BriaCell Therapeutics Corp.

 

The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report. This discussion and other parts of this Annual Report contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under “Risk Factors” and elsewhere in this Annual Report.

 

The preparation of our consolidated financial statements in conformity with these accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. On an on-going basis, we review our estimates and assumptions. The estimates were based on historical experience and other assumptions that we believe to be reasonable under the circumstances. Actual results are likely to differ from those estimates or other forward-looking statements under different assumptions or conditions, but we do not believe such differences will materially affect our financial position or results of operations. Our actual results may differ materially as a result of many factors, including those set forth under the headings entitled “Forward-Looking Statements” and “Risk Factors”.

 

 

Overview

 

BriaCell is a clinical-stage biotechnology company that is developing novel immunotherapies to transform cancer care. Immunotherapies have come to the forefront in the fight against cancer as they harness the body’s own immune system to recognize and destroy cancer cells. The Company is currently advancing its Bria-IMT™ targeted immunotherapy in combination with an immune check point inhibitor (Retifanlimab) in a pivotal Phase 3 study in metastatic breast cancer (listed on ClinicalTrials.gov as NCT06072612). Bria-IMT™ is currently under Fast Track Designation by the U.S. Food and Drug Administration (the “FDA”) intended to accelerate the review process of novel treatments that address unmet medical needs. Positive completion of the pivotal study, following review by FDA, could lead to full approval of the Bria-IMT™ immune checkpoint inhibitor combination in metastatic breast cancer.

 

BriaCell has reported benchmark-beating patient survival and clinical benefit in metastatic breast cancer with median overall survival of 13.3 months in BriaCell’s metastatic breast cancer patients vs. 5.9-9.8 months for similar patients reported in the literature in its Phase 2 study of Bria-IMT™ combination study with retifanlimab. Additionally, BriaCell reported median overall survival of 16.6 months in Phase 2 Bria-IMT™ study patients treated in combination with immune checkpoint inhibitor in patients treated with the Phase 3 formulation since 2022 (post-COVID). A completed Bria-IMT™ Phase 1/2 combination study with retifanlimab (an anti-PD1 antibody manufactured by Incyte) confirmed tolerability and early-stage efficacy (listed on ClinicalTrials.gov as NCT03328026).

 

BriaCell Phase 1/2 Study of Bria-OTS™, BriaCell’s personalized off-the-shelf immunotherapy, in metastatic breast cancer is ongoing (listed on ClinicalTrials.gov as NCT06471673). The first patient treated with 4 inoculations of cells (single agent) demonstrated complete resolution of a lung metastasis.

 

BriaCell is currently developing Bria-OTS™ and its advanced form, Bria-OTS+™, as a platform technology for personalized off-the-shelf immunotherapies for numerous types of cancer. The Company announced BriaCell has received from the FDA permission to proceed with Phase 1/2a clinical studies of Bria-BRES+™ for breast cancer and Bria-PROS+™ for prostate cancer with open Investigational New Drug Applications (INDs) for both.

 

Critical Accounting Policies and Estimates

 

1. Critical Estimates and Judgements

 

The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. The consolidated financial statements include estimates which, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the consolidated financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and also in future periods when the revision affects both current and future periods.

 

The critical judgments and significant estimates in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements are:

 

Going Concern

 

Preparation of the consolidated financial statement on a going concern basis, which contemplates that the Company will be able to meet its commitments, continue operations and realize its assets and discharge its liabilities in the normal course of business for at least twelve months from the date of approval of these Financial Statements from the Board of Directors. Should the Company be unable to continue as a going concern, it may be unable to realize the carrying value of its assets, including its intangible assets and to meet its liabilities as they become due.

 

Warrants and options

 

The Company uses the Black-Scholes option-pricing model to estimate the fair value of options at the grant date, and the warrant liability at the grant date and each reporting period date. The key assumptions used in the model are the expected future volatility in the price of the Company’s shares and the expected life of the warrants.

 

 

Income Taxes

 

The Company accounts for income taxes in accordance with Accounting Standard Codification 740, Income Taxes (“FASB ASC 740”), on a tax jurisdictional basis. The Company files income tax returns in the United States.

 

Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the tax bases of assets and liabilities and the consolidated financial statements reported amounts using enacted tax rates and laws in effect in the year in which the differences are expected to reverse. A valuation allowance is provided against deferred tax assets when it is determined to be more likely than not that the deferred tax asset will not be realized.

 

Provision for Income Taxes. Management accounts for income taxes by estimating future tax effects of temporary differences between the tax and book basis of assets and liabilities considering the provisions of enacted tax laws. The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and are often ambiguous. As such, management is required to make many subjective assumptions and judgments regarding the Corporation’s income tax exposures, including judgments in determining the amount and timing of recognition of the resulting deferred tax assets and liabilities, including projections of future taxable income. Interpretations of and guidance surrounding income tax laws and regulations change over time. As such, changes in management’s subjective assumptions and judgments can materially affect amounts recognized in the Consolidated balance sheet and Consolidated Statements of Operations and Comprehensive Loss

 

Intangible assets

 

Intangible assets are tested for impairment annually or more frequently if there is an indication of impairment. The carrying value of intangibles with definite lives is reviewed each reporting period to determine whether there is any indication of impairment. If there are indications of impairment, the impairment analysis is completed and if the carrying amount of an asset exceeds its recoverable amount, the asset is impaired and impairment loss is recognized.

