of the research or development projects;
regulatory risks, including the lengthy, unpredictable and costly FDA regulatory approval process and the potential impact on the Company if such approvals are not ultimately obtained;
the risk of unknown side effects arising from the development, manufacture or use of the Company’s products;
risk relating to the difficulty in enrolling patients in clinical trials which may result in delays or cancellation of clinical trials;
the Company’s dependence on third parties, including without limitation, contract research organizations, contract manufacturing organizations, clinical trial consultants, collaborative research consultants, regulatory affairs advisors, and others, whose performance and interdependence can critically affect the Company’s performance and the achievement of its milestones;
the Company’s significant dependence on licensed intellectual property and the risk of losing or breaching such licenses;
the Company’s dependence on assurances from third parties regarding licensing of proprietary technology owned by others, including the Company’s dependence on its license of the L-DOS47 antibody;
risks relating to the marketability of the Company’s products arising from regulatory delays or inability to obtain regulatory approval, and ongoing regulatory review and requirements;
uncertainty as to the availability of raw materials that the Company utilizes to manufacture its products, and in particular, Good Manufacturing Practice (“GMP”) grade materials, on acceptable terms or at all, and that the Company may not be able to timely obtain alternative suppliers upon commercially viable terms or at all, which could have a material adverse effect on the further development and commercialization of any or all of the Company’s drug product candidate(s);
manufacturing risks, the need to manufacture to regulatory standards, uncertainty whether the manufacturing process for the Company’s drug candidates can be further scaled-up successfully or at all and the risk that clinical batches of the Company’s drug candidate may not be able to be produced in a timely manner or at all, which would have a negative effect on the timing and/or occurrence of planned clinical trials and the potential commercialization of the drug candidates;
risks relating to the Company’s potential failure to find third party collaborators to assist or share in the costs of product development and the potential impact on the Company’s business, financial condition and results of operations;
the need for future preclinical and clinical trials, and the reliance by the Company on third parties to conduct such trials, the occurrence and success of which cannot be assured, and the fact that results seen in earlier clinical trials may not be repeated in later trials;
product liability and insurance risks;
the risk of lawsuits and other legal proceedings against the Company;
uncertainty as to the Company’s ability to maintain product liability insurance required by third parties and the risk of the corresponding agreement being terminated;
the need to attract and retain key personnel and reliance on key personnel;
the risk of misconduct on the part of employees and consultants, including non-compliance with regulatory standards and requirements;

the risk that indemnification obligations to directors and officers may adversely affect the Company’s finances;
the impact on the Company’s finances resulting from shifts in foreign exchange rates, credit risk and interest rate risk;
risks related to adverse decisions by tax authorities and changes in law;
risks relating to the potential financial strain on the Company’s resources due to the requirements of being a public company;
the impact of the ongoing volatility in the economic environment;
risks relating to compliance with environmental laws;
risk relating to a failure to maintain an effective system of internal controls;
risks related to epidemics, pandemics or other health crises, including the coronavirus (“COVID-19”) pandemic, and their potential effect on the Company’s business, operations and financial condition;
volatility in the trading price and volume of the Common Shares and potential challenges in maintaining listing requirements;
the possibility of dilution to current shareholders from future equity or convertible debt financings or through the exercise of stock options (“Options”), Common Share purchase warrants (“Warrants”) or other securities convertible or exchangeable into Common Shares;
liquidity of the Common Shares;
the risk that inaccurate or unfavorable research about the Company’s business, or the lack of research about its business, may affect the share price and trading volume of the Common Shares;

and other risk factors that are discussed above and elsewhere in this MD&A or identified in the Company’s other public filings under the Company’s profile on SEDAR at www.sedar.com (collectively, the “Helix Risk Factors”), any of which could cause actual results to vary materially from current results or the Company’s anticipated future results. Forward-looking information in this MD&A is based on certain material factors, estimates or assumptions, which may prove to be incorrect, including, but not limited to assumptions about: general business and current global economic conditions; future success of current research and development activities; achievement of development milestones; inability to achieve product cost targets; competition; changes to tax rates and benefits; the availability of financing on a timely basis; the Company’s and its competitors’ costs of production and operations; the Company’s ability to attract and retain skilled employees; receipt of all applicable regulatory approvals/clearances; protection of the Company’s intellectual property rights; market acceptance of the Company’s product candidates; the Company’s ability to meet the continued listing requirements of the Toronto Stock Exchange (“TSX”); and that the Helix Risk Factors will not cause the Company’s actual results or events to differ materially from the forward-looking information. The Company cautions that the foregoing list of important factors and assumptions is not exhaustive.

For all of the reasons set forth above, which do not represent an exhaustive list of factors that may affect the forward-looking information, investors should not place undue reliance on forward looking information. The forward-looking information is based on the beliefs, assumptions, opinions and expectations of the Company’s management at the time they are made, and the Company does not assume any obligation to update any forward-looking information should those beliefs, assumptions, opinions or expectations, or other circumstances change, except as required by law.

Data relevant to estimated market sizes in connection with Company’s lead products under development are presented in this MD&A. These data have been obtained from a variety of published resources, including published scientific literature, websites and information generally available through publicized means. The Company attempts to source reference data from multiple sources whenever possible for confirmatory purposes. Although the Company believes the data is reliable, the Company has not independently verified the accuracy and completeness of this data.

OVERVIEW

Helix is a clinical-stage biopharmaceutical company developing unique therapies in the field of immuno-oncology for the prevention and treatment of cancer based on its proprietary technological platform DOS47.

The Company is pioneering the development of a platform technology targeting the tumour microenvironment. Helix's technology is designed to reduce tumour acidity, an escape mechanism which cancer cells utilize to evade the anti-tumour immune response. Tumour acidity has been shown to correlate with resistance to anti-cancer treatment and poor prognosis for cancer patients.

To date, the Company’s proprietary technology platform, DOS47 has yielded two new drug product candidates, being L-DOS47 and V-DOS47.

L-DOS47 is currently under clinical study for the treatment of non-small cell lung cancer (“NSCLC”) and previously treated advanced pancreatic cancer. The Company completed extensive preclinical testing and manufacturing development of L-DOS47, following which the Company obtained regulatory approvals to conduct a Phase I/II NSCLC monotherapy clinical study in Poland, a Phase I NSCLC combination study with pemetrexed and carboplatin in the United States, and a Phase II NSCLC combination study with vinorelbine and cisplatin in Ukraine and Poland. In August 2019, the Company also received approval to conduct a Phase Ib/II

combination study utilizing L-DOS47 with doxorubicin in patients with previously treated advanced pancreatic cancer in the United States.

V-DOS47 drug candidate uses the Company’s proprietary DOS47 technology conjugated to anti-VEGFR2 antibody targeting a wide range of cancers. In 2016, V-DOS47 was licensed to Helix Immuno-Oncology S.A., the Company’s then wholly owned Polish subsidiary, (“HIO”), for pre-clinical and clinical development activity. HIO entered into a grant funding agreement with the Polish National Centre for Research and Development (“PNCRD”) to fund the V-DOS47 research project. On January 30, 2020, HIO conveyed to the PNCRD that it wished to terminate the grant funding program for V-DOS47. Under the grant funding agreement, HIO received approximately $1,457,000. As part of the debt cancellation agreements announced by the Company on June 26, 2020, the Company and HIO terminated the V-DOS47 license agreement. As a result, all transferred assets related to V-DOS47 have been automatically reassigned and transferred from HIO back to the Company without any formality. As a result, the Company will now assess what next steps to take with the V-DOS47 antibody.

In NSCLC, L-DOS47 has shown to be safe and well tolerated as a monotherapy pursuant to the Company’s LDOS002 study (“LDOS002”). L-DOS47 has also shown to be safe and well tolerated when used in combination with pemetrexed and carboplatin pursuant to the Company’s LDOS001 study (“LDOS001”). LDOS001 was conducted at University Hospital’s Case Medical Center in Cleveland, Ohio, at Penn State’s Cancer Institute in Hershey, Pennsylvania and at the University of Texas MD Anderson Cancer Center in Houston, Texas. As reported at the June 2020 conference of the American Society of Clinical Oncology, an objective response rate of 41.7% based on tumour burden and a clinical benefit rate of 75% inclusive of stable diseases were observed in the LDOS001 study. The Company believes the data supports the continuing development of L-DOS47 for NSCLC. As of the date of this MD&A, the Company is contemplating a new study in NSCLC using L-DOS47 in combination with immunotherapy and has hired several consultants to provide an assessment of the Company’s technology and advise on clinical strategy priorities.

During the year ended July 31, 2021, the Company engaged key opinion leaders on the feasibility and design of a possible immunotherapy chemo combination clinical study and had targeted a possible submission to the FDA by December 2021. As of the date of this MD&A, the Company is not in a position to make a submission to the FDA regarding the potential clinical study.

In December 2019, the Company announced the start of enrollment and screening for its Phase lb/ll clinical development program for previously treated patients with advanced pancreatic cancer. The study center is located in Scottsdale, Arizona at the Scottsdale Hospital (dba “HonorHealth”). The Company originally forecasted patient enrollment in the Phase Ib portion of the study to be completed by the end of the 2020 calendar year, pending safety outcomes and the impact of the COVID-19 pandemic. As a result of the COVID-19 pandemic, the Company has not met the previously forecasted patient enrollment timeline for this clinical study. The Company added two new clinical sites in other U.S. jurisdictions during the first quarter of 2021 in order to facilitate patient enrollment. The Company believes patient enrollment in the Phase Ib portion of the study may be completed by the second quarter of calendar year 2022. However, any cohort expansion in the dose escalation phase will result in a three-month extension in the projected timeline. Please see “Our results of operations may be negatively impacted by the COVID-19 outbreak” under the heading “Risk Factors”.

In 2017, the Company entered into a scientific research collaboration agreement with the Moffitt Cancer Center (“Moffitt”) in Tampa, Florida, to perform basic research studies to further investigate the pharmacodynamics of L-DOS47 and to determine the potential benefits of combining L-DOS47 with immune checkpoint inhibitors. The collaboration agreement with Moffitt is still in effect and the Company is assessing the possibility of expanding its collaboration with Moffitt. Pancreatic cancer is known to be a disease that is resistant to immunotherapy treatment and shown in animal models to be highly acidic. The Company believes the ability of L-DOS47 to modulate tumour acidity may be key to enable immunotherapy treatment for pancreatic cancer. This new research collaboration project will also build on data already obtained from imaging techniques performed by Moffitt that demonstrated the ability of L-DOS47 to affect tumour acidity. Translation of this technique into the clinic may help stratify patients for L-DOS47 and potentially identify patients who may be resistant to certain therapies due to tumour acidity.

In addition to DOS47, the Company has also developed antibodies that may be suitable for novel chimeric antigen receptor T-Cell therapeutic (“CAR-T”) for solid tumours. In March 2018, the Company announced a scientific research collaboration with ProMab Biotechnologies Inc. (“ProMab”) to co-develop novel antibody and CAR-Ts for various hematological malignancies and solid tumours. The first scientific research collaboration between the two parties involves a co-development program for a cell-based therapy in multiple myeloma. The aim was for both parties to perform various tasks with the objective of filing an investigational new drug application (“IND”) for testing in humans by for testing in humans by early 2019. The Company’s working capital deficiency through August 2019 pushed out the originally planned timeline for IND filing. Under the scientific research collaboration agreement with ProMab, the Company retained the rights for the multiple myeloma CAR-T in Canada and Europe and then sublicensed the European rights to its then wholly owned subsidiary, HIO, to further develop and commercialize these technologies in return for future milestone payments and royalty fees. The Company will provide certain technical and funding support in the early preclinical stages of the multiple myeloma scientific research collaboration program with ProMab. Under the sublicense agreement between the Company and HIO, HIO is expected to fully support the clinical development of cell therapy products and has recently applied for government grant assistance in Poland.

In December 2016, the Company signed an exclusive out-license agreement with Xisle Pharma Ventures Trust (“Xisle”) for the Company's late-stage, Biphasix™ technology platform, including the lead product candidate, interferon alpha. Under the terms of the agreement, Xisle paid an up-front fee and agreed to pay subsequent milestone payments and royalties to the Company as

Xisle advances the technology. As part of the agreement, the Company retained marketing rights for Belarus, Bulgaria, the Czech Republic, former Eastern Germany, Hungary, Moldova, Poland, Romania, Russia, Slovakia and Ukraine and non-exclusive rights for co-promotion in Canada. The Company subsequently assigned the foregoing marketing rights which it retained to HIO pursuant to an agreement between the Company and HIO, which terminated on June 26, 2020 in connection with the cancellation of intercompany debt owed by HIO to the Company.

On June 26, 2020, the Company announced that it had approved, in its capacity as a shareholder of HIO, a direct investment in HIO by an investor which resulted in the Company’s ownership in HIO being reduced to approximately 42.51% on July 8, 2020. The direct investment in HIO permitted HIO to apply for a new government grant for the development of the multiple myeloma CAR-T program in Poland. On September 3, 2020, HIO closed another direct private placement with an arm’s length party, CAIAC Fund Management AG (“CAIAC”), as designated trustee of an alternative investment fund to be established, resulting in a further dilution of the Company’s holding in HIO from 42.51% as at July 31, 2020 down to 29.89%.As a result of the financing, the Company’s ownership in HIO was diluted down to 29.89% and consequently, the Company has determined that it had lost control of HIO. During the year ended July 31, 2021, the Company received gross cash consideration of PLN 6,700,000 (CAD$2,308,000) for the balance of its shares in HIO ($2,020,000 net of costs of disposition), resulting in the full disposition of its interest in the associate. See Loss of control in subsidiary - discontinued operations below.

Also on June 26, 2020, the Company also announced the cancellation of intercompany debt in the total aggregate amount of approximately $2,700,000 owed to the Company by HIO. As part of the debt cancellation, both the V-DOS47 and Biphasix™ agreements between the Company and HIO described above were terminated with immediate effect.

The Company has an extensive patent portfolio that includes company owned and licensed patents and pending applications, including, but not limited to, the use of DOS47 as immunoconjugate for cancer treatment. The Company also has licenses with the National Research Council of Canada (“NRC”) that cover the use of antibodies for L-DOS47, other DOS47 candidates and cellular therapy products. Issued patents have coverage in all major pharmaceutical markets including North America, Europe, and Asia.

During the fiscal year ended July 31, 2021, the Company hired a biotechnology consulting firm to assess the Company’s drug product candidate with a focus on identifying value propositions and positioning strategies that would enable clinical adoption of L-DOS47. This engagement includes broad clinical development key opinion leader input on the positioning of possible combination therapies and the prioritization of current and/or any additional clinical indications. The Company expects the consulting firm’s report to be finalized by December 2021.

The Company currently believes that its growth and future prospects are mainly dependent on the success of its DOS47 drug product candidates.

RESEARCH AND DEVELOPMENT ACTIVITIES

Background

The pH system, with values ranging from 0 – 14, is used to measure acidity (pH < 7) and alkalinity (pH > 7). In general, the human body exists at a near-neutral pH - neither acidic nor alkaline (basic). In order for cells to function properly, they need the pH both inside and outside the cell to be neutral. There are some examples, however, where this rule is not followed. For example, the inside of the stomach is maintained at an acidic pH, as this helps to digest food. The cells lining the stomach have adapted to live in this acidic environment.

Tumours also exist in an acidic environment. Normal tissues include an extensive network of blood vessels, which deliver oxygen and nutrients to cells and remove waste products. However, tumours contain an abnormal network of blood vessels. Because of this, tumours are hypoxic (receive less oxygen than normal tissues) and need to use a non-oxygen requiring form of metabolism to provide energy for their survival and growth. One side-effect of this type of metabolism is that it generates an excess of hydrogen ions (H+) inside the cell, and hydrogen ions directly affect pH: the more hydrogen ions there are, the more acidic the inside of the cell becomes. Since a neutral pH inside the cell is essential for a cell to survive, tumour cells pump the excess hydrogen ions out of the cell. Due to the abnormal network of blood vessels, the excess hydrogen ions are not efficiently removed from the tumour microenvironment. Thus, the tumour microenvironment is acidic.

The acidic microenvironment helps promote tumour survival and metastasis in a number of ways. The genes expressed by the tumour are affected by the acidic microenvironment, which allows tumour cells to adapt. One of these acid-induced changes is to increase production and release of proteases by tumour cells. The proteases destroy the protein matrix that surrounds the tumour cells, which makes it easier for the tumour cells to invade local tissues – a first step to metastasis. In addition, the acidic tumour microenvironment has been shown to impair the activity of immune cells in the tumour, which allows the tumour cells to avoid destruction by the immune system.

The acidic tumour microenvironment also reduces the efficacy of common cancer treatments. Some chemotherapy drugs, such as doxorubicin, are weakly basic. The ability of these drugs to enter tumour cells, where they perform their function, is greatly reduced at acidic pH compared to neutral pH. Radiation therapy also is less effective at an acidic pH than at a neutral pH.

It is clear that the acidic tumour microenvironment has a profound effect both on tumour biology and current therapies, and that neutralizing the pH of the tumour microenvironment may have a dramatic impact. One way to reverse extracellular tumour acidity is to inhibit the proteins that pump hydrogen ions out of tumour cells. One advantage of inhibiting these proteins is that not only is acidity of the extracellular tumour microenvironment reduced, but acidity inside the tumour cells increases, which has a negative effect on tumour cell viability. However, targeting these pumps is not easily achieved as many of them exist in multiple forms and some are critical for the function of normal cells. In addition, since there are several different pumps that regulate pH, inhibition of just one is generally insufficient to combat tumour acidity.

A more general and theoretically more effective method to neutralize tumour extracellular pH is to use buffers. A variety of orally administered buffers have been effective in reducing tumour growth and/or metastases in preclinical animal studies. In addition, buffer therapies have been shown to enhance the activities of chemotherapy and immunotherapy. Although oral sodium bicarbonate buffer therapy was tested clinically, these trials failed due to poor compliance and moderate adverse effect. However, improved survival was seen in pancreatic cancer patients undergoing chemotherapy and “alkalization therapy” (produced by changes in diet and consumption of bicarbonate).

