[10-Q] Medicus Pharma Ltd. Quarterly Earnings Report
Medicus Pharma Ltd. (MDCX) is a clinical-stage life sciences company focused on advancing a dissolvable doxorubicin microneedle array program (SkinJect) and opportunistic biotech acquisitions. The company reported $9,669,546 in cash and cash equivalents at June 30, 2025, up from $4,164,323 at year-end 2024, driven by equity offerings and warrant exercises.
Operating losses widened: a six-month net loss of $11,278,492 in 2025 versus $5,340,217 in 2024, producing an accumulated deficit of $40,182,395. Cash used in operations was $9,409,825 for the six months. The company closed a $4.17M Regulation A offering and a $7.01M June 2025 public offering, issued debentures for $4.5M (principal $5.0M) and entered a SEPA commitment for up to $15M. The company also agreed to acquire Antev Limited for consideration shares and contingent payments up to $65M. Management discloses substantial doubt about going concern and identified material weaknesses in internal controls.
Medicus Pharma Ltd. (MDCX) è una società nel settore delle scienze della vita in fase clinica, focalizzata sullo sviluppo di un programma di micro-ago dissolvibile a base di doxorubicina (SkinJect) e su acquisizioni biotecnologiche opportunistiche. La società ha registrato $9,669,546 in disponibilità liquide al 30 giugno 2025, in aumento rispetto a $4,164,323 alla fine del 2024, grazie a offerte di capitale e all'esercizio di warrant.
Le perdite operative si sono ampliate: perdita netta semestrale di $11,278,492 nel 2025 rispetto a $5,340,217 nel 2024, con un disavanzo accumulato di $40,182,395. Il cash flow operativo è stato negativo per $9,409,825 nei sei mesi. La società ha chiuso un'offerta Regulation A da $4.17M e un'offerta pubblica di giugno 2025 da $7.01M, ha emesso debentures per $4.5M (capitale $5.0M) ed è entrata in un impegno SEPA fino a $15M. Inoltre ha concordato l'acquisizione di Antev Limited in cambio di azioni e pagamenti condizionali fino a $65M. La direzione dichiara fondati dubbi sulla continuità aziendale e ha identificato significative carenze nei controlli interni.
Medicus Pharma Ltd. (MDCX) es una empresa de ciencias de la vida en fase clínica centrada en avanzar un programa de microagujas solubles con doxorrubicina (SkinJect) y en adquisiciones biotecnológicas oportunistas. La compañía reportó $9,669,546 en efectivo y equivalentes al 30 de junio de 2025, frente a $4,164,323 al cierre de 2024, impulsado por emisiones de acciones y ejercicio de warrants.
Las pérdidas operativas se ampliaron: pérdida neta semestral de $11,278,492 en 2025 frente a $5,340,217 en 2024, acumulando un déficit de $40,182,395. El efectivo usado en operaciones fue de $9,409,825 en el semestre. La compañía cerró una oferta Regulation A por $4.17M y una oferta pública en junio de 2025 por $7.01M, emitió debentures por $4.5M (principal $5.0M) y firmó un compromiso SEPA de hasta $15M. También acordó adquirir Antev Limited mediante acciones de contraprestación y pagos contingentes de hasta $65M. La dirección manifiesta dudas sustanciales sobre la continuidad de la empresa e identificó debilidades materiales en los controles internos.
Medicus Pharma Ltd. (MDCX)는 용해형 독소루비신 마이크로니들 어레이 프로그램(SkinJect)과 기회 기반의 바이오텍 인수에 주력하는 임상단계 생명과학 기업입니다. 회사는 2025년 6월 30일 기준 현금 및 현금성자산 $9,669,546을 보고했으며, 이는 2024년 연말의 $4,164,323에서 주식 발행 및 워런트 행사로 증가한 수치입니다.
영업손실은 확대되었습니다: 2025년 6개월 순손실 $11,278,492 대 2024년 $5,340,217로 누적 적자는 $40,182,395에 이릅니다. 6개월간 영업으로 사용한 현금은 $9,409,825입니다. 회사는 $4.17M 규모의 Regulation A 공모와 2025년 6월 $7.01M 규모의 공개 공모를 마무리했으며, $4.5M 규모(원금 $5.0M)의 데벤처를 발행하고 최대 $15M의 SEPA 약정을 체결했습니다. 또한 Antev Limited를 주식 대가 및 최대 $65M의 조건부 지급으로 인수하기로 합의했습니다. 경영진은 계속기업 존속능력에 대한 상당한 의문을 표명했으며 내부 통제에서 중대한 결함을 확인했습니다.