 

Prepaid expenses

 

The Company has prepaid certain expenses in respect of its pivotal phase III trial and estimates the period over which such expenses will be incurred. As of July 31, 2026, the Company revised its estimate of the time to completion in respect of this trial. Amounts estimated to be expenses in more than 12 months have been classified to long-term prepaid expenses.

 

The useful life of property and equipment

 

Property and equipment are depreciated over their useful lives. Useful lives are based on management’s estimates of the period that the assets will be used which are periodically reviewed for continued appropriateness. Changes to estimates can result in significant variations in the amounts charged to the consolidated statement of operations and comprehensive loss in specific periods.

 

Investment equity method

 

Investments in entities over which the Company does not have a controlling financial interest but has significant influence are accounted for using the equity method, with the Company’s share of losses reported in the loss from equity method investments on the statements of operation and comprehensive loss. The Company has a 71.13% interest in BC Therapeutics. Management evaluates whether it has control over the investee in accordance with the guidance of ASC 810, which requires judgment to assess factors such as power over significant activities of the investee, exposure to variable returns, and the ability to affect those returns. Based on this evaluation, management concludes significant influence is present for accounting purposes.

 

 

2. New Accounting Policies Adopted

 

No new accounting policies were adopted during the year ended July 31, 2026, except as disclosed in Note 2(p) to the consolidated financial statements.

 

Results of Operations

 

Comparison of the year ended July 31, 2026, compared to the year ended July 31, 2025

 

Research Costs

 

Research costs are comprised primarily of (i) salaries and wages to Company employees at our laboratory and in clinical development; and (ii) clinical trials and investigational drug costs, which include the testing and manufacture of our investigational drugs and costs of our clinical trials.

 

The following is a breakdown of our research and development costs by nature of expenses:

 

	Year ended July 31,
	2026				2025
Clinical trial sites and investigational drug costs	$	20,168,133			$	14,765,112
Wages and salaries		6,359,077				4,648,203
Laboratory rent		516,110				457,320
Supplies		708,847				470,208
Depreciation		104,064				91,356
Professional Fees		601,253				718,429
Licensing Fees		173,913				-
Share-based compensation		605,111				120,050
	$	29,236,508			$	21,270,678

 

For the year ended July 31, 2026, total research, development, and clinical trial costs amounted to $29,236,508 as compared to $21,270,678 for the year ended July 31, 2025. The increase was primarily driven by higher clinical trial sites and investigational drug costs, which increased from $14,765,112 in 2025 to $20,168,133 in 2026. The increase reflects continued activity related to the pivotal Phase 3 trial. Wages and salaries increased from $4,648,203 in 2025 to $6,359,077 in 2026, reflecting higher headcount and personnel costs supporting ongoing research and clinical activities. Laboratory rent rose to $516,110 in 2026, compared to $457,320 in 2025, due to expanded use of facilities. Supplies increased from $470,208 in 2025 to $708,847 in 2026, reflecting increased consumable needs. Depreciation expenses increased to $104,064 in 2026, compared to $91,356 in 2025. The increase reflects new equipment that was purchased in 2026. Professional fees decreased from $718,429 in 2025 to $601,253 in 2026. Share-based compensation expenses increased significantly from $120,050 in 2025 to $605,111 in 2026.

 

Clinical trial expenses for the period are as follows:

 

	Year ended July 31,
	2026				2025
Bria-IMT™ Pivotal Phase 3 study	$	16,477,598			$	13,511,235
Bria-IMT™ Phase 1/2a		706,469				1,013,828
Bria-OTS™ Phase 1/2a		4,603,546				428,233
	$	21,787,613			$	14,953,296

 

 

Clinical trial expenses for the year ended July 31, 2026, were $21,787,613, compared to $14,953,296 during the year ended July 31, 2025. The increase reflects sustained investment in the Bria-IMT™ pivotal Phase 3 program and significant advancement of the Bria-OTS™ Phase 1/2a and next-generation Bria-OTS+™ programs, partially offset by lower costs associated with the continued wind-down of the Bria-IMT™ Phase 1/2a study. During fiscal 2026, the pivotal Phase 3 study continued to advance through increased patient enrollment, expansion of the clinical-site network, increased clinical-site activity, CRO services, central laboratory testing and clinical supply management as the study progressed toward planned interim analysis.

 

For the year ended July 31, 2026, Bria-IMT™ Pivotal Phase 3 Study costs totaled $16,477,598, compared to $13,511,235 in 2025. The increase reflects the continued progression of the pivotal study through an advanced stage of clinical development, including continued patient enrollment, expansion of clinical sites, increased clinical-site activity, CRO services, central laboratory testing and clinical supply management. During fiscal 2026, enrollment in the study surpassed 230 patients and the clinical-site network continued to expand, including the addition of major academic cancer centers and the study’s first Canadian clinical site. Spending levels during the year reflect continued operational execution of the study as it advances toward planned interim analysis.