Similarly, an alkaline diet likely improved responses to epithelial growth factor receptor – tyrosine kinase inhibitor (EGFR-TKI) therapy in non-small cell lung cancer (NSCLC) patients. Thus, a change in delivery method may allow for successful buffer therapy. Consistent with this hypothesis, administration of iv sodium bicarbonate nanoparticles improved doxorubicin efficacy in a preclinical breast cancer model. In addition, a clinical study was performed in which sodium bicarbonate was administered by local infusion into the tumour. In this study, hepatocellular carcinoma patients were treated with trans-arterial chemoembolization (TACE) with or without local bicarbonate. Patients receiving bicarbonate showed a 6-fold lower viable tumour residue, and a randomized controlled study showed that patients treated with bicarbonate had a higher objective response rate and cumulative overall survival in comparison to the patients treated with TACE alone.

Alkalization using urease - DOS47 platform technology

Although buffer therapies have the potential to neutralize the acidic tumour microenvironment, local administration of buffers is generally not feasible. In order to deliver alkalization therapy to tumours, the Company has developed DOS47, a proprietary technology platform. DOS47 compounds are conjugates of two components: the plant-based urease enzyme and an antibody that binds to a tumour-specific antigen. The antibody component targets the conjugate to tumours and the urease enzyme converts endogenous urea into metabolites that include ammonia and hydroxyl ions, thus raising the pH of the tumour microenvironment.

L-DOS47

L-DOS47 includes an antibody that targets carcinoembryonic antigen-related cell adhesion molecule 6 (CEACAM6)

Carcinoembryonic antigen-related cell adhesion molecule 6 (CEACAM6) is a cell surface protein found to be upregulated in several types of cancer, including NSCLC and pancreatic cancer. In lung adenocarcinoma, CEACAM6 expression has been significantly associated with adverse clinical outcome. Similarly, the median survival time of pancreatic adenocarcinoma patients with CEACAM6-positive tumours was significantly shorter than that of patients with CEACAM6-negative disease.

L-DOS47 is composed of the jack bean urease enzyme conjugated to approximately ten (10) copies of a camelid single-chain anti-CEACAM6 antibody. The specificity of L-DOS47 for CEACAM6 was confirmed in in vitro binding studies where binding was only observed to cells that express CEACAM6. Immunohistochemistry studies showed binding of L-DOS47 to lung cancer and pancreatic cancer tissues, but not to normal tissues. The ability of L-DOS47 to specifically target tumours was confirmed using a fluorescently labelled version of L-DOS47. These experiments were performed in a mouse model of lung cancer, and showed that for 12-72 hours after injection, L-DOS47 was localized at the tumour.

L-DOS47 has been shown to control tumour growth, reduce metastases, and enhance the effect of chemotherapy in animal models

L-DOS47 was tested in two mouse models: one with lung cancer and one with pancreatic cancer. In both cases, administration of L-DOS47 reduced tumour growth compared to treatment with a control reagent. In addition, when lung cancer cells and L-DOS47 were premixed and injected into mice, the presence of L-DOS47 reduced the ability of the tumour cells to colonize the lungs. The ability of L-DOS47 to improve chemotherapy efficacy was observed both in in vitro and in vivo preclinical experiments. In vitro experiments showed that at an acidic pH, L-DOS47 was able to dramatically increase the cytotoxicity of the weakly basic chemotherapeutic drug doxorubicin. In addition, a preliminary preclinical study showed that pre-treatment with L-DOS47 24 hours before doxorubicin delayed tumour growth in mice bearing a CEACAM6-positive pancreatic tumour.

L-DOS47 has been shown to raise the pH of the tumour microenvironment and restore immune-cell activity

Numerous experiments have been performed by the Company which monitored the production of ammonia and increase in pH when L-DOS47 was combined with urea in vitro. The ability of L-DOS47 to raise the pH of the tumour microenvironment in vivo

has been observed in both lung and pancreatic cancer models using multiple imaging methods including P-MRS and MRI-CEST (see images below). The Company has performed in vitro experiments with human CD8[+] T cells and has observed that culture at acidic pH increased the expression of the immune-downregulatory molecule programmed cell death protein 1 (PD-1) on the T cells, and that the T cells in acidic conditions reduced their production of the pro-immune cytokine interferon-gamma (IFN-γ). L-DOS47 successfully restored the activity of these cells, as observed by reduced expression of PD-1 and increased production of IFN-γ and another pro-immune cytokine, interleukin-2 (IL-2). In one preliminary preclinical experiment, treatment with L-DOS47 enhanced the ability of an anti-PD1 antibody to control growth of a pancreatic tumour in a mouse model.

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CEST MRI of iopamidol for pH imaging [1] of a Panc02 clone 38 SC tumour. (a) T2 weighted image, (b) CEST MRI before L-DOS47 injection, (c) ~30 minutes after 90 µg/ kg L-DOS47 injection. The difference in mean pHs is 0.38 units. L-DOS47 was administered iv. Iopamidol was administered SC, next to the tumour.

In summary, these preclinical experiments demonstrate that L-DOS47 successfully targets CEACAM6-expressing tumours, controls tumour growth, increases the pH of the tumour microenvironment, and is able to improve the efficacy of chemotherapy and immunotherapies. L-DOS47 is currently being tested in clinical trials of both lung and pancreatic cancers. See “Clinical Programs” below.

V-DOS47

V-DOS47 is the second immuno-oncology drug candidate derived from the Company’s DOS47 technology platform. V-DOS47 is an antibody-DOS47 conjugate that targets the vascular endothelial growth factor 2 receptor (VEGFR2). VEGFR2 is overexpressed in breast carcinoma compared with benign breast tissue. In patients with highly estrogen receptor positive (ER[+] ) forms of breast cancer, the efficacy of tamoxifen treatment negatively correlates with VEGFR2 expression.

CAR-T for solid tumours and hematological malignancies

CEACAM6 specific CARs

Expression of CEACAM6 protein has been reported in a variety of normal human tissues including granulocytes. However, its expression is elevated in many types of solid tumours such as breast, pancreatic, ovarian, lung and colon. CEACAM6 is envisaged as a biomarker and potential therapy target for pancreatic ductal adenocarcinoma and pancreatic intraepithelial neoplasia (Duxbury et al., 2004a, 2004c, 2004d). Recently CEACAM6 is suggested to be check point molecule in multiple myeloma.

The Company believes CEACAM6 specific CAR immune cells may have broad applications in a number of cancer types. The Company is working on two camelid single domain antibodies that target CEACAM6.

2A3 is a camelid single domain antibody isolated from a whole cancer cell immunized llama library. The antibody binds to the CEACAM6 antigen with high affinity and inhibits the proliferation of CEACAM6-expressing cancer cells in vitro . The efficacy of CEACAM6-CAR-T cells in xenograft model was examined in vivo . The results strongly support that CEACAM6-CAR-T cells can be used as an effective immunotherapy agent against CEACAM6-expressing cancers, and that camelid single domain antibodies can be easily adopted for CAR-T type therapies.

Vascular epithelial growth factor receptor 2 (VEGFR2) CARs

Most solid tumours and some hematologic malignancies are characterized by an angiogenic phenotype that is an absolute requirement for tumour survival, progression, and metastasis. Therapeutic approaches targeting molecules involved in tumour angiogenesis can inhibit tumour growth. Proliferating endothelial cells in the vessels within solid tumours aberrantly express high levels of angiogenic growth factors, receptors, and adhesion molecules that are absent or barely detectable in established blood vessels, which are normally quiescent. Among these, VEGF and its receptors appear to be the dominant regulators of angiogenesis responsible for the vascularization of normal and neoplastic tissues. Overexpression of VEGF and its receptors is associated with tumour angiogenesis, survival, invasion, metastasis, recurrence, and prognosis in human cancers. VEGF stimulates angiogenesis mainly through VEGFR-2 (also known as Flk1 in mice and KDR in humans), a tyrosine kinase receptor that is overexpressed in tumour endothelial cells and on some tumour cells. Pharmacologic approaches to inhibit VEGF, using monoclonal antibodies or small molecules, are of value in cancer treatment, though the cytostatic rather than cytotoxic nature of these interventions and the redundancy of angiogenic pathways have limited the curative potential of these treatments. The

Company believes VEGFR2 specific CAR immune cells may have broad applications in a number of cancer types. Helix is working on two camelid single domain antibodies that target VEGFR2.

The Company is also leveraging its know-how in manipulating the tumour microenvironment, and its expertise in developing unique single domain antibody therapeutics to develop CAR-T novel cell-based treatments. Helix intends to develop CARs for ACT for solid and hematological malignancies. The Company has selected CEACAM6 and VEGFR2 specific CARs for solid tumour. For hematological malignancies the Company has selected CD19, CD22 and BCMA as potential targets.

ProMab

On March 16, 2018, the Company entered into a collaboration agreement with ProMab to co-develop Car-T that target BCMA to treat multiple myeloma. In this collaboration, the Company retains commercial rights for this CAR-T in Canada and Europe. The Company entered into a sublicense agreement for BCMA with HIO whereby the Company will assist in preclinical and early phase clinical planning of the BCMA project. The Company’s assistance includes funding a certain portion(s) of the preclinical development stage while HIO leads the regulatory and clinical development of the product in Europe. The Company fulfilled its obligation regarding this collaboration agreement during fiscal 2021. These activities are expected to be coordinated with ProMab who will be developing the product for Asia and the U.S. The Company retains the rights for Canada.

The Biphasix[TM ] topical formulation system

The Biphasix™ Topical Formulation System is a platform technology which the Company acquired and further developed for microencapsulating therapeutic compounds in multilayered, lipid-based microvesicles. These microvesicles have complex structures that include a variety of compartments into which drug molecules can be integrated. The principal application of the technology is in the preparation of topical dosage forms for the dermal (into the skin) or mucosal (into the mucosal tissues) delivery of large molecular weight drug compounds.

Clinical programs

The Company has commenced four clinical studies under the L-DOS47 program. Three clinical studies involve the treatment of NSCLC: A Phase I combination study (LDOS001) conducted in the U.S., a Phase I/II monotherapy study concluded in Poland (LDOS002), and a Phase II combination study running in Eastern Europe (LDOS003). A fourth clinical study, a Phase Ib/II study (LDOS006) investigating the treatment of metastatic pancreatic adenocarcinoma, received regulatory approval and is currently being conducted in the U.S. The Company recently applied for a protocol amendment to the LDOS006 clinical trial.

LDOS001 – A Phase I combination therapy trial in lung cancer

LDOS001 was a Phase I, open label, dose escalation study of L-DOS47 in combination with standard doublet therapy of pemetrexed/carboplatin in patients with stage IV (TNM M1a and M1b) recurrent or metastatic non-squamous NSCLC. Patients received standard of care doses of pemetrexed [500 mg/m2] and carboplatin [AUC6], respectively, on Day 1 of a 3-week cycle, in combination with L-DOS47 (starting dose 0.59 µg/kg), administered weekly. The objective of the study design was to evaluate safety and tolerability, as well as determine the maximum tolerated dose (“MTD”) of L-DOS47, in combination treatment.

Fourteen (14) patients were enrolled across six dosing cohorts, starting at 0.59 and increasing up to 9.0 µg/kg. The MTD was not achieved as none of the patients experienced any dose-limiting toxicity (“DLT”). Fifty percent (50.0%) of patients experienced at least one treatment emergent adverse event assessed as study drug-related, with 14.3% of patients experiencing at least one grade 3/4 drug-related toxicity. Although the study was not designed specifically to assess efficacy, preliminary results showed that of 12 patients evaluable for efficacy, five patients (41.7%) had a partial response (“PR”), four patients (33.3%) experienced stable disease (SD) and three patients (25.0%) had progressive disease (“PD”). The objective response rate was 41.7%, with a median duration of 187 days, and a clinical benefit rate of 75.0% with a median duration of 141 days. Additional reports on L- DOS47 pharmacokinetics and immunogenicity have been completed with the completion of the Clinical Study Report expected to be finalized by December 2021.

L-DOS47, in combination with pemetrexed/carboplatin, was well tolerated with promising anti-tumour activity against nonsquamous NSCLC.

.
LDOS001 Phase I Best	Overall Response SummaryEfficacyEvaluable(N=12)
Best Overall Response	L-DOS47(All DosingCohorts)+ Pemetrexed/Carboplatin
	Overall
Number of Patients1 Complete Response (CR) Partial Response (PR) Stable Disease (SD) Progressive Disease (PD)	12 0 (0%) 5 (41.7%) 4 (33.3%) 3 (25.0%)

1 Number of patients used as denominator to calculate percentages.

LDOS002 – A phase I/II monotherapy trial in lung cancer

LDOS002 was a Phase I/II open-label, non-randomized, dose escalation study of L-DOS47 as a monotherapy in adult subjects with inoperable, chemo-naïve or refractory Stage IIIb or IV non-squamous NSCLC. The primary objectives of the Phase I portion of the study were to evaluate safety and tolerability of ascending doses of L-DOS47 and define the MTD. Patients received weekly doses of L-DOS47, administered as an intravenous infusion over 14 days, followed by seven days' rest (with one treatment cycle occurring over three weeks).

Despite a total of 55 patients being dosed across 16 dose levels ranging from 0.12 up to 13.55 μg/kg, the MTD was not reached. There was only one single DLT of spinal/bone pain reported at the 5.76 μg/kg dose level. The weekly dosing schedule of L-DOS47 for all doses up to 13.55 μg/kg was otherwise well tolerated and most adverse events reported were typical of the population under study. L-DOS47 did not elicit a dose-dependent release of cytokines at doses up to13.55μg/kg. Time of maximum observed plasma drug concentration after dosing (“Tmax”) was consistent across dose levels and treatment cycles, occurring within the first hour following the L-DOS47 infusion. There were no safety issues beyond those already observed in pre-clinical toxicology studies or expected in the population of patients being studied.

A dose response trend was observed when comparing the percentage of patients who were progression-free at 16 weeks across dose ranges, according to Response Evaluation Criteria in Solid Tumours (“RECIST”) version 1.1. A similar trend was observed when comparing the percentage of patients who had stable disease and had a reduction in target lesions.

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57%
60%
50%
50%
36% 36%
40%
30% 25%
17% 18%
20%
10%
0%
0%
0.12-0.46 0.59-1.38 1.84-4.33 5.76-13.55
Dose (µg/kg)
PFS > 16 weeks Stable (Target Lesion Reduction)
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L-DOS47 Monotherapy dose response in cohorts

In the Phase II portion of the study, the objective was to make a preliminary assessment of efficacy for L-DOS47 given as monotherapy. Enrolling subjects in the same patient population as in Phase I, patients were dosed at 13.55µg/kg, twice weekly over 14 days, followed by seven days’ rest. A total of 21 patients were dosed in the first stage of the Phase II component of the study.

Despite an intensified L-DOS47 monotherapy dosing regimen, evaluation of initial results did not yield ≥1 partial or complete response at any time point as defined by protocol. The Phase II component of the study did not proceed to Phase II, Stage 2 and the development of L-DOS47, as monotherapy treatment of non-squamous, NSCLC was discontinued. Based on the efficacy results of the Phase I/II monotherapy study, Helix is pursuing Phase II studies in combination with therapies that may benefit from the pH-modulating effects of L-DOS47 on solid tumours that express CEACAM6.

LDOS003 – A Phase II combination therapy trial in lung cancer

LDOS003 is a Phase II, open-label, randomized study of L-DOS47 in combination with vinorelbine/cisplatin vs vinorelbine/cisplatin alone in patients with lung adenocarcinoma. Vinorebine/cisplatin chemotherapy combination in the U.S. has become infrequent due to the rapidly evolving treatment landscape and the growing prominence of immunotherapies such as Keytruda®. The Company commenced this study based on the use of vinorebine/cisplatin chemotherapy combinations in Eastern European and Asian markets.

The approved protocol called for patients receiving L-DOS47 to be dosed on days 1 and 8 of each 21-day treatment cycle, along with standard vinorelbine/cisplatin chemotherapy for a total of four treatment cycles. The study was divided into two parts. Part I applied a standard 3 + 3 algorithm for dose escalation to determine the L-DOS47 maximum tolerated dose when given in combination with vinorelbine/cisplatin. Cohorts of three patients were recruited into three dosing cohorts (6, 9 and 12 µg/kg). All patients at a given dosing cohort were to complete the first treatment cycle (3-week period) before escalation in subsequent patients were to proceed. The decision for escalation to the next dose level would be made after the safety data had been reviewed

by the Trial Steering Committee (“TSC”). If a patient in any cohort experiences a DLT, an additional three patients would need to be enrolled, for a maximum of up to 18 patients in this initial dose escalation part of the study.

In Part II, after the maximum tolerated dose of L-DOS47 in combination with vinorelbine/cisplatin has been determined, a further 118 patients will be randomized (1:1) to receive L-DOS47 in combination with vinorelbine/cisplatin, or vinorelbine/cisplatin alone. Efficacy will be assessed by time to progression (time from first day of study drug administration to documented disease progression), response rate (proportion of patients with a best overall response of complete response and partial response according to RECIST v. 1.1), and overall survival (time from first day of study drug administration to death due to any cause). Monitoring will include radiological evaluations every second cycle. Safety and tolerability of L-DOS47 in combination will also continue to be evaluated. For all patients, treatment will continue either until the patient experiences disease progression, unacceptable toxicity, the patient withdraws consent or has completed four treatment cycles.

Patient recruitment began in February 2019 but halted in April 2020. At the time, the first two cohorts (6 and 9 µg/kg) in Part I of the study had been completed. Two (2) patients had also been dosed in the third cohort, 12 µg/kg, but the cohort could not be completed due to a shortage in the required vinorelbine dosages from the manufacturer, which was expected to continue into 2021. Consequently, the Company made the decision to terminate further recruitment, proceed to data analysis and not move forward with Part II of the study . The clinical report for LDOS003 Phase I LDOS-47 vinorelbine/cisplatin combination study is expected to be completed in March 2022.

LDOS006 – A Phase Ib/II combination trial in pancreatic cancer

The Company received FDA approval in August 2019 to initiate a new study of L-DOS47 in the treatment of pancreatic cancer. This is an open label, non-randomized study designed to evaluate the safety, tolerability and preliminary anti-tumour activity of L- DOS47 in combination with doxorubicin in patients aged ≥ 18 years old with metastatic pancreatic cancer who have progressed on at least two prior treatment regimens. The trial was initiated in November 2019 and the first patient dosed in December 2019.