Medicus Pharma Ltd. (MDCX) est une société de sciences de la vie en phase clinique, axée sur le développement d'un programme d'aiguilles micro-perforantes solubles à la doxorubicine (SkinJect) et sur des acquisitions biotechnologiques opportunistes. La société a déclaré $9,669,546 en liquidités et équivalents de trésorerie au 30 juin 2025, contre $4,164,323 à la fin de 2024, tirés par des émissions d'actions et l'exercice de bons de souscription.
Les pertes d'exploitation se sont creusées : une perte nette semestrielle de $11,278,492 en 2025 contre $5,340,217 en 2024, entraînant un déficit accumulé de $40,182,395. Les flux de trésorerie utilisés par l'exploitation se sont élevés à $9,409,825 pour les six mois. La société a clôturé une offre Regulation A de $4.17M et une offre publique en juin 2025 de $7.01M, émis des débentures pour $4.5M (principal $5.0M) et conclu un engagement SEPA allant jusqu'à $15M. Elle a également accepté d'acquérir Antev Limited contre des actions de contrepartie et des paiements conditionnels allant jusqu'à $65M. La direction exprime des doutes substantiels quant à la continuité d'exploitation et a identifié des faiblesses importantes dans le contrôle interne.
Medicus Pharma Ltd. (MDCX) ist ein biowissenschaftliches Unternehmen in der klinischen Phase, das ein auflösbares Doxorubicin-Mikronadel-Array-Programm (SkinJect) vorantreibt und opportunistische Biotech-Akquisitionen anstrebt. Das Unternehmen meldete zum 30. Juni 2025 Zahlungsmittel und Zahlungsmitteläquivalente in Höhe von $9,669,546, gegenüber $4,164,323 zum Jahresende 2024, getrieben durch Eigenkapitalemissionen und Ausübung von Warrants.
Die operativen Verluste haben sich ausgeweitet: ein Halbjahresfehlbetrag von $11,278,492 im Jahr 2025 gegenüber $5,340,217 im Jahr 2024, was zu einem kumulierten Fehlbetrag von $40,182,395 führt. Der aus Geschäftstätigkeit verwendete Cashflow betrug $9,409,825 für die sechs Monate. Das Unternehmen schloss ein Regulation A-Angebot über $4.17M und ein öffentliches Angebot im Juni 2025 über $7.01M ab, gab Schuldverschreibungen über $4.5M (Nennbetrag $5.0M) aus und ging eine SEPA-Zusage über bis zu $15M ein. Außerdem vereinbarte es die Übernahme von Antev Limited gegen Aktienzahlungen und bedingte Zahlungen von bis zu $65M. Das Management äußert erhebliche Zweifel an der Fortführungsfähigkeit des Unternehmens und identifizierte wesentliche Schwächen in der internen Kontrolle.
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Insights
TL;DR: Liquidity improved materially in H1 2025 but cash burn and widening losses keep valuation risk elevated.
The company increased cash to $9.67M through a Regulation A offering, a June 2025 public offering and warrant exercises, and received $4.5M net proceeds from debentures. These financings reduced immediate liquidity risk and produced a working capital surplus of $2.45M at June 30, 2025. However, operating cash outflow of $9.41M in six months and a consolidated accumulated deficit of $40.18M indicate continued reliance on financing. The interim SKNJCT-003 clinical signal (>60% clearance at interim) is a positive operational milestone explicitly disclosed, but the company remains pre-revenue and subject to trial execution risk. Overall impact: mixed; financing improves near-term runway while losses and cash burn remain material.
TL;DR: Material weaknesses in internal controls and going-concern uncertainty are significant governance red flags.
The filing discloses two unresolved material weaknesses: insufficient precision in accounting review and undocumented IT controls, including cybersecurity and access management. Management has begun remediation steps but has not demonstrated operating effectiveness. The Company also explicitly states substantial doubt about its ability to continue as a going concern within one year without additional financing. These disclosures are material for investors because they increase the risk of misstatements, operational interruptions, and regulatory scrutiny. Impact on investor confidence and cost of capital is likely negative until remediation and sustained operational control are evidenced.
Medicus Pharma Ltd. (MDCX) è una società nel settore delle scienze della vita in fase clinica, focalizzata sullo sviluppo di un programma di micro-ago dissolvibile a base di doxorubicina (SkinJect) e su acquisizioni biotecnologiche opportunistiche. La società ha registrato $9,669,546 in disponibilità liquide al 30 giugno 2025, in aumento rispetto a $4,164,323 alla fine del 2024, grazie a offerte di capitale e all'esercizio di warrant.