 

For the year ended July 31, 2026, Bria-IMT™ Phase 1/2a costs were $706,469, compared to $1,013,828 in 2025. The decrease reflects the continued wind-down of the program following completion of its primary activities. Current-period costs primarily relate to residual close out procedures, data management and limited follow up activities.

 

For the year ended July 31, 2026, Bria-OTS™ Phase 1/2a costs totaled $4,603,546, compared to $428,233 in 2025. The substantial increase reflects continued advancement of the Bria-OTS™ program and the Company’s next-generation Bria-OTS+™ platform. Costs incurred during the year included expanded clinical development and manufacturing activities, GMP production of Bria-BRES+™ and Bria-PROS+™, regulatory and analytical support, and operational activities supporting the ongoing Phase 1/2a program and advancement of additional product candidates toward clinical development.

 

General and Administrative Expenses

 

For the year ended July 31, 2026, general and administrative expenses were $6,817,729, compared to $5,934,125 for the year ended July 31, 2025. The increase was primarily driven by higher shareholder communications costs, share-based compensation, and consulting fees, partially offset by lower wages and salaries, insurance expense, regulatory, filing and transfer agent fees, and travel expenses.

 

Financial income, net

 

For the year ended July 31, 2026, financial income, net was $601,461, compared to $114,511 for the year ended July 31, 2025. The increase was primarily attributable to higher interest income, which increased to $633,766 in 2026 from $119,958 in 2025. Unrealized gains on short-term investments were $14,804 in 2026 compared to $56,473 in 2025. Foreign exchange losses decreased to $17,478 in 2026 from $24,941 in 2025, while interest expense decreased to $29,631 from $36,979.

 

Loss for the period

 

The Company reported a net loss of $35,325,292 for the year ended July 31, 2026, compared to $26,556,140 for the year ended July 31, 2025. The increase in net loss was primarily attributable to higher research, development, and clinical trial expenses and to a lesser extent, general and administrative expenses, together with a lower gain on the change in fair value of the warrant liability. These increases were partially offset by higher financial income, net, and an unrealized gain on investment during 2026.

 

 

Liquidity and Capital Resources

 

As of July 31, 2026, the Company has working capital of $14,063,292 (July 31, 2025 – $15,948,588) and an accumulated deficit of $146,659,826 (July 31, 2025 - $111,755,564).

 

As of July 31, 2026, the Company’s capital resources consist primarily of cash and cash equivalents and short-term investments, comprised mostly of cash on deposit with banks, investments in money market funds, investments in U.S. government securities, U.S. government agency securities, and investment grade corporate debt securities. Our investment policy and strategy are focused on preservation of capital and supporting our liquidity requirements.

 

Historically, the Company has financed its operations through private and public placements of equity securities, as well as debt financing. The Company’s ability to fund its longer-term cash requirements is subject to multiple risks, many of which are beyond its control. The Company intends to raise additional capital, either through debt or equity financings in order to achieve its business plan objectives. Management believes that it can be successful in obtaining additional capital; however, there can be no assurance that the Company will be able to do so. There is no assurance that any funds raised will be sufficient to enable the Company to attain profitable operations or continue as a going concern. To the extent that the Company is unsuccessful, the Company may need to curtail or cease its operations and implement a plan to extend payables or reduce overhead until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful. To this end, for several months during calendar year 2025, certain directors and officers agreed to defer payment of their directors’ fees/compensation until we completed a financing, after which these fees were paid in full. Further, certain officers have indicated their willingness to receive a portion of their compensation in shares of the Company, subject to applicable Nasdaq rules. In addition, we continue to reduce expenditure on certain non-core activities whilst maintaining our focus on our Phase 3 Bria-IMT™ pivotal study in advanced metastatic breast cancer.

 

During the year ended July 31, 2026, the Company’s overall position of cash and cash equivalents decreased by $641,373 from the year ended July 31, 2025 (including effects of foreign exchange). This decrease in cash can be attributed to the following:

 

The Company’s net cash used in operating activities during the year ended July 31, 2026, was $28,651,323 as compared to $28,170,520 for the year ended July 31, 2025.

 

Cash used in investing activities for the year ended July 31, 2026, was $3,805,049, as compared to $7,646,000 for the year ended July 31, 2025. The amount in 2026 relates primarily to net purchases of short-term investments ($3,301,000), an equity investment in BC Therapeutics ($377,000), and purchases of property and equipment ($127,049), and in the prior year, to the purchase of short-term investments ($7,316,000) and an equity investment in BC Therapeutics ($330,000).

 

Cash generated from financing activities for the year ended July 31, 2026, was $31,814,999, as compared to $45,448,239 for the year ended July 31, 2025. In both periods, this relates primarily to proceeds from the issuance of shares.

 

Off-balance Sheet Arrangements

 

None.

 

Tabular Disclosure of Contractual Obligations

 

None.