The Phase Ib part of the study applies a standard 3 + 3 algorithm for dose escalation to determine the L-DOS47 maximum tolerated dose to use in combination with doxorubicin for the Phase II part of the study. Patients are recruited into three cohorts where each cohort receives increasing weekly dose levels of L-DOS47 in combination with a fixed dose of 20 mg/m2 of doxorubicin weekly, (or 15 mg/m[2 ] as per the subsequently amended protocol), with four weeks making up one treatment cycle up to a maximum of six cycles. The decision for escalation to the next dose level will be made after all patients in a cohort have completed four weeks of combination treatment and the safety data have been reviewed by the Safety Review Committee of the Company. If a patient in any cohort experiences a dose limiting toxicity, an additional three patients will be enrolled, for a maximum of up to 18 patients in this initial dose escalation part of the study.

The Phase II part of the study will focus on evaluating preliminary anti-tumour activity, as well as continuing to evaluate safety and tolerability of L-DOS47 in combination with doxorubicin. A further 11 additional patients will be enrolled in this phase of the study. Patients will be initiated on the L-DOS47 dose determined in Phase I, in combination with 20 mg/m2 doxorubicin as per the original protocol or 15 mg/m[2 ] as per the subsequently amended protocol, with tumour marker carbohydrate antigen 19-9 (CA19-9) measurements at each treatment cycle, and radiological assessments every two treatment cycles. Tumour response will be assessed according to RECIST version 1.1. Safety will be assessed by reported adverse events (AEs), serious adverse events (SAEs), physical exams, vital signs, Karnofsky Performance Status, electrocardiogram (ECG), echocardiogram (ECHO)/multigated acquisition scan (MUGA), clinical laboratory evaluations (hematology, chemistry, coagulation and urinalysis), and anti-LDOS47 antibody levels.

Currently a total of fourteen (14) patients have been dosed with L-DOS47 in combination with doxorubicin. Six (6) patients were dosed under the original protocol where patients were initiated on L-DOS47 in combination with 20 mg/m[2] doxorubicin, three (3) of whom withdrew due to disease progression prior to completing the required 4-week cycle in order to be included in the evaluation for dose escalation. Of the remaining three (3) patients, one patient experienced a DLT attributed to doxorubicin and as a result, a protocol amendment adjusting the starting chemotherapy dose was submitted to FDA on December 23, 2020, and patient screening resumed on January 25, 2021. Due to slower enrolment related to challenges resulting from COVID-19 pandemic measures, two additional sites were opened for recruitment in March and April 2021.

Under an amended protocol where patients were initiated on L-DOS47 in combination with 15 mg/m[2] doxorubicin, the first three (3) patients dosed resulted in one patient experiencing a serious adverse event (thromboembolic event). The investigator assessed the event as probably related to L-DOS47, but with alternate causality related to patient’s prior medical history of thromboembolic event and advanced pancreatic disease state. The sponsor physician assessed the event as possibly related to doxorubicin chemotherapy, the patient’s prior medical history, and an uncontrolled pancreatic cancer state, although a possible relationship to L-DOS47 in combination with doxorubicin could not be ruled out. As this event met the criteria for a DLT, the cohort was expanded and a further five (5) patients have since been dosed. Two patients discontinued from the trial prior to completing the required 4-week cycle in order to be included in the evaluation for dose escalation due to adverse events unrelated to study treatment. Of the remaining three patients, one discontinued due to disease progression, one remains on treatment in the fifth treatment cycle, and one patient continues in the first treatment cycle. This last patient is required to complete the 4-week DLT observation period before safety data for Cohort 1 can be evaluated for dose escalation.

A further revised protocol dated November 9, 2021 was submitted to FDA on November 15, 2021. The main revision is to increase the number of treatment cycles from 6 to 8 cycles, while providing flexibility to administer additional treatment cycles where clinical benefit to patient outweighs risk.

Given the Company’s limited current cash resources and the possibility of not being able to obtain additional financing on a timely basis, the Company may be required to reduce, delay or cancel one or more of its planned research and development programs, including clinical studies.

Manufacturing

L-DOS47 is an immunoconjugate drug composed of single chain antibody molecules specific for CEACAM6 that are cross-linked with a purified urease derived from the jack bean plant (Canavalia ensiformis).

The urease component is extracted from jack beans through a multistage process that yields an enzyme with high activity and purity. The llama-derived recombinant antibody is manufactured in E. coli and the purified antibodies are covalently linked to the urease enzyme by a chemical cross-linker into L-DOS47 drug substance. The drug substance is filled and lyophilized into the final L-DOS47 drug product for use in the clinic. The Company has extensively characterized L-DOS47 and maintains a comprehensive analytical program for the drug substance, drug product, and the urease and antibody intermediates.

A 1% Polysorbate 80 diluent is co-mixed with L-DOS47 to prevent protein adsorption to the saline bags and IV tubing that are used to administer the drug to patients in the clinic.

Manufacturing, release, and stability testing of L-DOS47 and the 1% Polysorbate diluent is currently conducted by contract manufacturing organizations (“CMOs”) and contract testing laboratories (“CTLs”) in Canada and the U.S. The Company requires all CMOs and CTLs to maintain compliance with current GMP and to be licensed by the national regulatory authority in their jurisdiction. Company employees and consultants provide technical, quality, and regulatory oversight for all operations related to L-DOS47 production. Currently, the Company has service and quality agreements with several CMOs/CTLs for clinical-stage manufacturing, testing, and release of the L-DOS47 drug substance and drug product and the 1% Polysorbate diluent.

The Company’s supply of L-DOS47 drug product continues to be subjected to stability assays according to ICH Q1A (R2) guidelines. The oldest lot is on extended shelf-life and the last testing point was initially planned for 78M (May 2021) due to a shortage of stability samples. The stability program was subsequently resupplied, and the stability protocol will be extended as long as the product continues to meet specifications. If the product goes Out-of-Specification (OOS) at the real-time storage condition (2-8ºC) for two consecutive pulls before the final time point, further testing may be discontinued.

The CMO that manufactured the L-DOS47 drug substance batch that is currently being used in the clinical studies informed the Company in early 2019 that it would no longer be able to manufacture L-DOS47. In September 2019, the Company signed an agreement with another CMO to reprocess a drug substance batch the Company had kept in reserve. The Company completed the reprocessing of the drug substance batch in June 2020, and after quality control testing and release, the drug substance was transferred to another CMO to complete the fill/finish process. After lyophilization which was completed in early 2021 the drug product lot was placed on a 36M stability program which may be extended if warranted by real-time stability data. If the product goes OOS at the real-time storage condition (2-8ºC) for two consecutive pulls before the final time point, further testing may be discontinued. The new batch recently completed a successful six-month stability test in July 2021 with the next stability test scheduled for completion in December 2021. The Company has another reserve batch of drug substance to produce drug product in the event it needs to do so.

The Company has also been in discussion with another CMO to plan out a technology transfer program to manufacture a new batch of L-DOS47 drug product. As of now, no commitment has been made.

If any of the stability assays for the current batch or new production batch do not meet acceptance criteria, the Company’s clinical studies and any planned research and development programs would likely face delays and possibly be cancelled, which could impair the current and future value of the business. See “Risk Factors”.

Product focus and strategy

The Company is currently focused on the development, commercialization &/or partnership of L-DOS47 as a potential therapy for NSCLC and pancreatic cancer but at the same time is evaluating the current clinical strategy to determine if the Company’s L- DOS47 pipeline can be expanded into other indications. The following diagram sets forth the status and milestones related to the Company’s current L-DOS47 clinical program.

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NSCLC

Completion of the LDOS001 Phase I LDOS-47 pemetrexed/carboplatin combination study clinical report by December 2021.
Completion of the LDOS003 Phase I LDOS-47 vinorelbine/cisplatin combination study clinical report in March 2022.

Pancreatic

Completion of the LDOS006 Phase Ib doxorubicin combination study has been pushed out to March 2022. COVID-19 in 2020 materially hindered patient enrollment resulting in the Company adding two new clinical sites early in calendar year 2021. The clinical study was also impacted with two adverse events which resulted in the expansion of the number of patients previously forecasted to complete the Phase Ib portion of the study.
Provided the LDOS006 Phase Ib portion of the study is successfully completed, the Company is forecasting patient enrollment for the Phase II portion of the study to commence no later than June 2022 with a final clinical report by September 2023. Unlike the Phase Ib study where new patient enrollment must be completed sequentially, the Phase II portion of the study allows for multiple patient enrollment simultaneously which could reduce the currently projected timeline.

Commercialization

The Company’s DOS47 commercialization objective is to eventually enter into a strategic partnering alliance with a large pharmaceutical company, on an individual or multiple drug candidate basis, such as L-DOS47 or any potential new DOS47 drug product candidate. The intention of Company is to enter a structured process that will include preparing the Company to have discussions with potential partners, engaging in dialogue with a targeted group of qualified partners and licensees, and entering negotiations on a prospective partnership, alliance or licensing transaction. In the meantime, the Company will continue to gather as much value-adding clinical data/findings, which demonstrate the safety and efficacy of L-DOS47 in patients or any other new potential DOS47 drug candidate so as to maximize value for shareholders when entering into a strategic partnering alliance.

Market and competition

NCSLC

Based on information published in “Key Statistics for Lung Cancer” by the American Cancer Society (www.cancer.org) in January 2020 , lung cancer accounts for approximately 25% of all cancer deaths and is by far the leading cause of cancer death among men and women in the U.S. It is estimated that in 2020 there will be over 228,820 new lung cancer cases and 135,720 people may die from the disease in the United States. Of these cases, over 80% are anticipated to be of the non-small cell lung cancer (NSCLC) type.

The treatment options for metastatic NSCLC have changed significantly in the last few years due to the clinical success of immunotherapies such as immune checkpoint inhibitors that target Programmed Death 1 (“ PD-1 ”) or its ligands. However, a significant percentage of patients do not respond to current therapies resulting in an urgent need for additional therapeutic options.

Treatment options for metastatic NSCLC have changed significantly in the last few years due to the clinical success of immunotherapies such as immune checkpoint inhibitors that target PD-1 or its ligands. On March 4, 2015, the FDA approved Nivolumab, the generic name for the trade drug named Opdivo®, which targets PD-1 for the treatment of metastatic squamous NSCLC with progression on or after platinum-based chemotherapy. On October 2, 2015, the FDA granted accelerated approval for Pembrolizumab, the generic name for the trade drug named Keytruda®, which targets PD-1 to treat patients with advanced metastatic NSCLC with Tumours that express PD-L1 whose disease has progressed after treatment.

As of March 2017, the FDA had approved five checkpoint inhibitor drugs: ipilimumab (Yervoy®), pembrolizumab (Keytruda®), nivolumab (Opdivo®), atezolizumab (Tecentriq®) and avelumab (Bavencio®).

On May 10, 2017, the FDA granted accelerated approval to pembrolizumab (Keytruda®, Merck and Co., Inc.) in combination with pemetrexed and carboplatin for the treatment of patients with previously untreated metastatic NSCLC. Approval was based on a cohort (G1) of patients enrolled in an open-label, multicenter, multi-cohort study.

Pancreatic cancer

Pancreatic cancer remains a deadly disease of significant unmet medical needs. In “Key Statistics for Pancreatic Cancer” dated January 2020, the American Cancer Society estimated that in 2020, 57,600 people will be diagnosed with the disease in the US with 47,050 deaths. The most common type of pancreatic cancer is exocrine in nature and approximately 95% of these exocrine cancers are adenocarcinomas.

Treatment options for late-stage metastatic pancreatic cancer patients are limited. Surgery and radiation are used only for symptom relief and chemotherapy remains the primary mode of therapy. Gemcitabine is widely used either alone or in combination with erlotinib (Tarceva), capecitabine, cisplatin or nab-paclitaxel. Other chemo-cocktails are also possible depending on patient tolerability to such cocktails and physician choice of best suitable care. If these lines of therapy are not effective, other combinations such as oxaliplatin and fluoropyrimidine may be used.

Although checkpoint therapy has been shown to be beneficial in certain lung cancers and melanoma, checkpoint therapy clinical studies in pancreatic patients have largely been unsuccessful. While the exact reasons are still to be elucidated, the unique structural and immune environment associated with pancreatic cancer may underlie the lack of success with antibody-based immunotherapies. Technological competition from pharmaceutical companies, biotechnology companies and university researchers is intense and is expected to continue. While the Company is not aware of any other competitors in clinical development of a therapy that targets tumour acidosis, some potential competitors have substantially greater product development capabilities and financial, scientific, marketing and human resources than the Company. See “The Company faces risks in connection with competition and technological change” under the heading “Risk Factors”.

SELECTED FINANCIAL INFORMATION

Selected Annual Information

*l Information*
	Year ended July 31
	2021	2020	2019
Revenue	-	-	-
Net Loss from continuingoperations	(9,574,000)	(8,561,000)	(6,807,000)
Basic & diluted lossper share from continuingoperations	(0.06)	(0.07)	(0.06)
Net Loss attributable to Helix BioPharma	(8,038,000)	(8,985,000)	(7,526,000)
Total assets	4,065,000	4,906,000	940,000
Total non-current financial liabilities	1,584,000	-	-
Declared dividends	-	-	-

The Company reported a net loss and total comprehensive loss of $8,038,000 for the year ended July 31, 2021 (2020 - $8,985,000). Fluctuations in total net loss and total comprehensive loss is mainly the result of the Company’s cash reserves available to be deployed on ongoing research and development activities and operating, general and administration expenses.

Research and development expenses during the year ended July 31, 2021 increased marginally to $5,880,000 from $5,868,000 in 2020. The increase mainly represents higher wages and benefits expense.

Operating, general and administration expenses during the year ended July 31, 2021, increased to $3,251,000 from $2,748,000 in 2020. The increase in operating, general and administration spending in fiscal 2021 mainly reflects higher stock-based compensation expense associated with the vesting of Options that were granted to directors of the Company over their vesting period in addition to higher legal costs, director fees and auditor fees.

During Q1 of fiscal 2021, the Company’s former subsidiary, HIO, completed a direct financing with an arm’s length party. As a result of the financing, the Company’s ownership in HIO was diluted down to 29.89% and consequently, the Company determined that it had lost control of HIO. The Company subsequently disposed of all its interest in HIO in Q2 of fiscal 2021 pursuant to the HIO Disposition. See “Results from Operations – Loss of control in subsidiary – discontinued operations” for additional information.

On May 10, 2021, the Company entered into a definitive convertible security funding agreement (the "Lind Agreement") with Lind Global Macro Fund, LP, a New York based institutional investment fund managed by The Lind Partners, LLC ("Lind"). The Company closed the first tranche ("First Tranche") under the Lind Agreement on May 13, 2021, for gross proceeds of $3,500,000. In connection with the closing of the First Tranche, the Company issued a convertible security (a "Convertible Security") of the Company with a two-year term and a face value of $4,112,500 and issued an aggregate of 1,957,056 common share purchase warrants (“Warrants”) exercisable into common shares in the capital of the Company ("Common Shares") until May 13, 2023, at an exercise price of $1.0283 per Common Share. In connection with the closing of the First Tranche, the Company paid Lind a 3% commitment fee of the amount funded under the First Tranche. The Lind Agreement contemplates the issuance of a second Convertible Security subject to certain conditions precedent and upon the mutual agreement of the Company and Lind for gross proceeds to the Company of up to $6,500,000.

Summary of Quarterly Results

The following table depicts selected quarterly data previously reported for the last eight quarters (thousands of $, except per share data).

	Q4 2021	Q3 2021	Q2 2021	Q1 2021	Q4 2020	Q3 2020	Q2 2020	Q1 2020
Research and development expenses	1,777	1,933	1,086	1,084	1,246	1,523	1,588	1,511
Operation, general and admin expenses	479	651	818	1,303	523	862	654	709
Gain(loss)from discontinued operations	-	-	(626)	2,162	(613)	-	-	-
Net loss and total comprehensive loss	(2,770)	(2,554)	(2,492)	(222)	(2,114)	(2,594)	(2,255)	(2,211)
Lossper share - basic and fullydiluted	(0.02)	(0.02)	(0.02)	-	(0.01)	(0.02)	(0.02)	(0.02)
Cash	3,565	2,266	4,096	1,428	4,235	4,989	2,094	1,650
Workingcapital(deficiency)	144	1,223	3,639	2,426	2,735	3,826	873	430

Net loss and comprehensive loss decreased significantly in Q1 of fiscal year 2021 due to a gain from discontinued operations of $2,162,000 recorded in that quarter. Cash increases in Q2 and Q4 in fiscal year 2021 are due to (i) the successful closings of a two-tranche private placement of units on December 4 and 30, 2020 for total gross proceeds of $4,100,000 and (ii) the closing of the First Tranche for gross proceeds of $3,500,000. Capital raised by the Company has gone towards working capital and research and development expenditures associated with the Company’s pre-clinical and clinical programs.

The Company’s current business is not subject to seasonality.

RESULTS FROM OPERATIONS

Net loss from continuing operations

The Company did not generate any revenue during the fiscal years ended July 31, 2021 and 2020.The Company recorded a net loss and total comprehensive of $8,038,000 ($0.06 loss per Common Share) and $8,985,000 ($0.07 loss per Common Share) for the fiscal years ended 2021 and 2020, respectively.

Research & development expenses

Research and development expenses for fiscal 2021 totalled $5,880,000 (2020 - $5,868,000).

The following table outlines research and development costs expensed and investment tax credits for the Company’s significant research and development projects for the fiscal years ended July 31:

research and development projects for the fiscal years ended July 31:
	2021	2020
Research and development programs, excluding the below items	$ 4,514,000	$ 4,497,000
Salaries and benefits	1,270,000	1,191,000
Stock-based compensation expense	1,000	117,000
Amortization of property plant and equipment	41,000	54,000
Amortization of right of use assets	129,000	129,000
Research and development investment tax credits	(75,000)	(120,000)
	$5,880,000	$5,868,000

Research and development expenditures in fiscal 2021, when compared to fiscal 2020 were higher by $12,000. Higher collaborative research activity totalling $1,023,000 and salaries of $79,000 were offset by lower clinical study expenditures of $476,000, lower intellectual property patent expenses of $303,000, lower manufacturing and stability assay expenses of $136,000 and a reduction in stock-based compensation expense of $116,000.