Le perdite operative si sono ampliate: perdita netta semestrale di $11,278,492 nel 2025 rispetto a $5,340,217 nel 2024, con un disavanzo accumulato di $40,182,395. Il cash flow operativo è stato negativo per $9,409,825 nei sei mesi. La società ha chiuso un'offerta Regulation A da $4.17M e un'offerta pubblica di giugno 2025 da $7.01M, ha emesso debentures per $4.5M (capitale $5.0M) ed è entrata in un impegno SEPA fino a $15M. Inoltre ha concordato l'acquisizione di Antev Limited in cambio di azioni e pagamenti condizionali fino a $65M. La direzione dichiara fondati dubbi sulla continuità aziendale e ha identificato significative carenze nei controlli interni.
Medicus Pharma Ltd. (MDCX) es una empresa de ciencias de la vida en fase clínica centrada en avanzar un programa de microagujas solubles con doxorrubicina (SkinJect) y en adquisiciones biotecnológicas oportunistas. La compañía reportó $9,669,546 en efectivo y equivalentes al 30 de junio de 2025, frente a $4,164,323 al cierre de 2024, impulsado por emisiones de acciones y ejercicio de warrants.
Las pérdidas operativas se ampliaron: pérdida neta semestral de $11,278,492 en 2025 frente a $5,340,217 en 2024, acumulando un déficit de $40,182,395. El efectivo usado en operaciones fue de $9,409,825 en el semestre. La compañía cerró una oferta Regulation A por $4.17M y una oferta pública en junio de 2025 por $7.01M, emitió debentures por $4.5M (principal $5.0M) y firmó un compromiso SEPA de hasta $15M. También acordó adquirir Antev Limited mediante acciones de contraprestación y pagos contingentes de hasta $65M. La dirección manifiesta dudas sustanciales sobre la continuidad de la empresa e identificó debilidades materiales en los controles internos.
Medicus Pharma Ltd. (MDCX)는 용해형 독소루비신 마이크로니들 어레이 프로그램(SkinJect)과 기회 기반의 바이오텍 인수에 주력하는 임상단계 생명과학 기업입니다. 회사는 2025년 6월 30일 기준 현금 및 현금성자산 $9,669,546을 보고했으며, 이는 2024년 연말의 $4,164,323에서 주식 발행 및 워런트 행사로 증가한 수치입니다.
영업손실은 확대되었습니다: 2025년 6개월 순손실 $11,278,492 대 2024년 $5,340,217로 누적 적자는 $40,182,395에 이릅니다. 6개월간 영업으로 사용한 현금은 $9,409,825입니다. 회사는 $4.17M 규모의 Regulation A 공모와 2025년 6월 $7.01M 규모의 공개 공모를 마무리했으며, $4.5M 규모(원금 $5.0M)의 데벤처를 발행하고 최대 $15M의 SEPA 약정을 체결했습니다. 또한 Antev Limited를 주식 대가 및 최대 $65M의 조건부 지급으로 인수하기로 합의했습니다. 경영진은 계속기업 존속능력에 대한 상당한 의문을 표명했으며 내부 통제에서 중대한 결함을 확인했습니다.
Medicus Pharma Ltd. (MDCX) est une société de sciences de la vie en phase clinique, axée sur le développement d'un programme d'aiguilles micro-perforantes solubles à la doxorubicine (SkinJect) et sur des acquisitions biotechnologiques opportunistes. La société a déclaré $9,669,546 en liquidités et équivalents de trésorerie au 30 juin 2025, contre $4,164,323 à la fin de 2024, tirés par des émissions d'actions et l'exercice de bons de souscription.
Les pertes d'exploitation se sont creusées : une perte nette semestrielle de $11,278,492 en 2025 contre $5,340,217 en 2024, entraînant un déficit accumulé de $40,182,395. Les flux de trésorerie utilisés par l'exploitation se sont élevés à $9,409,825 pour les six mois. La société a clôturé une offre Regulation A de $4.17M et une offre publique en juin 2025 de $7.01M, émis des débentures pour $4.5M (principal $5.0M) et conclu un engagement SEPA allant jusqu'à $15M. Elle a également accepté d'acquérir Antev Limited contre des actions de contrepartie et des paiements conditionnels allant jusqu'à $65M. La direction exprime des doutes substantiels quant à la continuité d'exploitation et a identifié des faiblesses importantes dans le contrôle interne.
Medicus Pharma Ltd. (MDCX) ist ein biowissenschaftliches Unternehmen in der klinischen Phase, das ein auflösbares Doxorubicin-Mikronadel-Array-Programm (SkinJect) vorantreibt und opportunistische Biotech-Akquisitionen anstrebt. Das Unternehmen meldete zum 30. Juni 2025 Zahlungsmittel und Zahlungsmitteläquivalente in Höhe von $9,669,546, gegenüber $4,164,323 zum Jahresende 2024, getrieben durch Eigenkapitalemissionen und Ausübung von Warrants.