The increase in collaborative research spend in fiscal 2021 compared to fiscal 2020 is related to the Company’s sub-licensing agreement with HIO, whereby the Company was responsible to fund pre-clinical activity in exchange for future royalties and milestones. As part of the sub-licensing agreement, HIO is responsible for certain intellectual property expenditures. In addition, the Company also incurred collaborative research spend in fiscal 2021 related to research activities with Moffitt.

Lower clinical operations spend in fiscal 2021 compared to fiscal 2020 are related to the Company’s LDOS003 Phase II clinical study in Poland and Ukraine as a result of enrollment being halted in the previous fiscal year, causing no further expenditures incurred in the current fiscal year. The Company intends to finalize reporting by March 2022 provided the Company’s disagreement over billings by the clinical research organization overseeing the program are resolved. The Company also incurred lower expenditures associated with its LDOS001 clinical study in the current fiscal year and is now finalizing the clinical study report which is expected to be completed by December 2021. The Company’s LDOS006 Phase Ib/II pancreatic clinical study in the U.S. commenced enrollment in December 2019 during the early days of COVID-19 which delayed the clinical trial. In early 2021, the Company added two additional new sites in an effort to increase the rate of patient enrollment and advance the study. The study is currently still in the first cohort.

The decrease in intellectual property spend in fiscal 2021 compared to fiscal 2020 includes an amount totalling $135,000 which the Company invoiced to HIO as passthrough cost for reimbursement associated with the sub-licensing agreement. This amount is included in receivables at July 31, 2021.

The decrease in manufacturing and stability assay spend in fiscal 2021 compared to fiscal 2020 of $136,000 mainly reflects the timing of manufacturing expenses related to the repolishing of older drug substance and the resulting lyophilization of new drug product where the expenses overlapped both fiscal years.

Operating, general and administration expenses

Operating, general and administration expenses for fiscal 2021 totalled $3,251,000 (2020 - $2,748,000).

The following table outlines operating, general and administration costs expensed for the fiscal years ended July 31:

		2021		2020
Wages and benefits	$	407,000	$	434,000
Director fees		229,000		174,000
Investor relations		386,000		736,000
Other general and administrative		1,563,000		1,022,000
Stock-based compensation expense		663,000		353,000
Amortization of property plant and equipment		3,000		3,000
Amortization of right of use assets		–		26,000
	$	3,251,000	$	2,748,000

The increase in operating, general and administration expenses of $503,000 in fiscal 2021 compared to fiscal 2020 reflects higher stock-based compensation expense, higher expenses associated with various third-party advisory services such as legal, accounting, business development and investment banking services in an attempt to raise additional capital as part of a qualifying transaction to list the Company’s Common hares on a U.S. stock exchange. Several factors materialized that resulted in the Company eventually abandoning its plans to up-list on a U.S. stock exchange. These include but are not limited to the increase in the percentage ownership of the Common Shares by new insiders; a decline in the price of the Common Shares making it extremely challenging for the Company to leverage the Multijurisdictional Disclosure System; and the resignation of the Company’s previous auditors.

Stock based compensation expense for fiscal 2021 totalled $663,000 (2020 - $353,000). The increase represents the expense associated with the vesting of Options granted to directors over their vesting period. The reduction in investor relations expense for fiscal 2021 compared to fiscal 2020 mainly reflects the termination of the agreement the Company had in place with ACM Alpha Consulting Management EST (“ACMest”).

Loss of control in subsidiary – discontinued operations

For the annual consolidated financial statements for the fiscal years ended July 31 2020 and 2019, the Company’s investment in HIO was classified as held for sale and was presented as discontinued operations. On September 3, 2020, HIO completed a direct financing with an arm’s length party. As a result of the financing, the Company’s ownership in HIO was diluted down to 29.89% and consequently, the Company determined that it had lost control of HIO during the three months ended October 31, 2020. As the Company’s remaining interest allowed the Company to exert significant influence over HIO, the Company’s investment was accounted for as an interest in associate using the equity method. The Company’s remaining interest in HIO was recognized at

its fair value as at September 3, 2020 based on HIO’s post-financing valuation. The difference between the carrying value of the net assets of HIO and non-controlling interest and the value assigned to the shares of HIO of $2,231,000 was recognized as a gain on loss of control of subsidiary in the year ended July 31, 2021. On November 9, 2020, the Company announced that it had signed a definitive share purchase agreement with CAIAC Fund Management AG (“CAIAC”), as designated trustee of HIO Fund (the “Fund”), to purchase the Company’s remaining holdings in HIO for gross proceeds of PLN 6,700,000 (CDN$2,308,000) (the “HIO Disposition”). The HIO Disposition closed on December 22, 2020 and the Company incurred transaction fees of 12.5% of the proceeds amounting to $288,500 payable to ACMest.

The following summarizes the accounting of the Company’s investment in HIO at deconsolidation through to July 31, 2021:

Fair value of retained interest		$	2,715,000
Net assets of HIO
Cash	966,000
Receivables	25,000
Due from intercompany	2,000
Prepaids	10,000
Capital assets	69,000
Accounts payable	(46,000)
Accrued liabilities	(3,000)
Net assets of HIO			(1,023,000)
Deconsolidation of non-controlling interest in HIO			587,000
Deconsolidation of accumulated foreign exchange amount			138,000
Book value of investment in HIO			(186,000)
Gain on loss of control of subsidiary		$	2,231,000
Share of net loss until disposition			(69,000)
Loss on disposition of retained interest			(626,000)
Net gain from discontinued operations		$	1,536,000
The continuity of the Company’s investment in associate related to HIO until its disposition is as follows:
Balance - September 3, 2020		$	–
Fair value in retained interest in associate			2,715,000
Share of net loss for theperiod ended October 31,2020			(69,000)
Balance – October 31, 2020		$	2,646,000
Cash received for the disposition of interest in associate, net of costs			(2,020,000)
Loss ondispositionof retained			(626,000)
Balance – July31,2021		$	–

Significant projects

For a summary of the Company’s significant projects that have not yet generated revenue, please see “Overview” above.

Fourth quarter

On May 11, 2021, the Company entered into the Lind Agreement. See “Selected Financial Information – Selected Annual Information” above for additional information. The result of the Lind Agreement was an improvement of the Company’s cash flows in the fourth quarter of fiscal 2021, ultimately allowing the Company to continue funding its working capital and research and development clinical programs.

On June 24, 2021, the Company appointed new auditors. See “Disclosure Controls and Procedures and Internal Control Over Financial Reporting - Management's Annual Report on Internal Control Over Financial Reporting and Disclosure Controls and Procedures” below for additional information.

In the fourth quarter of fiscal 2021, the Company decided to defer its application to the Nasdaq Stock Market as a result of no longer being able to qualify for an accelerated cross border qualifying financing under the Multijurisdictional Disclosure System.

CRITICAL ACCOUNTING ESTIMATES

The preparation of annual consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, revenue and expenses and the related disclosures of contingent assets and liabilities and the determination of the Company’s ability to continue as a going concern. Actual results could differ materially from these estimates and assumptions. The Company reviews its estimates and underlying assumptions on an ongoing basis. Revisions are recognized in the period in which the estimates are revised and may impact future periods.

The Company has also assessed the impact of COVID-19 on estimates and critical judgement. Although the Company expects COVID-19 related disruptions to continue into the Company’s fiscal 2022 year, the Company believes that the long-term estimates and assumptions do not require significant revisions. Although the Company determined that no significant revisions to such estimates, judgements or assumptions were required, the pandemic is fluid and given the inherent uncertainty at this time, revisions may be required in future periods to the extent that the negative impacts on the Company’s business operations arising from COVID-19 continue or become worse. Any such revision could result in a material impact on the Company’s financial performance and financial condition.

The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the Company’s annual consolidated financial statements have been set out in Note 1 of the Company’s annual consolidated financial statements for the fiscal year ended July 31, 2021.

SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies used in preparing the Company’s annual consolidated financial statements are described in Note 2 of the Company’s annual consolidated financial statements for the fiscal year ended July 31, 2021, except for those related accounting policies and methods of computation related to any new accounting standards and pronouncements.

NEW ACCOUNTING STANDARDS AND PRONOUNCEMENTS NOT YET ADOPTED

There are no new accounting standards and pronouncements issued but not yet effective up to the date of issuance of the Company's annual consolidated financial statements that are expected to have a material impact on the Company.

LIQUIDITY AND CAPITAL RESOURCES

Since inception, the Company has mainly relied on financing its operations from public and private sales of equity. The Company does not have any credit facilities and is therefore not subject to any externally imposed capital requirements or covenants. The Company manages its liquidity risk by continuously monitoring forecasts and actual cash flow from operations and anticipated investing and financing activities.

The Company reported a net loss and total comprehensive loss of $8,038,000 for the fiscal year ended July 31, 2021 (July 31, 2020 - $8,985,000). As at July 31, 2021 the Company had working capital of $144,000, shareholders’ deficiency of $1,393,000 and a deficit of $188,554,000. As at July 31, 2020, the Company had a working capital of $2,735,000, shareholders’ equity of $2,981,000 and a deficit of $180,516,000.

On November 9, 2020, the Company announced that it had signed a definitive share purchase agreement with CAIAC, as designated trustee of Fund, to purchase the Company’s remaining holdings in HIO for gross proceeds of PLN 6,700,000 (CDN$2,308,000). The HIO Disposition closed on December 22, 2020 and the Company incurred transaction fees of 12.5% of the proceeds ($288,500) payable to ACMest. The Company received $2,020,000 net of costs in December 2020 relating to this transaction.

During the year ended July 31, 2021, the Company completed two private placements resulting in the issuance of 8,200,000 units (“Units”) at a price of $0.50 per Unit for aggregate gross proceeds of $4,100,000 ($3,561,000 net of issue costs). The sale of the Units resulted in the issuance of an aggregate of 8,200,000 Common shares and 8,200,000 Warrants, with each such Warrant entitling the holder thereof to purchase one Common Share at an exercise price of $0.70 for a period of five years from the date of issuance.

On May 11, 2021, the Company announced that it had entered into the Lind Agreement with Lind Global Macro Fund, LP, a New York based institutional investment fund managed by Lind. The Company closed the First Tranche under the Lind Agreement on May 13, 2021 when it issued a Convertible Security with a two year term and a face value of $4,112,500 and an aggregate of 1,957,056 common share purchase warrants exercisable into Common Shares for a period of 48 months at an exercise price of $1.0283 per Common Share. The Convertible Security issued under the First Tranche accrues a simple interest rate obligation of 8.75% per annum on the amount funded, being $3,500,000, which interest is prepaid and attributed to the face value of the Convertible Security. The Company also paid Lind a 3% commitment fee on the amount funded under the First Tranche, as well as under any second tranche, which as of the date of this MD&A has not yet been completed.

Each Convertible Security issuable under the Lind Agreement has a two-year term from the date of issuance and accrues a simple interest rate obligation of 8.75% per annum on the amount funded, which interest is prepaid and attributed to the face value of each Convertible Security upon issuance. Lind is entitled to convert the Convertible Securities into Common Shares over the term of the applicable Convertible Security, subject to certain limitations, at a conversion price equal to 85% of the five-day trailing volume-weighted average price (“VWAP”) of the Common Shares prior to the date a notice of conversion is provided to the Company by Lind. The Lind Agreement includes certain restrictions on the maximum face value of each of the Convertible Securities that may be converted in any particular month. In addition, the Company has the option to buy-back 66.7% of the Convertible Securities in cash at any time with no penalty, subject to the option of Lind to convert up to 1/3 of the face value of the

applicable Convertible Security into Common Shares at the time of such buy-back. If the Convertible Security is repaid by the Company within 180 days of issuance, the face value amount owed will be reduced pursuant to the terms of the Lind Agreement. Lind will also be entitled to accelerate its conversion right to the full amount of the face value or demand repayment of the face value in cash upon a default and other designated events as set out in the Lind Agreement. To the extent that the full face value of a Convertible Security has not been converted at the maturity date of the applicable Convertible Security, the outstanding balance of such face value shall be to be repaid to Lind by the Company in cash.

The Lind Agreement is subject to covenant requirements. In the event of default LIND may declare, by notice to the Company, effective immediately, all outstanding obligations by the Company under the Funding Agreement to be immediately due and payable in immediately available funds and terminate the agreement. No such declaration has been made at time of filing of these annual consolidated financial statements. For additional information, please refer to the Lind Agreement which has been filed by the Company on SEDAR at www.sedar.com.

In order for the Company to advance the currently planned preclinical and clinical research and development activities, its collaborative scientific research programs and pay for its overhead costs, the Company will need to raise approximately $15,000,000 through to the end of fiscal 2023. The Company projects an average monthly fixed overhead spend of approximately $275,000. This amount does not include the costs related to any of the Company’s third-party activities such as clinical studies, collaborative research activities and contract manufacturing.

The Company currently has three clinical studies (see Research and Development Activities above for additional information) of which only one now is still enrolling patients. Due to slow enrollment, the Company stopped LDOS001 enrollment and continues to work on finalizing the clinical study report. The Company is forecasting approximately $256,000 in cash required to fully complete the study, which is expected to occur by December 2021. The Company previously forecasted LDOS003 as a large, randomized study but concluded that it would not move forward with the randomized portion of the study unless the Company entered into a co-development partnership with a third party. The Company is currently working on completing the study and report which has been delayed due administrative disagreement as a result of overbilling by the clinical research organization overseeing the program. The Company is projecting $486,000 to fully complete the study and report.

The Company received IND approval by the FDA to conduct a Phase Ib/II study (LDOS006) in the U.S., L-DOS47 in combination with doxorubicin, for previously treated advanced pancreatic cancer. Patient enrollment commenced December 2019. COVID-19 impacted patient enrollment resulting in the Company adding two additional clinical sites this year. The Company is forecasting a cost of approximately $4,826,000 through to October 2023 to complete both the Phase Ib and Phase II portion of the trial. Certain conditions need to be achieved in order for the Company to be able to progress through to the Phase II portion of the trial. Of the forecasted $4,826,000, the portion attributable to the Phase II is approximately $2,603,000 and is forecasted to begin around May 2023.

The Company is forecasting manufacturing expenditures of approximately $1,243,000 through to the end of fiscal 2023 in support of the Company’s clinical study programs. The Company previous forecasted a manufacturing technology transfer to a new manufacturer with a scaled-up production in anticipation of having sufficient supply for a contemplated pivotal trial and a new clinical study of L-DOS47 in combination with an immune-oncology drug. The Company has since produced a new batch of drug product from previous drug substance providing additionally sufficient supply for the Company’s current clinical program, provided stability assays continue to meet protocol standards.

The Company is currently not forecasting any collaborative research expenditures.

The Company’s cash reserves of $3,565,000 as at July 31, 2021 are insufficient to meet anticipated cash needs for working capital and capital expenditures through the next twelve months, nor are they sufficient to see planned research and development initiatives through to completion. Though the funds raised during this fiscal year have assisted the Company in dealing with its immediate working capital requirements, additional funds are required to advance the Company’s clinical and preclinical programs and deal with future working capital requirements. To the extent that the Company does not believe it has sufficient liquidity to meet its current obligations, management considers securing additional funds, preferably through the issuance of equity securities of the Company, to be critical for its development needs. The Company may also consider other forms of raising funds, such as the issuance of debt which may or may not include a conversion of equity in the Company.

The Company’s long-term liquidity depends on its ability to raise funds from various sources, which depends substantially on the success of its ongoing research and development programs, economic conditions and the state of the biotech industry.

Accessing the capital markets can be particularly challenging for companies that operate in the biotechnology industry. While the Company has been able to raise equity financing in recent years, there can be no assurance that additional funding by way of equity financing will continue to be available. Any additional equity financing, if secured, would result in dilution to the existing shareholders and such dilution may be significant. The Company may also seek additional funding from or through other sources, including technology licensing, co-development collaborations, mergers and acquisitions, joint ventures, and other strategic alliances, which, if obtained, may reduce the Company’s interest in its projects or products or result in significant dilution to existing shareholders. The Company may also seek additional funding from government grants. There can be no assurance, however, that any alternative sources of funding will be available. The failure of the Company to obtain additional financing on a timely basis may result in the Company reducing, delaying or cancelling one or more of its planned research, development and/or marketing

programs, including clinical trials, further reducing overhead, or monetizing non-core assets, any of which could impair the current and future value of the business or cause the Company to consider ceasing operations and undergoing liquidation.

Given the Company’s conclusion about the insufficiency of its cash reserves, significant doubt is cast about the Company’s ability to continue operating as a going concern. The continuation of the Company as a going concern for the foreseeable future depends mainly on raising sufficient capital, and in the interim, reducing, where possible, operating expenses (including making changes to the Company’s research and development plans), including the delay of one or more of the Company’s research and development programs, further reducing overhead and the possible disposition of assets.

The Company needs to raise additional capital to further advance its clinical development program.

Use of proceeds from the sale of securities in the past have been used for working capital, including funding the Company’s ongoing research and development activities.

CONTRACTUAL OBLIGATIONS

The Company’s commitments are summarized as follows:

	2022 2023	2024		2025		2026		2027+ Total
Clinical research organizations(1)$ 1,039,000 $ 1,544,000 $		–	$	–	$	–	$	– $ 2,583,000
Royalty and in-licensing(2)	20,000 20,000	20,000		10,000		10,000		50,000 130,000
Operating leases(3)	41,000 –	–		–		–		– 41,000
	$ 1,100,000 $ 1,564,000 $	20,000	$	10,000	$	10,000	$	50,000 $ 2,754,000

(1) The Company has clinical research organization supplier agreements in place for clinical research services and passthrough costs related to the Company’s clinical stage programs.

(2) Represents future minimum royalties.

(3) The Company is committed to pay $41,000 under three facility lease agreements.

RELATED PARTY TRANSACTIONS

Related party transactions are at arm’s length and recorded at the amount agreed to by the related parties.

The following table summarizes key management compensation for the fiscal years ended July 31:

		2021		2020
Compensation	$	587,000	$	586,000
Stock-based compensation		(18,000)		147,000
	$	569,000	$	733,000

Key management compensation is approved by the board of directors of the Company (the “Board”) and is comprised of: (i) the terms agreed to in the employee’s employment agreement, and (ii) additional grants of Options approved by the Board. Options are expensed over the vesting period of the Options.

The following table summarizes non-management directors’ compensation for the fiscal years ended July 31:

		2021		2020
Directors’ fees	$	229,000	$	174,000
Stock-based compensation		673,000		280,000
	$	902,000	$	454,000

The Board has set compensation for the members of the Board as a result of peer review and pursuant to the Company’s internal policies. Additional option grants to members of the Board are issued at the discretion of the Board. Options are expensed over the vesting period of the Options.

The following table summarizes the total compensation for both ACM Alpha Consulting Management EST (“ACMest”) and ACM Alpha Consulting Management AG (“ACMag”) for the fiscal years ended July 31:

		2021	2020
Finder’s fee commissions (ACMag)	$	801,000	$ 2,000,000
Financial and investor relations consultingfee(ACMest)		287,000	548,000

Until October 21, 2020, the Company had agreements in place with both ACMest and ACMag. Mr. Kandziora is President of ACMest and acted as Observer on the Board of Directors of the Company up until August 22, 2019, in addition to being on the

Supervisory Board of HIO. Mrs. Kandziora is President of ACMest and was Corporate Secretary of the Company up until August 22, 2019.

On October 29, 2020, the Company announced that, effective October 21, 2020, the financial advisory services agreement dated July 2, 2018 between the Company and ACMag and the investor relations and advisory services agreement dated July 2, 2018 between the Company and ACMest. had been terminated by the mutual agreement of the parties.

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no material off-balance sheet arrangements.

INTELLECTUAL PROPERTY

The Company protects its intellectual property rights through a robust combination of patent, copyright, trademark and trade secrets as well as with confidentiality and invention assignment agreements.

The Company seeks intellectual property protection in various jurisdictions around the world and owns patents and patent applications relating to products and technologies in the United States, Canada, Europe and other jurisdictions.

As of July 31, 2021, the Company had rights to 5 issued U.S. patents, which will expire between July 16, 2023 and January 22, 2036 assuming all required fees are paid, had 6 pending U.S. patent applications, 64 issued foreign patents, and 42 pending foreign patent applications. The Company’s patents and patent applications cover aspects of the Company’s current and future product concepts. Some of the pending foreign patent applications preserve an opportunity to pursue patent rights in multiple countries.

As of July 31, 2021, the Company had one registered trademark in Canada.

The Company also relies, in part, upon unpatented trade secrets, know-how and continuing technological innovation, and may in the future rely upon licensing opportunities, to develop and maintain our competitive position. The Company protects its proprietary rights through a variety of methods, including confidentiality and assignment agreements with suppliers, employees, consultants, and others who may have access to the Company’s proprietary information.

While there is no active litigation involving any of our patents or other intellectual property rights and we have not received any notices of patent infringement, the Company may be required to enforce or defend its intellectual property rights against third parties in the future.

Patents and other proprietary rights are very valuable to the Company and involve complex legal and factual issues. The Company has no assurance that any or all of its patent applications will result in the issuance of patents. Further, issued patents may not provide the Company with a competitive advantage against competitors with similar technologies, or who have designed around the Company’s patents. As well, the Company’s patents may be invalidated or found enforceable if challenged. Intellectual property laws vary from country to country which may result in varying levels of intellectual property protection.

Because of the substantial length of time and expense associated with developing new products, the pharmaceutical, medical device, and biotechnology industries place considerable importance on obtaining patent protection for new technologies, products, and processes. The Company’s policy is to file patent applications to protect inventions, technology, and improvements that are important to the development of our business and with respect to the application of our products and technologies to the treatment of a number of diseases. The Company’s policy also includes regular reviews related to the development of each technology and product in light of its intellectual property protection, with the goal of protecting all key research and developments by patent.

The Company will continue to seek intellectual property protection as appropriate and require our employees, consultants, outside scientific collaborators, and sponsored researchers to enter into confidentiality agreements with the Company that contain assignment of invention clauses outlining ownership of any intellectual property developed during the course of the individual’s relationship with the Company.

Patents

The Company currently owns several patents in respect of the DOS47 technology and has licensed patent rights from the NRC for the antibody component of L-DOS47. In addition to issued patents, the Company has filed several new patent applications around the world.

Cell-Based Therapy

The Company has filed a joint patent application with NRC to protect the use of an antibody for use in cell-based therapies. In addition, the Company filed a new patent application covering the use of anti-VEGFR2 antibodies in cell-based therapy in July 2017.

FINANCIAL INSTRUMENTS

Fair value hierarchy

The Company categorizes its fair value measurements according to a three-level hierarchy. The hierarchy prioritizes the inputs used by the Company’s valuation techniques. A level is assigned to each fair value measurement based on the lowest-level input significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are defined as follows:

Level 1 – unadjusted quoted prices as at the measurement date for identical assets or liabilities in active markets. Level 2 – observable inputs other than quoted prices included in level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. Level 3 – significant unobservable inputs that are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Please refer to Notes 1 and 2 in the Company’s annual consolidated financial statements for the fiscal year ended July 31, 2021 for a description of the significant assumptions and accounting policies related to financial instruments.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company’s main objectives when managing capital are to ensure sufficient liquidity to finance research and development activities, clinical trials, ongoing administrative costs, working capital and capital expenditures. The Company includes cash and components of shareholders’ equity, in the definition of capital. The Company endeavours not to unnecessarily dilute shareholders when managing the liquidity of its capital structure.

Currency risk

The Company has international transactions and is exposed to foreign exchange risks from various currencies, primarily the Euro and U.S. dollar. In addition, foreign exchange risks arise from purchase transactions, as well as recognized financial assets and liabilities denominated in foreign currencies.

Balances in foreign currencies are as follows, as at July 31:

		2021		2020
	USD	EUR	USD	EUR
Accounts payable	(825,000)	(252,000)	(622,000)	(257,000)
Accruals	(70,000)	–	(44,000)	–
Net foreign currencies	(895,000)	(252,000)	(666,000)	(257,000)
Closing exchange rate	1.1995	1.4788	1.3404	1.5831
Impact of 1% change in exchange rate	+/- 11,000	+/- 4,000	+/- 9,000	+/- 4,000

Any fluctuation in the exchange rates of the foreign currencies listed above could have an impact on the Company’s results from operations; however, they would not impair or enhance the ability of the Company to pay its foreign-denominated expenses.

Credit risk

Credit risk is the risk of a financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligation.

The table below breaks down the various categories that make up the Company’s accounts receivable balances as at July 31:

	2021	2020
Government related – GST/HST	$ 78,000	$ 46,000
Research and development investment tax credits	140,000	121,000
Patent costs recoverable from former subsidiary	135,000	–
Other	–	13,000
	$353,000	$180,000

Interest rate risk

Interest rate risk is the risk that future cash flows of a financial instrument will fluctuate because of changes in interest rates, which are affected by market conditions. The Company is exposed to interest rate risk arising from fluctuations in interest rates received on its cash. The Company does not have any credit facilities and is therefore not subject to any debt related interest rate risk. The Company manages its interest rate risk by maximizing the interest income earned on excess funds while maintaining the liquidity necessary to conduct its operations on a day-to-day basis. Any investment of excess funds is limited to risk-free financial instruments. Fluctuations in the market rates of interest do not have a significant impact on the Company’s results of operations due to the relatively short-term maturity of any investments held by the Company at any given point in time and the low global interest rate environment. The Company does not use derivative instruments to reduce its exposure to interest rate risk.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its obligations as they come due.

Since inception, the Company has mainly relied on financing its operations from public and private sales of equity. The Lind Agreement is subject to covenant requirements that could affect the Company’s liquidity. See LIQUIDITY AND CAPITAL RESOURCE section below.

The Company’s long-term liquidity depends on its ability to access the capital markets, which depends substantially on the success of the Company’s ongoing research and development programs, as well as economic conditions relating to the state of the capital markets generally. Accessing the capital markets is particularly challenging for companies that operate in the biotechnology industry.

The following are the contractual maturities of the undiscounted cash flows of financial liabilities as at:

			July	31,2021					July 31,2020	July 31,2020
		Carrying		Less than	Greater than			Carrying		Less than	Greater	than
		amount		one year		one-year		amount		one year	one-year
Accounts payable	$	1,466,000	$	1,466,000	$	–	$	1,416,000	$	1,416,000	$	–
Accrued liabilities	$	380,000	$	380,000	$	–	$	301,000	$	301,000	$	–
Convertible notepayable	$	3,612,000	$	2,028,000	$	1,584,000	$	–	$	–	$	–

This table only covers liabilities and obligations relative to financial instruments and does not anticipate any income associated with assets.

OUTSTANDING SHARE DATA

The Company is authorized to issue 10,000,000 preferred shares in the capital of the Company (each, a “Preferred Share”). As at the date of this MD&A, the Company had nil Preferred Shares issued and outstanding.

The Company is authorized to issue an unlimited number of Common Shares without par value. As at the date of this MD&A the Company had 142,471,169 Common Shares issued and outstanding.

As at the date of this MD&A, the Company had the following securities convertible into Common Shares outstanding:

Warrants to purchase up to 69,377,969 Common Shares; and
Options to purchase up to 7,050,000 Common Shares.
The Convertible Security issued to Lind under the First Tranche. See “Liquidity and Capital Resources” for additional information relating to the Convertible Security issued under the First Tranche and the Convertible Security issuable under any second tranche under the Lind Agreement.

SUBSEQUENT EVENT

Subsequent to July 31, 2021, the Company received three conversion notices from LIND totalling $616,875. As a result of these conversion notices the Company issued 1,338,152 common shares resulting in 142,471,169 common shares issued and outstanding as at the date of this MD&A.

DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL REPORTING

Management has designed the Company’s disclosure controls and procedures (“DC&P”) to provide reasonable assurance that all relevant information is gathered, recorded, processed, summarized and reported to the Interim Chief Executive Officer and the Chief Financial Officer of the Company so that appropriate decisions can be made within the time periods specified in securities legislation regarding public disclosure by the Company in its annual filings, interim filings or other documents or reports required to be filed or submitted by it under securities legislation.

Management has also designed internal controls over financial reporting (“ICFR”) to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of annual consolidated financial statements for external purposes in accordance with IFRS. Because of its inherent limitations, ICFR can provide only reasonable assurance and may not prevent or detect misstatements. Further, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

Management's Annual Report on Internal Control Over Financial Reporting and Disclosure Controls and Procedures

Management is responsible for establishing and maintaining adequate ICFR and has designed such ICFR to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of annual consolidated financial statements for external purposes in accordance with IFRS.

Management, including the Interim Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s ICFR will prevent all error and all fraud. A control system can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving our stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Company’s Chief Financial Officer and Interim Chief Executive Officer evaluated the effectiveness of our internal controls over financial reporting as at July 31, 2021, and identified a material weakness resulting from the Company’s limited accounting resources and technical expertise to ensure complex and non-routine transactions are addressed during the financial statement close process. As a result, the control deficiency creates a reasonable possibility that a material misstatement of interim and annual financial statements may not be prevented or detected on a timely basis.

Management believes, based on its knowledge, that (i) this MD&A does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements not misleading, in light of the circumstances under which they were made, with respect to the period covered by this MD&A and, (ii) the annual consolidated financial statements, and other financial information included in this MD&A, fairly present in all material respects the financial condition, results of operations and cash flows at, and for, the fiscal years presented in this MD&A.

Management is confident that the plan we have to address this weakness will be achieved in fiscal 2022.

Evaluation of DC&P

The Company’s Chief Executive Officer and Chief Financial Officer reviewed and evaluated the Company’s DC&P during the fiscal year 2021. Based on the evaluation, they have concluded that the Company’s DC&P are effective in providing timely material information relating to the Company.

RISKS AND UNCERTAINTIES

The Company is subject to risks, events and uncertainties, or “risk factors”, associated with being a publicly traded company operating in the biotechnology industry, with research and development stage projects in pre-clinical discovery and clinical development and with no expectation of revenue or profits in the foreseeable future and, as such, is heavily dependant on raising sufficient capital on a timely basis in order to advance the Company’s drug development programs. As a result of these risk factors, reported information and forward-looking information may not necessarily be indicative of future operating results or of future financial position, and actual results may vary from the forward-looking information or reported information. The Company cannot predict all of the risk factors, nor can it assess the impact, if any, of such risk factors on the Company’s business or the extent to which any factor, or combination of factors, may cause future results or financial position to differ materially from either those

reported or those projected in any forward-looking information. Accordingly, reported financial information and forward-looking information should not be relied upon as a prediction of future actual results. Some of the risks and uncertainties affecting the Company, its business, operations and results which could cause actual results to differ materially from those reported or from forward-looking information include, either wholly or in part, those described elsewhere in this MD&A, as well as the following:

Risks Related to the Company’s Business

The Company does not have any source of operating income and is dependent solely on outside sources of financing

The Company’s operations consist of research and development activities, which do not generate any revenue. Accordingly, the Company has no source of revenue, positive operating cash flow or operating earnings to subsidize its ongoing research and development and other operating activities and the ability of the Company to continue as a going concern is dependent upon the Company’s ability to rely on cash on hand, and on outside sources of financing to fund its ongoing research and development and other operating activities. Such sources of financing involve risks, including that the Company will not be able to raise such financing on terms satisfactory to the Company or at all, and that any additional equity and/or any convertible debt financing, if secured, would result in dilution to existing shareholders, and that such dilution may be significant. The Company may also seek additional funding from or through other sources, including technology licensing, co-development collaborations, mergers and acquisitions, joint ventures, and other strategic alliances, which, if obtained, may reduce the Company’s interest in its projects or products or result in significant dilution to existing shareholders. The Company may also seek additional funding from government grants. There can be no assurance, however, that any alternative sources of funding will be available. The failure of the Company to obtain additional financing on a timely basis may result in the Company reducing, delaying or cancelling one or more of its planned research and development programs, including clinical trials, further reducing overhead, or monetizing non-core assets, any of which could impair the current and future value of the business or cause the Company to consider ceasing operations and undergoing liquidation.

The Company has a history of losses and expects to continue to incur additional losses for the foreseeable future

The Company’s primary focus continues to be on its research and development of drug product candidates. The research and development of drug product candidates require the expenditure of significant amounts of cash over a relatively longtime period. The Company expects to continue to incur losses from continuing operations for the foreseeable future. The Company’s accumulated deficit as at July 31, 2021 is $188,554,000. There can be no assurance that the Company will record earnings in the future or that the drug product candidates under development by us will be approved for sale in Canada, the United States, or elsewhere. Furthermore, there can be no assurance that if such products are approved, they will be successfully commercialized, and the extent of our future losses and the timing of our profitability are highly uncertain. If we are unable to achieve profitability, we may be unable to continue our operations.

The Company faces risks in connection with competition and technological change

The biotechnology industry is subject to rapid and substantial technological change. Technological competition from pharmaceutical companies, biotechnology companies and university researchers is intense and is expected to continue to be intense.

The rapid advancement of immunotherapies has and likely will continue to significantly change the treatment of cancer and may result in a reduction, which may be significant, in the potential patient population and/or treatment protocols available to chemotherapies and other treatments currently in development, such as the Company’s primary drug product candidate, L-DOS47. Developments in immunotherapies have resulted in the Company repositioning its L-DOS47 lead drug product candidate away from a front-line monotherapy protocol towards second and third-line combination therapies with existing chemotherapy drugs and possibly in combination with immunotherapies, resulting in additional expenditures and delays in previously anticipated development timelines for L-DOS47. Advancements in technology can impact the Company at any time and as such, any further repositioning, would likely result in additional expenses being incurred by the Company and in further delays in the anticipated development timeline for L-DOS47, or in the Company determining that its L-DOS47 drug product candidate is no longer viable. The Company is currently heavily dependent on the success of its lead drug product candidate L-DOS47, which is the only drug candidate currently in clinical development.

The Company cell-based therapies initiative may face significant hurdles. The Company’s effort is mainly at research proof-of-concept stage. It is possible that the selected targets or choice of antibodies are not optimal. This can delay the initiation of formal preclinical and clinical development significantly. The Company has chosen to develop cell-based therapy for solid tumour. While there are many successful examples of cell-based therapy treatment in hematological malignancies, similar success in solid tumour is less certain.

Many of the Company’s competitors have substantially greater financial, technical and human resources and significantly greater experience in conducting preclinical testing and human clinical trials of product candidates, scaling up manufacturing operations and obtaining regulatory approvals of products. Accordingly, the Company’s varying

competitors may succeed in obtaining regulatory approval for products more rapidly. The Company’s ability to compete successfully will largely depend on:

the efficacy and safety profile of our product candidates relative to marketed products and other product candidates in development;
our ability to develop and maintain a competitive position in the product categories and technologies on which we focus;
the time it takes for our product candidates to complete clinical development and receive marketing approval;
our ability to obtain required regulatory approvals;
our ability to commercialize any of our product candidates that receive regulatory approval;
our ability to establish, maintain and protect intellectual property rights related to our product candidates; and
acceptance of any of our product candidates that receive regulatory approval by physicians and other healthcare providers and payers.

Competitors have developed and may develop technologies that could be the basis for products that challenge the differentiated nature and potential for best-in-class product development programs and discovery research capabilities of the DOS47 platform technology. Some of those products may have an entirely different approach or means of accomplishing the desired therapeutic effect than our product candidates and may be more effective or less costly than our product candidates. The success of our competitors and their products and technologies relative to our technological capabilities and competitiveness could have a material adverse effect on the future preclinical studies a nd clinical trials of our product candidates, including our ability to obtain the necessary regulatory approvals for the conduct of such clinical trials. This may further negatively impact our ability to generate future product development programs with improved pharmacological properties.

If we are not able to compete effectively against our current and future competitors, our business will not grow and our financial condition and operations will substantially suffer.

The Company is heavily dependent on the success of a single drug product candidate

The Company’s future success is dependent primarily on the regulatory approval and commercialization of a single drug product candidate, L-DOS47, which is the Company’s only drug candidate currently in clinical development. The Company does not have any products that have obtained regulatory approval. The Company is conducting early stage research and development initiatives and is currently in the process of developing L-DOS47, which will require further time-consuming and costly research and development. There can be no assurance that L-DOS47 or any other drug product candidate that the Company undertakes to develop will ever be successfully developed or commercialized. As a result, the Company’s near-term prospects, including its ability to finance its operations and generate revenue, are substantially dependent on its ability to obtain regulatory approval for, and, if approved, to successfully commercialize L- DOS47 in a timely manner.