Die operativen Verluste haben sich ausgeweitet: ein Halbjahresfehlbetrag von $11,278,492 im Jahr 2025 gegenüber $5,340,217 im Jahr 2024, was zu einem kumulierten Fehlbetrag von $40,182,395 führt. Der aus Geschäftstätigkeit verwendete Cashflow betrug $9,409,825 für die sechs Monate. Das Unternehmen schloss ein Regulation A-Angebot über $4.17M und ein öffentliches Angebot im Juni 2025 über $7.01M ab, gab Schuldverschreibungen über $4.5M (Nennbetrag $5.0M) aus und ging eine SEPA-Zusage über bis zu $15M ein. Außerdem vereinbarte es die Übernahme von Antev Limited gegen Aktienzahlungen und bedingte Zahlungen von bis zu $65M. Das Management äußert erhebliche Zweifel an der Fortführungsfähigkeit des Unternehmens und identifizierte wesentliche Schwächen in der internen Kontrolle.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(MARK ONE)
For the quarterly period ended
OR
For the transition period from ___ to ___
Commission file number:
(Exact Name of Registrant as Specified in Its Charter)
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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| (Address of principal executive offices) | (Zip Code) |
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) |
Name of each exchange on which registered | ||
| The |
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| Warrants, each exercisable for one common share at an exercise price of $4.64 per share |
MDCXW | The Nasdaq Capital Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company | |||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Yes ☐ No
Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2of the Exchange Act).
Yes ☐ No
As of August 11, 2025, there were
MEDICUS PHARMA LTD.
FORM 10-Q FOR THE QUARTER ENDED June 30, 2025
TABLE OF CONTENTS1
| Page | ||
| Part I. | Financial Information | 1 |
| Item 1. | Financial Statements | 1 |
| Condensed Consolidated Balance Sheets as of June 30, 2025 (Unaudited) and December 31, 2024 | 1 | |
| Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2025 and 2024 (Unaudited) | 2 | |
| Condensed Consolidated Statements of Changes in Shareholders' Equity for the three and six months ended June 30, 2025 and 2024 (Unaudited) | 3 | |
| Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024 (Unaudited) | 4 | |
| Notes to Condensed Consolidated Financial Statements (Unaudited) | 5 | |
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 17 |
| Item 3. | Quantitative and Qualitative Disclosures Regarding Market Risk | 23 |
| Item 4. | Controls and Procedures | 24 |
| Part II. | Other Information | 25 |
| Item 1. | Legal Proceedings | 25 |
| Item 1A. | Risk Factors | 25 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 25 |
| Item 3. | Defaults Upon Senior Securities | 25 |
| Item 4. | Mine Safety Disclosures | 25 |
| Item 5. | Other Information | 25 |
| Item 6. | Exhibits | 25 |
| Part III. | Signatures | 27 |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") that involve substantial risks and uncertainties. All statements, other than statements of historical facts contained in this Quarterly Report on Form 10-Q regarding our strategy, future operations, future financial position, projected costs, prospects, plans, and objectives of management are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. The words "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "predict," "project," "will," "would," or the negative of such terms and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Such statements are based on assumptions and expectations that may not be realized and are inherently subject to risks, uncertainties, and other factors, many of which cannot be predicted with accuracy and some of which might not even be anticipated.
The forward-looking statements in this Quarterly Report on Form 10-Q include, among other things, statements about:
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our financial results, including our ability to generate earnings and achieve and sustain profitability, which may vary significantly from forecasts and from period to period;
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the progress, timing and completion of our research, development and preclinical studies and clinical trials for our products and product candidates;
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our ability to market, commercialize, achieve market acceptance for and sell our products and product candidates;
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our ability to develop, manage and maintain our direct sales and marketing organizations;
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our estimates regarding anticipated operating losses, future revenues, capital requirements and our needs for additional financing;
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market risks regarding consolidation in the healthcare, pharmaceutical and biotech/life sciences industry;
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the willingness of healthcare providers to purchase our products if coverage, reimbursement and pricing from third party payors for procedures using our products significantly declines;
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our ability to adequately protect our intellectual property and operate our business without infringing upon the intellectual property rights of others;
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the fact that product quality issues or product defects may harm our business;
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any product liability claims; and
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the regulatory, legal and certain operating risks that our operations subject us to.