The Company’s single lead drug product candidate, L-DOS47, may not be accepted by the market and may never generate revenue and the Company has limited sales, marketing and distribution experience

Even with regulatory approval, the Company may not achieve market acceptance of its lead drug product candidate, L- DOS47, which depends on a number of factors, including the establishment and demonstration in the medical community of the clinical utility of the Company’s products, and their potential advantage over alternative treatment methods. There is also the risk that the actual market size or opportunity for any drug candidate developed by the Company is uncertain. Failure to gain market acceptance of the Company’s products or an incorrect estimate in the nature and size of the markets for the Company’s products could have a material adverse effect on the Company.

The Company has limited sales, marketing and distribution experience, and there is no assurance that the Company will be able to establish adequate sales, marketing, and distribution capabilities or make arrangements with any collaborators, strategic partners, licensees, or others to perform such activities, or that such efforts will be successful. The Company’s objective for L-DOS47 is to enter into strategic alliances with appropriate pharmaceutical partners. There can be no assurance that any such strategic alliance will be maintained or achieved, or if achieved, that it will result in revenue to the Company.

The timing of the Company’s internal goals and projected timelines may not be met

The Company sets internal goals for and makes public statements regarding its expected timing of meeting the objectives material to its success, including the commencement, duration and completion of clinical trials and anticipated regulatory approvals. The actual timing of these forward-looking events can vary dramatically due to a number of factors, including, without limitation, delays in scaling-up of drug product candidates, delays or failures in clinical trials, additional data requirements from the regulators, the Company failing to obtain required financing, and other risks referred to herein. Without limiting the generality of the foregoing, it is possible that required regulatory approvals may be delayed or denied,

including those related to undertaking or continuing clinical trials, manufacturing of drug products, and marketing such products.

A failure to obtain necessary financing or a change in the schedule of a clinical trial (which may occur for many reasons, including due to factors beyond the Company’s reasonable control, such as scheduling conflicts, the occurrence of serious adverse events, interruption of supplies of study drugs, withdrawals of regulatory approvals, or slow patient recruitment) could delay the commencement or completion of the clinical trial, or result in its suspension or early termination, which could have a material adverse effect on the Company.

We will have significant additional future capital needs in 2021 and beyond and there may be uncertainties as to our ability to raise additional funding in the future to meet these need s

We will require significant additional capital resources to expand our business, in particular the further development of our product candidate, L-DOS47. Advancing our product candidate, marketing for our product, or acquisition and development of any new products or product candidates will require considerable resources and additional access to capital markets. In addition, our future cash requirements may vary materially from those now expected. For example, our future capital requirements may increase if:

we experience unexpected or increased costs relating to preparing, filing, prosecuting, maintaining, defending and enforcing patent claims, or other lawsuits, brought by either us or our competition;
we experience scientific progress sooner than expected in our discovery, research and development projects, if we expand the magnitude and scope of these activities, or if we modify our focus as a result of our discoveries;
we are required to perform additional pre-clinical studies and clinical trials; or
we elect to develop, acquire or license new technologies, products or businesses.

The Company could potentially seek additional funding through corporate collaborations and licensing arrangements or through public or private equity or debt financing. However, if capital market conditions in general, or with respect to life sciences companies such as ours, are unfavorable, our ability to obtain significant additional funding on acceptable terms, if at all, will be negatively affected. Additional financing that we may pursue may involve the sale of Common Shares which could result in significant dilution to our shareholders. If sufficient capital is not available, we may be required to delay our research and development projects, which could harm our business, financial condition, prospects or results of operations.

The Company may not obtain adequate protection for its products through its intellectual property

The Company’s success depends, in large part, on the Company’s ability to protect its competitive position through patents, trade secrets, trademarks, and other intellectual property rights. The Company’s success, competitive position and future revenues with respect to its product candidates will depend, in part, on the Company’s ability to protect its intellectual property. The Company will be able to protect its proprietary rights from unauthorized use by third parties only to the extent that its proprietary rights are covered by valid and enforceable patents or are effectively maintained as trade secrets. The Company seeks intellectual property protection in various jurisdictions around the world and owns patents and patent applications relating to biological products and technologies in the United States, Canada, Europe and other jurisdictions. The scope and duration of the Company’s intellectual property rights vary from country to country depending on the nature and extent of the Company’s intellectual property filings, the applicable statutory provisions governing the intellectual property, and the nature and extent of the Company’s legal rights. The Company’s failure to do so may adversely affect the Company’s business and competitive position.

The patent positions of pharmaceutical and biopharmaceutical firms, including the Company’s, are uncertain and involve complex questions of law and fact for which certain important legal issues remain unresolved. The patents issued or to be issued to the Company may not provide the Company with any competitive advantage. The Company may not be able to protect its intellectual property rights throughout the world. The Company’s patents may be challenged by third parties in patent litigation. In addition, it is possible that third parties with biological products that are very similar to the Company’s may circumvent the Company’s patents by means of alternate designs or processes. The Company may have to rely on method of use patent protection for its biological products in development and any resulting biological products, which may not confer the same level of protection as protection of the Company’s biological products per se. The Company may be required to disclaim part of the term of certain patents in the United States. There may be prior art of which the Company is not aware that may affect the validity or enforceability of a patent claim. There also may be prior art of which the Company is aware, but which the Company does not believe affects the validity or enforceability of a claim, which may, nonetheless ultimately be found to affect the validity or enforceability of a claim. No assurance can be given that the Company’s patents would, if challenged, be held by a court to be valid or enforceable or that a competitor’s technology or drug would be found by a court to infringe the Company’s patents.

Patent terms may be inadequate to protect the Company’s competitive position on its product candidates for an adequate amount of time. Patents have a limited lifespan, in most jurisdictions inclusive of the United States, if all maintenance fees are timely paid, the term of protection is a period of 20 years from the filing date of the application. Patent term extensions of up to 5 years may be available in certain countries for patents pertaining to new medicinal ingredients or new

combinations of medicinal ingredients for human or veterinary use based upon the delay in regulatory review. Even if patents covering the Company’s product candidates are obtained, once the patent life and any patent term extension have expired, the Company may be open to competition from competitive products, including generics or biosimilars. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, the Company’s owned and licensed patent portfolio may not provide the Company with sufficient rights to exclude others from commercializing products similar or identical to the Company’s.

Patent applications relating to or affecting the Company’s business may have been filed by a number of pharmaceutical and biopharmaceutical companies and academic institutions. The technologies in these applications or patents may cover the Company’s technologies, and such conflict could create freedom to operate issues. The Company’s granted patents could be challenged, invalidated or found unenforceable in interference and derivation proceedings, and post grant proceedings including re-examination, Inter Parte Review and Post-Grant Review, in the United States. The Company’s granted patents could also be challenged and revoked in opposition proceedings in certain countries outside of the United States such as in Europe. In addition to patents, the Company relies on trade secrets and proprietary know-how to protect its intellectual property. The Company generally requires employees, consultants, outside scientific collaborators, and sponsored researchers and other advisors to enter into confidentiality agreements. These agreements provide that all confidential information developed or made known to the individual during the course of the individual’s relationship with the Company is to be kept confidential and not disclosed to third parties except in specific circumstances. In the case of employees, the agreements provide that all of the technology that is conceived by the individual during the course of employment is the Company’s exclusive property. These agreements may not provide meaningful protection or adequate remedies in the event of unauthorized use or disclosure of proprietary information. In addition, it is possible that third parties could independently develop proprietary information and techniques substantially similar to the Company’s or otherwise gain access to the Company’s trade secrets.

The Company may obtain the right to use certain technology under license agreements with third parties. The Company’s failure to comply with the requirements of material license agreements could result in the termination of such agreements, which could cause the Company to terminate the related development program and cause a complete loss of investment in that program. As a result of the foregoing factors, the Company may not be able to rely on its intellectual property to protect the Company’s products in the marketplace.

Patent litigation is costly and time consuming and may subject the Company to liabilities

The Company’s involvement in any patent litigation, opposition, or other administrative proceedings will likely cause the Company to incur substantial expenses, and the efforts of technical and management personnel will be significantly diverted. In addition, the Company may not have the financial means defend its patents and in the event it does, an adverse determination in litigation could subject the Company to significant liabilities, including, but not limited to, monetary damages.

Security breaches and other disruptions could compromise the Company’s information and expose the Company to liability, which would cause the Company’s business and reputation to suffer

In the ordinary course of our business, the Company collects and stores sensitive data, including intellectual property, proprietary business information and that of our suppliers and business partners, and personally identifiable information of our collaborators and employees, on our networks and on shared cloud services. The secure processing, maintenance and transmission of this information is critical to our operations. Despite our security measures, our information technology and infrastructure may be exposed to malware, cyberattacks, attacks by hackers or breached due to employee error, malfeasance, or other disruptions. Any such breach could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, disrupt our operations and damage our reputation, which could adversely affect our business and competitive position.

Further, some of our partners may store personal or confidential information that we share with them. If these third parties fail to implement adequate data-security practices or fail to comply with our terms and policies, sensitive data may be improperly accessed, acquired, or disclosed. And even if these third parties take all these steps, their networks and information technology systems may still suffer a security breach, which could compromise our data.

The Company may infringe the intellectual property rights of others

The Company’s commercial success depends significantly on the Company’s ability to operate without infringing on the patents and other intellectual property rights of third parties. There could be issued patents of which the Company is not initially aware that the Company’s products infringe or patents that the Company believes it does not infringe, but that the Company may ultimately be found to infringe. Patent applications are maintained in secrecy from the time of filing until publication. The publication of discoveries in the scientific or patent literature frequently occurs later than the date on which the underlying discoveries were made and patent applications were filed. There may be currently pending

patent applications of which the Company is unaware that may later result in issued patents that the Company’s products infringe.

The biopharmaceutical industry has produced a proliferation of patents in jurisdictions around the world. The coverage of patents is subject to interpretation by the courts of a particular jurisdiction, and the interpretation is not always uniform. The Company believes that the sale or use of its primary biological product candidate, L-DOS47 would not infringe any valid claim of patents, although there can be no assurances of this. In the event of an infringement or violation of another party’s patent, the Company may not be able to enter into licensing arrangements or make other arrangements at a reasonable cost. Any inability to secure licenses or alternative technology could result in delays in the introduction of drugs or lead to prohibition of the manufacture or sale of drugs by the Company.

Third parties may initiate legal proceedings alleging that the Company is infringing their intellectual property rights, the outcome of which would be uncertain and could harm the Company’s business

Third parties may assert patent or other intellectual property infringement claims against the Company or its other licensors arising from the manufacture, use, or sale of the Company’s current or future product candidates. An unfavorable outcome could result in loss of patent rights and require the Company to cease using the related technology or to attempt to license rights to it from the prevailing party. The Company’s business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms. The Company may not have the financial means and wherewithal to defend against third party claims and in the event it does, defense of litigation proceedings may fail and, even if successful, may result in substantial costs and distract the Company’s management and other employees. In the event of a successful claim of infringement against the Company, the Company may have to pay substantial damages, including treble damages and legal fees for willful infringement, pay royalties, redesign its infringing products or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.

The Company may become involved in lawsuits or other proceedings to protect or enforce the Company’s patents or other intellectual property, which could be expensive, time consuming and unsuccessful

Competitors may infringe the Company’s patents or other intellectual property. The Company may not have the financial means and wherewithal to defend its patents or other intellectual properties and in the event the Company was to initiate legal proceedings against a third party to enforce a patent covering the Company’s product candidates, the defendant could counterclaim that the patent covering the Company’s product candidate is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, written description, enablement, or clarity. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the United States Patent and Trademark Office, or “USPTO”, or made a misleading statement, during prosecution. The outcome following legal assertions of invalidity and unenforceability is unpredictable. The validity of the Company’s current or future patents or patent applications or those of the Company’s licensors may also be challenged in interference or derivation proceedings, opposition, post grant review, inter partes review, or other similar enforcement and revocation proceedings, provoked by third parties or brought by the Company. The Company’s patents could be found invalid, unenforceable, or their scope significantly reduced.

The Company may be subject to claims challenging the inventorship of the Company’s patents and other intellectual property

The Company or its licensors may be subject to claims that former employees, collaborators or other third parties have an interest in the Company’s owned or in-licensed patents, trade secrets, or other intellectual property as an inventor or co-inventor. For example, the Company or its licensors may have inventorship disputes arise from conflicting obligations of employees, collaborators, consultants or others who are involved in developing the Company’s product candidates. Litigation may be necessary to defend against these and other claims challenging inventorship of the Company’s or its licensors’ ownership of the Company’s owned or in-licensed patents, trade secrets or other intellectual property. The Company may not have the financial means to defend such claims and in the event the Company or its licensors fail in defending any such claims, in addition to paying monetary damages, the Company may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, intellectual property that is important to the Company’s product candidates. Even if the Company is successful in defending against such claims, litigation could result in substantial costs

and be a distraction to management and other employees. Any of the foregoing could have a material adverse effect on the Company’s business, financial condition, results of operations and prospects.

The Company may be subject to claims that its employees, collaborators, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties or that the Company’s employees have wrongfully used or disclosed alleged trade secrets of their former employers

As is common in the biotechnology and pharmaceutical industry, the Company employs individuals who were previously employed at universities or other biotechnology or pharmaceutical companies, including the Company’s competitors or potential competitors. Although the Company tries to ensure that its employees, collaborators, consultants and independent contractors do not use the proprietary information or know-how of others in their work for the Company, the Company may be subject to claims that the Company or its employees, consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of any of the Company’s employees’ former employers or other third parties. Litigation may be necessary to defend against these claims. The Company may not have the financial means to defend such claims and in the event the Company fails in defending any such claims, in addition to paying monetary damages, the Company may lose valuable intellectual property rights or personnel, which could adversely impact the Company’s business. Even if the Company is successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and the Company’s patent protection could be reduced or eliminated for non-compliance with these requirements

Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications will be due to be paid to the USPTO and various governmental patent agencies outside of the United States in several stages over the lifetime of the patents and/or applications. The Company has systems in place to remind the Company to pay these fees, and the Company employs an outside firm and relies on its outside counsel to pay these fees due to non-U.S. patent agencies. The USPTO and various non-U.S. governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. The Company employs reputable law firms and other professionals to help the Company comply, and in many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. However, there are situations in which non-compliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, the Company’s competitors might be able to enter the market and this circumstance would have a material adverse effect on the Company’s business.

The Company faces research and development risks, including the need to prove the Company’s drug candidates are safe and effective in clinical trials

The Company’s drug candidates are complex compounds and the Company faces difficult challenges in connection with the manufacture of clinical batches of each of them, which could further delay or otherwise negatively affect the Company’s planned clinical trials, or required regulatory approvals.

There is also the risk that the Company could obtain negative findings or factors that may become apparent during the course of research or development. The results from preclinical and clinical trials may not be predictive of results obtained in any ongoing or future clinical trials. A number of companies in the biotechnology and pharmaceutical industry have suffered significant setbacks in advanced clinical trials, even after achieving promising results in earlier trials and preclinical trials.

The timing and success of the Company’s clinical trials also depend on a number of other factors, including, but not limited to: (a) obtaining additional financing, which is not assured; (b) sufficient patient enrolment, which may be affected by the incidence of the disease studied, the size of the patient population, the nature of the protocol, the proximity of patients to clinical sites, the eligibility criteria for a patient to participate in the study and the rate of patient drop-out; (c) regulatory agency policies regarding requirements for approval of a drug, including granting permission to undertake proposed human testing; (d) the Company’s capacity to produce sufficient quantities and qualities of clinical trial materials to meet the trial schedule; (e) performance by third parties, on whom the Company relies to carry out its clinical trials; and (f) the approval of protocols and/or protocol amendments.

Clinical trials are complex, expensive and uncertain, and have a high risk of failure, which can occur at any stage. Data obtained from pre-clinical and clinical trials may be interpreted in different ways, or be incorrectly reported, which could delay or prevent further development of the drug candidate studied. Failure to complete clinical trials successfully and to obtain successful results on a timely basis could have a material adverse effect on the Company.

Even if the Company’s drug candidates successfully complete the clinical trials and receive the regulatory approval necessary to market the drug candidates to the public, there is also the risk of unknown side effects, which may not appear until the drug candidates are on the market and may result in delay or denial of regulatory approval or withdrawal of previous approvals, product recalls or other adverse events, which could materially adversely affect the Company.

While the Company continues to explore opportunities to expand its drug product pipeline with new DOS47-based therapeutics pending the identification of further tumour targeting agents, there can be no assurance that any such tumour targeting agents will be identified or that any new DOS47-based therapeutics will be developed.

The regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time consuming, expensive and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for our product candidates, our business will be substantially harmed

The time required to obtain approval by the FDA and comparable foreign authorities is unpredictable but typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities. The results of preclinical studies and early clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and initial clinical trials. It is not uncommon for companies in the biopharmaceutical industry to suffer significant setbacks in advanced clinical trials due to nonclinical findings made while clinical studies were underway and safety or efficacy observations made in clinical studies, including previously unreported adverse events. Our future clinical trial results may not be successful, and notwithstanding any potential promising results in earlier studies, we cannot be certain that we will not face similar setbacks. The historical failure rate for product candidates in our industry is high. In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions. We have not obtained regulatory approval for any product candidate and it is possible that none of our existing product candidates or any product candidates we may seek to develop in the future will ever obtain regulatory approval.

Our product candidates could fail to receive regulatory approval for many reasons, including the following:

the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials;
we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate is safe and effective for its proposed indication;
the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval;
the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials;
the data collected from clinical trials of our product candidates may not be sufficient to support the submission of an New Drug Application, or NDA, or other submission or to obtain regulatory approval in the United States or elsewhere;
the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and
the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.

We may not have the necessary capabilities, including adequate staffing, to successfully manage the execution and completion of any future clinical trials we initiate in a way that leads to our obtaining marketing approval for our product candidates in a timely manner, or at all. This lengthy approval process as well as the unpredictability of future clinical trial results may result in our failing to obtain regulatory approval to market our product candidates, which would significantly harm our business, results of operations and prospects.

In addition, even if we were to obtain approval, regulatory authorities may approve any of our product candidates for fewer or more limited indications than we request, may not approve the price we intend to charge for our products, may grant approval contingent on the performance of costly post-marketing clinical trials, may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate or may restrict its distribution. Any of the foregoing scenarios could materially harm the commercial prospects for our product candidates.

We have not previously submitted an NDA to the FDA or similar drug approval filings to comparable foreign authorities, for any product candidate, and we cannot be certain that any of our product candidates will be successful in clinical trials or receive regulatory approval. Further, our product candidates may not receive regulatory approval even if they are successful in clinical trials. If we do not receive regulatory approvals for our product candidates, we may not be able to continue our operations. Even if we successfully obtain regulatory approvals to market one or more of our product candidates, our revenues will be dependent, in part, upon the size of the markets in the territories for which we gain

regulatory approval and have commercial rights. If the markets for patients that we are targeting for our product candidates are not as significant as we estimate, we may not generate significant revenues from sales of such products, if approved.

We plan to seek regulatory approval to commercialize our product candidates both in the United States and the European Union and in additional foreign countries. While the scope of regulatory approval is similar in other countries, to obtain separate regulatory approval in many other countries we must comply with numerous and varying regulatory requirements of such countries regarding safety and efficacy and governing, among other things, clinical trials and commercial sales, pricing and distribution of our product candidates, and we cannot predict success in these jurisdictions.

Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any

Undesirable side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign authorities. The clinical evaluation of our product candidates in patients is still in the early stages and it is possible that there may be side effects associated with their use. Results of our trials could reveal a high and unacceptable severity and prevalence of these or other side effects. In such an event, we, the FDA, the IRBs at the institutions in which our studies are conducted, or the DSMB could suspend or terminate our clinical trials or the FDA or comparable foreign regulatory authorities could order us to cease clinical trials or deny approval of our product candidates for any or all targeted indications. Treatment-related side effects could also affect patient recruitment or the ability of enrolled patients to complete the clinical trial or result in potential product liability claims. In addition, these side effects may not be appropriately recognized or managed by the treating medical staff. We expect to have to train medical personnel using our product candidates to understand the side effect profiles for our clinical trials and upon any commercialization of any of our product candidates. Inadequate training in recognizing or managing the potential side effects of our product candidates could result in patient injury or death. Any of these occurrences may harm our business, financial condition and prospects significantly.

Additionally, if one or more of our product candidates receives marketing approval, and we or others later identify undesirable side effects caused by such products, a number of potentially significant negative consequences could result, including:

regulatory authorities may withdraw approvals of such products;
we may be required to recall a product or change the way such a product is administered to patients;
additional restrictions may be imposed on the marketing or distribution of the particular product or the manufacturing processes for the product or any component thereof;
regulatory authorities may require additional warnings on the label, such as a “black box” warning or contraindication;
we may be required to implement Risk Evaluation and Mitigation Strategies, or REMS, or create a medication guide outlining the risks of such side effects for distribution to patients;
we could be sued and held liable for harm caused to patients;
our product may become less competitive; and
our reputation may Any of these events could prevent us from achieving or maintaining market acceptance of the particular product candidate or for particular indications of a product candidate, if approved, and could significantly harm our business, results of operations and prospects.

Difficulty in enrolling patients in the Company’s clinical trials, could result in delays or cancellation of clinical trials

As the Company’s product candidates advance from preclinical testing to clinical testing, and then through progressively larger and more complex clinical trials, the Company will need to enroll an increasing number of patients that meet various eligibility criteria. There is significant competition for recruiting cancer patients in clinical trials, and the Company may be unable to enroll the patients it needs to complete clinical trials on a timely basis or at all. The factors that affect the Company’s ability to enroll patients is largely uncontrollable and include, but are not limited to, the following:

size and nature of the patient population;
eligibility and exclusion criteria for the trial;
design of the study protocol;
competition with other companies for clinical sites or patients;
the perceived risks and benefits of the product candidate under study;
the patient referral practices of physicians; and
the number, availability, location and accessibility of clinical trial sites.

The Company is dependent on a number of third parties and the failure or delay in the performance of one of these third parties’ obligations may adversely affect the Company

The Company is dependent on third parties to varying degrees in virtually all aspects of its business, including without limitation, on contract research organizations, contract manufacturing organizations, clinical trial consultants, raw material suppliers, collaborative research consultants, regulatory affairs advisers, medical and scientific advisors, clinical trial investigators, business service providers and other third parties. Critical supplies may not be available from third parties on acceptable terms, or at all, including GMP grade materials. Service providers may not perform, or continue to perform, as needed, or be available to provide the required services on acceptable terms or at all. Any lack of or interruption in supplies of raw materials or services, or any change in supply or service providers or any inability to secure new supply or service providers, would have an adverse impact on the development and commercialization of the Company’s products. For example, the Company has previously experienced delays in the manufacturing of both engineering and clinical batches of L-DOS47, which have in turn caused delays in the progression of its development program, and there may be further delays. The Company relies on a third party for its supply of urease and if the contract with the third-party urease supplier is terminated early, the Company will have to find a new supplier of urease, as well as a new manufacturer of bulk drug product for future clinical testing programs. There can be no assurance that a new supplier or manufacturer can be contracted in a timely manner or at all, and this could negatively impact the Company’s development plans for L- DOS47.

With respect to L-DOS47, the Company is currently dependent on, in addition to third party suppliers, manufacturers and consultants, the NRC and its license to the Company of a lung cancer antibody in order to develop and commercialize L-DOS47. Early termination of the license with NRC would have a material adverse effect on the further development of L-DOS47 and may require the cessation of such development, which would have a material adverse effect on the Company.

Given the Company`s lack of financing, expertise, infrastructure and other resources to support a new drug product from clinical development to marketing, the Company also requires strategic partner support to develop and commercialize its drug candidates. There can be no assurance that such strategic partner support will be obtained upon acceptable terms or at all.

The Company relies heavily on contract manufacturers for the production of product required for its clinical trials, product formulation work, scaling-up experiments and commercial production. The Company may not be able to obtain new, or keep its current, contract manufacturers to provide these services. Even if the Company does, contract manufacturers may not be reliable in meeting its requirements for cost, quality, quantity or schedule, or the requirements of any regulatory agencies. The Company may not be able to manufacture products in quantities or qualities that would enable the Company to meet its business objectives, and failure to do so would materially adversely affect the Company’s business.

If the Company can successfully develop markets for its products, the Company would have to arrange for their scaledup manufacture. There can be no assurance that the Company will, on a timely basis, be able to make the transition from manufacturing clinical trial quantities to commercial production quantities successfully or be able to arrange for scaledup commercial contract manufacturing. Any potential difficulties experienced by the Company in manufacturing scale-up, including recalls or safety alerts, could have a material adverse effect on the Company’s business, financial condition, and results of operations.

The Company relies significantly on licensed intellectual property. If the Company were to lose its rights to licensed intellectual property, the Company would not be able to continue developing or commercializing L-DOS47. If the Company breaches the agreement with NRC under which it licenses the use, development and commercialization rights to a lung cancer antibody in order to develop and commercialize L-DOS47 or any other future product candidate or technology from third parties or if certain insolvency events were to occur, the Company could lose license rights that are critical to its business

The Company has an exclusive worldwide license to a lung cancer antibody necessary to develop and commercialize L- DOS47 pursuant to a license agreement with NRC that is critical to the Company’s business, which is subject to termination for breach of certain terms and, therefore, the Company’s rights may only be available for as long as the Company’s development and commercialization activities are sufficient to meet the terms of the license. In addition, the Company may need to enter into additional license agreements in the future. The Company’s existing license agreements impose, and any future license agreements may impose on the Company, various developments, regulatory and/or commercial diligence obligations, payment of milestones and/or royalties and other obligations. If the Company fails to comply with its obligations under these agreements, or the Company is subject to a bankruptcy, the licensor may have the right to terminate the license, in which event the Company would not be able to market products covered by the license, which would have a material adverse effect on the Company’s business, financial condition, results of operations and prospects. Moreover, the Company’s current or future licenses may provide for a reversion to the licensor of the

Company’s rights in regulatory filings or other intellectual property or data that the Company regards as its own in the event the license terminates under certain circumstances, such as due to breach.

Licensing of intellectual property is of critical importance to the Company’s business and involves complex legal, business and scientific issues. Disputes may arise between us and the Company’s licensors regarding intellectual property subject to a license agreement, including with respect to:

the scope of rights granted under the license agreement and other interpretation-related issues;
the rights of the Company’s licensors under the license agreements; and
the Company’s diligence obligations with respect to the use of the licensed technology in relation to the Company’s development and commercialization of L-DOS47 and any future product candidates, and what activities satisfy those diligence obligations.

Any disputes with the Company’s licensors over intellectual property that the Company has licensed from them may prevent or impair the Company’s ability to maintain its current licensing arrangements on acceptable terms. Termination or expiry of the Company’s license agreements could result in the loss of significant rights and could materially harm the Company’s ability to further develop and commercialize L-DOS47 or other future product candidates.

In addition, the agreements under which the Company currently licenses intellectual property or technology from third parties are complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what the Company believes to be the scope of its rights to the relevant intellectual property or technology, or increase what the Company believes to be its financial or other obligations under the relevant agreement, either of which could have a material adverse effect on the Company’s business, financial condition, results of operations, and prospects. Moreover, if disputes over intellectual property that the Company has licensed prevent or impair the Company’s ability to maintain its current licensing arrangements on commercially acceptable terms, the Company may be unable to successfully develop and commercialize the affected product candidates, which could have a material adverse effect on the Company’s business, financial conditions, results from operations and prospects.

The marketability of the Company’s products may be affected by delays and the inability to obtain necessary approvals, and following any market approval, the Company’s products will be subject to ongoing regulatory review and requirements which may continue to affect their marketability, including but not limited to regulatory review of drug pricing, healthcare reforms or the payment and reimbursement policies for drugs by the various insurers and other payors in the industry

The research, development, manufacture and marketing of pharmaceutical products are subject to regulation by the FDA, and comparable regulatory authorities in other countries. These agencies and others regulate the testing, manufacture, safety and promotion of the Company’s products. The Company must receive applicable regulatory approval of a product candidate before it can be commercialized in any particular jurisdiction. Approval by a regulatory authority of one country does not ensure the approval by regulatory authorities of other countries. Changes in regulatory approval policies or regulations during the development period may cause delays in the approval or rejection of an application. Regulatory authorities have substantial discretion in the approval process and may refuse to accept any application or may decide that our data are insufficient for approval, or require additional preclinical, clinical or other trials and place the Company’s IND submissions on hold for an indeterminate amount of time. The development and regulatory approval process in each jurisdiction takes many years, requires the expenditure of substantial resources, is uncertain and subject to delays, and can adversely affect the successful development and commercialization of our drug candidates.

Even if the Company obtains marketing approval in a particular jurisdiction, there may be limits on the approval and the Company’s products likely will be subject to ongoing regulatory review and regulatory requirements in that jurisdiction. Pharmaceutical companies are subject to various government regulations, including without limitation, requirements regarding occupational safety, laboratory practices, environmental protection and hazardous substance control, and may be subject to other present and future regulations.

The availability of reimbursement by governmental and other third-party payors, such as private insurance plans, will affect the market for any pharmaceutical product, and such payors tend to continually attempt to contain or reduce the costs of healthcare. Significant uncertainty exists with respect to the reimbursement status of newly approved healthcare products.

We are substantially dependent on third parties for the manufacture of our clinical supplies of our product candidates, and we intend to rely on third parties to produce commercial supplies of any approved product candidate. Therefore, our development of our products could be stopped or delayed, and our commercialization of any future product could be

stopped or delayed or made less profitable if third party manufacturers fail to obtain approval of the FDA or comparable regulatory authorities or fail to provide us with drug product in sufficient quantities or at acceptable prices

The manufacture of biotechnology and pharmaceutical products is complex and requires significant expertise, capital investment, process controls and know-how. Common difficulties in biotechnology and pharmaceutical manufacturing may include: sourcing and producing raw materials, transferring technology from chemistry and development activities to production activities, validating initial production designs, scaling manufacturing techniques, improving costs and yields, establishing and maintaining quality controls and stability requirements, batch lot expiries, eliminating contaminations and operator errors, and maintaining compliance with regulatory requirements. We do not currently have nor do we plan to acquire the infrastructure or capability internally in accordance with cGMP prescribed by the FDA or to produce an adequate supply of compounds to meet future requirements for clinical trials and commercialization of our products. Drug manufacturing facilities are subject to inspection before the FDA will issue an approval to market a new drug product, and all of the manufacturers that we intend to use must adhere to the cGMP regulations prescribed by the FDA.

We expect therefore to rely on third-party manufacturers for clinical supplies of our product candidates that we may develop. These third-party manufacturers will be required to comply with current good manufacturing practices, or GMPs, and other applicable laws and regulations. We will have no control over the ability of these third parties to comply with these requirements, or to maintain adequate quality control, quality assurance and qualified personnel. If the FDA or any other applicable regulatory authorities do not approve the facilities of these third parties for the manufacture of our other product candidates or any products that we may successfully develop, or if it withdraws any such approval, or if our suppliers or contract manufacturers decide they no longer want to supply or manufacture for us, we may need to find alternative manufacturing facilities, in which case we might not be able to identify manufacturers for clinical or commercial supply on acceptable terms, or at all. Any of these factors would significantly impact our ability to develop, obtain regulatory approval for or market our product candidates and adversely affect our business.

We and/or our third-party manufacturers may be adversely affected by developments outside of our control, and these developments may delay or prevent further manufacturing of our products. Adverse developments may include labor disputes, resource constraints, shipment delays, inventory shortages, lot failures, unexpected sources of contamination, lawsuits related to our manufacturing techniques, equipment used during manufacturing, or composition of matter, unstable political environments, acts of terrorism, war, natural disasters, and other natural and man-made disasters. If we or our third-party manufacturers were to encounter any of the above difficulties, or otherwise fail to comply with contractual obligations, our ability to provide any product for clinical trial or commercial purposes would be jeopardized. This may increase the costs associated with completing our clinical trials and commercial production. Further, production disruptions may cause us to terminate ongoing clinical trials and/or commence new clinical trials at additional expense. We may also have to take inventory write-offs and incur other charges and expenses for products that fail to meet specifications or pass safety inspections. If production difficulties cannot be solved with acceptable costs, expenses, and timeframes, we may be forced to abandon our clinical development and commercialization plans, which could have a material adverse effect on our business, prospects, financial condition, and the value of our securities.

We, or third-party manufacturers on whom we rely, may be unable to successfully scale-up manufacturing of our product candidates in sufficient quality and quantity, which would delay or prevent us from developing our product candidates and commercializing approved products, if any

In order to conduct clinical trials of our product candidates and commercialize any approved product candidates, we, or our manufacturers, will need to manufacture them in large quantities. We, or our manufacturers, may be unable to successfully increase the manufacturing capacity for any of our product candidates in a timely or cost-effective manner, or at all. In addition, quality issues may arise during scale-up activities. If we, or any of our manufacturers, are unable to successfully scale up the manufacture of our product candidates in sufficient quality and quantity, the development, testing, and clinical trials of that product candidate may be delayed or infeasible, and regulatory approval or commercial launch of any resulting product may be delayed or not obtained, which could significantly harm our business. If we are unable to obtain or maintain third-party manufacturing for commercial supply of our product candidates, or to do so on commercially reasonable terms, we may not be able to develop and commercialize our product candidates successfully.

Our failure to find third party collaborators to assist or share in the costs of product development could materially harm our business, financial condition and results of operations

Our strategy for the development and commercialization of our proprietary product candidates may include the formation of collaborative arrangements with third parties. Existing and future collaborators have significant discretion in determining the efforts and resources they apply and may not perform their obligations as expected. Potential third party

collaborators include biopharmaceutical, pharmaceutical and biotechnology companies, academic institutions and other entities. Third-party collaborators may assist us in:

funding research, preclinical development, clinical trials and manufacturing;
seeking and obtaining regulatory approvals; and
successfully commercializing any future product candidates.

If we are not able to establish further collaboration agreements, we may be required to undertake product development and commercialization at our own expense. Such an undertaking may limit the number of product candidates that we will be able to develop, significantly increase our capital requirements and place additional strain on our internal resources. Our failure to enter into additional collaborations could materially harm our business, financial condition and results of operations.

In addition, our dependence on licensing, collaboration and other agreements with third parties may subject us to a number of risks. These agreements may not be on terms that prove favorable to us and may require us to relinquish certain rights in our product candidates. To the extent we agree to work exclusively with one collaborator in a given area, our opportunities to collaborate with other entities could be curtailed. Lengthy negotiations with potential new collaborators may lead to delays in the research, development or commercialization of product candidates. The decision by our collaborators to pursue alternative technologies or the failure of our collaborators to develop or commercialize successfully any product candidate to which they have obtained rights from us could materially harm our business, financial condition and results of operations.

We rely on third parties to conduct our preclinical and clinical trials. If these third parties do not successfully perform their contractual legal and regulatory duties or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be substantially harmed

We have relied upon and plan to continue to rely upon third-party medical institutions, clinical investigators, contract laboratories and other third party CROs to monitor and manage data for our ongoing preclinical and clinical programs. We rely on these parties for execution of our preclinical and clinical trials, and control only certain aspects of their activities. Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol, legal, regulatory and scientific standards, and our reliance on the CROs does not relieve us of our regulatory responsibilities. We and our CROs are required to comply with cGCPs, which are regulations and guidelines enforced by the FDA, the Competent Authorities of the Member States of the European Economic Area, or EEA, and comparable foreign regulatory authorities for all of our products in clinical development.

Regulatory authorities enforce these cGCPs through periodic inspections of trial sponsors, principal investigators and trial sites. If we or any of our CROs fail to comply with applicable cGCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA, the EMA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. We cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials comply with cGCP regulations. In addition, our clinical trials must be conducted with product produced under current good manufacturing practices, or cGMP, regulations. Our failure to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process.

If any of our relationships with these third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs or to do so on commercially reasonable terms. In addition, our CROs are not our employees, and except for remedies available to us under our agreements with such CROs, we cannot control whether or not they devote sufficient time and resources to our on-going clinical, nonclinical and preclinical programs. If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our product candidates. As a result, our results of operations and the commercial prospects for our product candidates would be harmed, our costs could increase and our ability to generate revenues could be delayed.

Many of the third parties with whom we contract may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical trials or other drug development activities that could harm our competitive position. If the third parties conducting our GLP preclinical studies or our clinical trials do not perform their contractual duties or obligations, experience work stoppages, do not meet expected deadlines, terminate their agreements with us or need to be replaced, or if the quality or accuracy of the clinical data they obtain is compromised due to their failure to adhere to our clinical trial protocols or to GCPs, or for any other reason, we may need to enter into new arrangements with alternative third parties. Switching or adding additional CROs involves additional cost and requires management time and focus. In addition, there is a natural transition period when a new CRO commences work. As a result, delays occur, which can materially impact our ability to meet our desired clinical development timelines. Though we carefully manage our relationships with our CROs, there can be no assurance that we will not encounter

similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition and prospects.

The Company operates in an industry that is more susceptible than others to legal proceedings and, in particular, liability claims

The Company operates in an industry that is more susceptible to legal proceedings than firms in other industries, due to the uncertainty involved in the development of pharmaceuticals. Defense and prosecution of legal claims can be expensive and time consuming and may adversely affect the Company regardless of the outcome due to the diversion of financial, management and other resources away from the Company’s primary operations. Negative judgments against the Company, even if the Company is planning to appeal such a decision, or even a settlement in a case, could negatively affect the cash reserves of the Company, and could have a material negative effect on the development of its drug products.

The Company may be exposed, in particular, to liability claims which are uninsured or not sufficiently insured, and any claims may adversely affect the Company’s ability to obtain insurance in the future or result in negative publicity regarding the efficacy of its drug products. Such liability insurance is expensive, its ability is limited, and it may not be available on terms that are acceptable to the Company, if at all.

The use of any of the Company’s unapproved products under development, the use of its products in clinical trials, and, if regulatory approval is received, the sale of such products, may expose the Company to liability claims which could materially adversely affect the Company’s business. The Company may not be able to maintain or obtain commercially reasonable liability insurance for future products, and any claims under any insurance policies may adversely affect its ability to maintain existing policies or to obtain new insurance on existing or future products. Even with adequate insurance coverage, publicity associated with any such claim could adversely affect public opinion regarding the safety or efficacy of the Company’s products. As a result, any product liability claim or recall, including in connection with products previously sold by the Company through its former distribution business, could materially adversely affect the Company’s business.

If the Company were unable to maintain product liability insurance required by third parties, the corresponding agreements would be subject to termination, which could have a material adverse impact on our operations

Some of our licensing and other agreements with third parties require or might require us to maintain product liability insurance. If the Company cannot maintain acceptable amounts of coverage on commercially reasonable terms in accordance with the terms set forth in these agreements, the corresponding agreements would be subject to termination, which could have a material adverse impact on the Company’s operations.

The Company is dependent upon key personnel; Director residency requirements

The Company’s ability to continue its development of potential products depends on its ability to attract and maintain qualified key individuals to serve in management and on the Board. However, the Company does not currently have a formal succession plan for members of its senior management team or for its Board and, because competition for qualified key individuals with experience relevant to the industry in which the Company operates is intense, the Company may not be able to attract and/or retain such personnel. Additionally, applicable corporate law requires that at least 25% of the Company’s directors be resident Canadians, and the Company’s articles provide that the Company cannot have fewer than four directors at any time.

Consequently, if the Company is unable to attract and/or loses and is unable to replace key personnel, its business could be negatively affected and, in particular, if the Company loses its current resident Canadian director in the future and is unable to find a resident Canadian director to fill the resulting vacancy, the Board will be prevented from taking any action other than appointing an additional resident Canadian director until such time as a new resident Canadian director has been appointed such that at least 25% of the Company’s directors are resident Canadians.

The Company employs a small number of employees who have many years of technical knowledge of the Company’s technology and two senior officers, the CEO and CFO. COVID-19 imposes a high risk to all of the Company’s activities. The Company has established a policy to diligently monitor developments. Because the situation is fluid, the Company will be updating its staff whenever necessary. The Company has implemented and communicated a policy to all staff in order mitigate any potential risk.

In addition, the Company does not carry key-person insurance on any individuals.

The Company’s employees and consultants may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could have a material adverse effect on the Company’s business

The Company is exposed to the risk of employee and consultant fraud or other misconduct. Misconduct by employees and consultants could include, but are not limited to the following: failure to comply with regulators, failure to provide accurate information, failure to comply with manufacturing standards the Company has established, jurisdictional healthcare fraud and abuse of laws and regulations, failure to report financial information or data accurately or disclose unauthorized activities. For example, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing, and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Employee and consultant misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to the Company’s reputation. If any such actions are instituted against the Company, and the Company is not successful in defending itself or asserting its rights, those actions could have a substantial impact on the Company’s business and operating results, including the imposition of substantial fines, halt in trading of the Common Shares, possible delisting and/or other sanctions.

Indemnification obligations to directors and officers of the Company may adversely affect the Company’s finances

The Company has entered into agreements pursuant to which the Company has agreed to indemnify its directors and senior management in respect of certain claims made against them while acting in their capacity as such. If the Company is called upon to perform its indemnity obligations, its finances may be adversely affected.

The Company’s finances may fluctuate based on foreign currency exchange rates

The Company operates internationally and is exposed to foreign exchange risks from various currencies, primarily the U.S. dollar, the Euro and the Polish Zloty. Fluctuations in the value of foreign currencies relative to the Canadian dollar could cause us to incur currency exchange losses.

The Company may incur losses due to adverse decisions by tax authorities or changes in law

The Company’s income tax reporting is subject to audit by tax authorities. The effective tax rate may change from year to year based on the mix of income; non-deductible expenses; changes in tax law; and changes in the estimated values of future income tax assets and liabilities.

The Company may enter into transactions and arrangements in the ordinary course of business in which the tax treatment is not entirely certain. The Company must therefore make estimates and judgments in determining its consolidated tax provision. The final outcome of any audits by taxation authorities may differ from estimates and assumptions used in determining the consolidated tax provisions and accruals. This could result in a material effect on the Company’s scientific research and experimental development tax credits, income tax provision, financial position and the net income/loss for the period in which such determinations are made.

The Company is subject to taxation in Canada. The Company’s effective tax rate and tax liability are determined by a number of factors, including the amount of taxable income, the tax rates, The application of these tax laws and related regulations is subject to legal and factual interpretation, judgment and uncertainty. An adverse interpretation or ruling by a taxing authority in a jurisdiction in which the Company operates or a change in law could increase the Company’s tax liability or result in the imposition of penalty payments, which could adversely impact the Company’s operating results.

The requirements of being a public company may strain the Company’s resources, divert management’s attention and affect its ability to attract and retain qualified board members

The Company’s Common Shares are publicly traded on the TSX. As a public company, the Company is subject to the reporting requirements of Canadian securities regulators, the listing requirements of any stock exchange on which its Common Shares are listed for trading and other applicable securities rules and regulations. Compliance with these rules and regulations may increase the Company’s legal and financial compliance costs, may make some activities more difficult, time-consuming or costly and may increase the demand on the Company’s systems and resources. Being a public company requires that the Company file continuous disclosure documents, including, among other things, annual and quarterly financial statements. Management’s attention may be diverted from other business concerns, which could have a material adverse effect on the Company’s business, financial condition and results of operations. The Company may need to hire more employees in the future, which will increase its costs and expenses.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure create uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. The Company may invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If the

Company’s efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory authorities, legal proceedings may be initiated against the Company and its business may be harmed.

General economic conditions may have an adverse effect on the Company and its business

Continuing global economic volatility and uncertainty may have an adverse effect on the Company and its business, including without limitation the ability to raise additional financing, to obtain strategic partner support or commercialization opportunities and alliances for the Company’s new drug candidates, and to obtain continued services and supplies.

The Company’s business involves environmental risks that could result in accidental contamination, injury, and significant capital expenditures in order to comply with environmental laws and regulations

The Company and its commercial collaborators are subject to laws and regulations governing the use, manufacture, storage, handling and disposal of materials and certain waste products. Although the Company believes that its safety procedures comply with the regulations, the risk of accidental contamination or injury from these materials cannot be eliminated. In the event of such an accident, the Company could be held liable for any damages that result and any such liability could exceed the resources of the Company. The Company is not specifically insured with respect to this liability. The Company (or its collaborators) may be required to incur significant costs to comply with environmental laws and regulations in the future; and the operations, business or assets of the Company may be materially adversely affected by current or future environmental laws or regulations.

Any failure to maintain an effective system of internal controls may result in material misstatements of the Company’s consolidated financial statements or cause us to fail to meet the Company’s reporting obligations or fail to prevent fraud; and in that case, the Company’s shareholders could lose confidence in the Company’s financial reporting, which would harm the Company’s business, could negatively impact the price of the Common Shares and prevent the Company from raising additional capital

Effective internal controls are necessary for the Company to provide reliable financial reports and prevent fraud. If the Company fails to maintain an effective system of internal controls, the Company may not be able to report its financial results accurately or prevent fraud; and in that case, the Company’s shareholders could lose confidence in the Company’s financial reporting, which would harm the Company’s business, negatively impact the price of the Common Shares and also prevent the Company from raising additional capital. Even if the Company were to conclude that its internal control over financial reporting provides reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with IFRS as issued by the IASB, because of its inherent limitations, internal control over financial reporting may not prevent or detect fraud or misstatements. Failure to achieve and maintain effective internal control over financial reporting could prevent the Company from complying with its reporting obligations on a timely basis, which could result in the loss of investor confidence in the reliability of the Company’s consolidated financial statements, harm the Company’s business , negatively impact the trading price of the Common Shares and prevent the Company from raising additional capital.

Our results of operations may be negatively impacted by the COVID-19 outbreak

The Company’s business, operations and financial condition could be materially and adversely affected by the outbreak of epidemics or pandemics or other health crises, including the COVID-19 pandemic. As a result of the COVID-19 outbreak, the Company may experience disruptions that could severely impact its business, preclinical studies and clinical trials, including:

delays or difficulties in enrolling patients in our clinical trials;
delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff;
interruption of key clinical trial activities, such as clinical trial site data monitoring, due to limitations on travel imposed or recommended by federal, provincial or state governments, employers and others or interruption of clinical trial subject visits and study procedures, which may impact the integrity of subject data and clinical study endpoints;
interruption or delays in the operations of the FDA, which may impact approval timelines;
interruption of, or delays in receiving supplies of our product candidates from our contract manufacturing organizations due to staffing shortages, production slowdowns or stoppages and disruptions in delivery systems; and
limitations on employee resources that would otherwise be focused on the conduct of our preclinical studies and clinical trials, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people.

In addition, the trading prices for the Common Shares and the securities of other biopharmaceutical companies have been highly volatile as a result of the COVID-19 epidemic. As a result, the Company may face difficulties raising capital through sales of our securities, and such sales may be on unfavorable terms, if at all. The COVID-19 outbreak continues to rapidly evolve. The extent to which the outbreak may impact our business, preclinical studies and clinical trials will

depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions and other measures implemented in Canada, the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the Canada, the United States and other countries to contain the disease.

The spread of COVID-19 has resulted in a sharp decline in global economic growth as well as causing increased volatility and declines in financial markets. If the COVID-19 pandemic is prolonged, or further diseases emerge that give rise to similar effects, the adverse impact on the global economy could deepen and result in further declines in global economic growth and financial markets. Accordingly, the full impact of the COVID-19 pandemic on the global economy and financial markets is uncertain and may have an adverse effect on the Company.

To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this AIF. Because of the highly uncertain and dynamic nature of events relating to the COVID-19 pandemic, it is not currently possible to estimate the impact of COVID-19 on the Company. However, these effects could have a material impact on our business, operations and financial condition.

Risks Related to the Common Shares

The Company’s share price and trading volumes are volatile and the Company may have difficulty maintaining listing requirements

The market price of the Company’s Common Shares, as well as market prices for securities of biopharmaceutical and drug delivery companies generally, have historically been highly volatile, and have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies.

The trading price of the Common Shares is subject to change and could in the future fluctuate significantly. The fluctuations could be in response to numerous factors beyond the Company’s control, including but not limited to, the following:

actual or anticipated fluctuations in the Company’s quarterly results of operations;
recommendations by securities research analysts;
changes in the economic performance or market valuations of companies in the industry in which the Company operates;
addition or departure of the Company’s executive officers and other key personnel;
release or expiration of transfer restrictions on outstanding Common Shares;
sales or perceived sales of additional Common Shares;
operating and financial performance that vary from the expectations of management, securities analysts and investors;
regulatory changes affecting the Company’s industry generally and its business and operations;
announcements of developments and other material events by the Company or its competitors;
fluctuations to the costs of vital production materials and services;
changes in global financial markets and global economies and general market conditions, such as interest rates and pharmaceutical product price volatility;
significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving the Company or its competitors;
operating and share price performance of other companies that investors deem comparable to the Company or from a lack of market comparable companies;
news reports relating to trends, concerns, technological or competitive developments, regulatory changes and other related issues in the Company’s industry or target markets; and the outbreak of epidemics, pandemics or other health crises including COVID-19.

The Internet offers various avenues for the dissemination of information. The Company has no control over the information that is distributed and discussed on electronic bulletin boards and investment chat rooms. The intention of the people or organizations that distribute such information may not be in the Company’s best interest and the best interests of its shareholders. This, in addition to other forms of investment information including newsletters and research publications, could result in a sharp decline in the market price of the Common Shares.

In addition, stock markets have occasionally experienced extreme price and volume fluctuations. The market prices for high-technology companies have been particularly affected by these market fluctuations and such effects have often been unrelated to the operating performance of such companies. These broad market fluctuations may cause a decline in the market price of the Common Shares.

Sales of substantial numbers of the Company’s Common Shares could cause a decline in the market price of such Common Shares. There are minimum listing requirements for an issuer to maintain its listing on the TSX, and if the Company fails to maintain these listing requirements, it may be involuntarily delisted from the TSX. De-listing the

Company or the Company shares from any securities exchange could have a negative effect on the liquidity of the Company shares and/or the ability of a shareholder to trade in shares of the Company, and could have an adverse effect on the Company’s ability to raise future equity financings. The Company’s Common Shares trade in a very low volume compared to the number of Common Shares outstanding. This means a shareholder could have difficulty disposing of Common Shares, especially if there are other shareholders of the Company trying to sell their shares in the Company at the same time. Volatility in share price and trading volumes could have an adverse effect on the Company’s ability to raise future equity financings.

Shareholders of the Company may face dilution from future equity or convertible debt financings or through the exercise of stock options, warrants or other securities convertible or exchangeable into Common Shares

To attract and retain key personnel, the Company has granted options to its key employees, directors and consultants to purchase Common Shares as non-cash incentives. In addition, the Company has a significant number of warrants to purchase Common Shares outstanding. The issuance of shares pursuant to the exercise of a significant number of such options and/or warrants may result in significant dilution to other shareholders of the Company.

As noted above, the Company needs additional funding and has historically turned to the equity markets to raise this funding. The future sale of equity securities and warrants may also result in significant dilution to the shareholders of the Company.

The Company cannot predict the size or nature of future sales or issuances of securities or the effect, if any, that such future sales and issuances will have on the market price of the Common Shares. Sales or issuances of substantial numbers of Common Shares or other securities that are convertible or exchangeable into Common Shares, or the perception that such sales or issuances could occur, may adversely affect prevailing market prices of the Common Shares. With any additional sale or issuance of Common Shares or other securities that are convertible or exchangeable into Common Shares, investors will suffer dilution to their voting power and economic interest in the Company. Furthermore, to the extent holders of the Company’s stock options or other convertible securities convert or exercise their securities and sell the Common Shares they receive, the trading price of the Common Shares may decrease due to the additional amount of Common Shares available in the market.

Trading in the Company’s Common Shares outside of Canada may be subject to restrictions on trading under foreign securities laws, and purchasers of securities under private placements by the Company will be subject to certain restrictions on trading

The Company’s Common Shares trade on the TSX and are freely tradeable only in Canada. As such, shareholders trading the Common Shares outside of Canada may be subject to restrictions imposed by foreign securities laws that may restrict their ability to transfer shares freely or at all. Certain securities offered by the Company pursuant to its private placements, including the unlisted warrants issued by the Company, are subject to certain initial hold periods and other restrictions on trading imposed by applicable securities laws and, in the case of the warrants, pursuant to the terms of the applicable warrant certificates. These restrictions may affect the liquidity of the investment of certain shareholders in the securities of the Company.

The Company does not expect to pay any cash dividends for the foreseeable future

Investors should not rely on an investment in the Common Shares to provide dividend income. The Company does not anticipate that it will pay any cash dividends to holders of the Common Shares in the foreseeable future. Instead, the Company plans to retain any earnings to maintain and expand its operations. In addition, any future debt financing arrangement may contain terms prohibiting or limiting the amount of dividends that may be declared or paid on the Common Shares. Accordingly, investors must rely on sales of their Common Shares after price appreciation, which may never occur, as the only way to realize any return on their investment. As a result, investors seeking cash dividends should not purchase Common Shares.

If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research about the Company’s business, the share price and trading volume of the Common Shares could decline

The trading market for the Common Shares will depend, in part, on the research and reports that securities or industry analysts publish about the Company or its business. If one or more of the analysts who cover the Company downgrade the Common Shares or publish inaccurate or unfavorable research about the Company’s business, the Company’s share price would likely decline. In addition, if the Company’s operating results fail to meet the forecast of analysts, the Company’s share price would likely decline. If one or more of these analysts cease coverage of the Company or fail to publish reports on the Company regularly, demand for the Common Shares could decrease, which might cause the share price and trading volume of the Common Shares to decline.

RISK FACTORS IN OTHER PUBLIC FILINGS

For all of the reasons set forth above, together with those additional risk factors identified under the headings “Forward-Looking Statements” and “ Risk Factors ” in the Company’s most recent Annual Information Form filed under the Company’s profile on SEDAR at www.sedar.com, investors should not place undue reliance on forward-looking information. Other than any obligation to disclose material information under applicable securities laws, the Company undertakes no obligation to revise or update any forward-looking information after the date hereof.

Data relevant to estimated market sizes and penetration for the Company’s lead products under development are presented in this MD&A. This data has been obtained from a variety of published resources including published scientific literature, websites and information generally available through publicized means. The Company attempts to source reference data from multiple sources whenever possible for confirmatory purposes. Although the Company believes the foregoing data is reliable, the Company has not independently verified the accuracy and completeness of this data.

ADDITIONAL INFORMATION

Additional information relating to the Company’s fiscal year ended July 31, 2021, is available under the Company’s profile on SEDAR at www.sedar.com.