The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading "Risk Factors" in Part I, Item 1A in our Annual Report on Form 10-K, as amended, originally filed with the United States Securities and Exchange Commission ("SEC") on March 28, 2025 (the "2024 Annual Report"). Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
PART I - FINANCIAL INFORMATION
Item 1. Interim Financial Statements.
MEDICUS PHARMA LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, 2025 | December 31, 2024 | |||||
| (unaudited) | ||||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | $ | ||||
| Prepaid expenses and other current assets | ||||||
| Total current assets | ||||||
| Operating lease right-of-use assets | ||||||
| Deferred issuance costs | ||||||
| Total assets | $ | $ | ||||
| Liabilities and Shareholder's equity | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | |||||
| Accrued expenses and other current liabilities | ||||||
| Related party payable | ||||||
| Operating lease liability, current | ||||||
| Debentures | ||||||
| Total current liabilities | ||||||
| Operating lease liability, non-current | ||||||
| Total liabilities | ||||||
| Commitments and contingencies (Note 10) | ||||||
| Shareholders' equity | ||||||
| Common shares, |
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| Additional paid-in capital | ||||||
| Accumulated deficit | ( |
) | ( |
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| Total shareholders' equity | ||||||
| Total liabilities and shareholders' equity | $ | $ |
The accompanying notes are an integral part of the unaudited condensed financial statements.
1
MEDICUS PHARMA LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
| Three months ended June 30, | Six months ended June 30, | |||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||
| Operating expenses: | ||||||||||||
| General and administrative | $ | $ | $ | |||||||||
| Research and development | ||||||||||||
| Total operating expenses | ||||||||||||
| Loss from operations | ( |
) | ( |
) | ( |
) | ( |
) | ||||
| Other income (expense) | ||||||||||||
| Interest income (expense) | ( |
) | ( |
) | ||||||||
| Change in fair value of Debentures | ( |
) | ( |
) | ||||||||
| Total other income (expense) | ( |
) | ( |
) | ( |
) | ( |
) | ||||
| Net loss and comprehensive loss for the year | $ | ( |
) | $ | ( |
) | $ | ( |
) | ( |
) | |
| Net loss per share attributable to common shareholders - basic and diluted | $ | ( |
) | $ | ( |
) | $ | ( |
) | ( |
) | |
| Weighted average number of common shares outstanding - basic and diluted | ||||||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
2
MEDICUS PHARMA LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)
For the Six Months Ended June 30, 2025 and 2024
| Common shares | Additional | Accumulated | |||||||||||||
| Shares | Amount | paid-in capital | deficit | Total | |||||||||||
| Balance as of December 31, 2024 | $ | $ | $ | ( |
) | $ | |||||||||
| Issuance of common shares and warrants in connection with Regulation A, net of issuance costs of $ |
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| Issuance of common shares in connection with SEPA offering costs | |||||||||||||||
| Issuance of common shares upon exercise of stock warrants | |||||||||||||||
| Stock-based compensation | - | ||||||||||||||
| Net loss and comprehensive loss for the period | - | ( |
) | ( |
) | ||||||||||
| Balance as of March 31, 2025 | ( |
) | |||||||||||||
| Issuance of common shares in connection with equity financing, net of offering costs of $ |
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| Issuance of common shares upon the exercise of stock warrants | |||||||||||||||
| Stock-based compensation | - | ||||||||||||||
| Net loss and comprehensive loss for the period | - | ( |
) | ( |
) | ||||||||||
| Balance as of June 30, 2025 | $ | $ | $ | ( |
) | $ | |||||||||
| Common shares | Additional | Accumulated | |||||||||||||
| Shares | Amount | paid-in capital | deficit | Total | |||||||||||
| Balance as of December 31, 2023 | $ | $ | $ | ( |
) | $ | |||||||||
| Stock-based compensation | - | ||||||||||||||
| Net loss and comprehensive loss for the period | - | ( |
) | ( |
) | ||||||||||
| Balance as of March 31, 2024 | ( |
) | ( |
) | |||||||||||
| Conversion of debt | |||||||||||||||
| Issuance of common shares | |||||||||||||||
| Stock-based compensation | - | ||||||||||||||
| Net loss and comprehensive loss for the period | - | ( |
) | ( |
) | ||||||||||
| Balance as of June 30, 2024 | $ | $ | $ | ( |
) | $ | |||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
3
MEDICUS PHARMA LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Six months ended June 30, | ||||||
| 2025 | 2024 | |||||
| Cash flows from operating activities: | ||||||
| Net loss for the period | $ | ( |
) | $ | ( |
) |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||
| Stock-based compensation expense | ||||||
| Change in operating lease right-of-use assets | ||||||
| Change in fair value of Debentures | ||||||
| Costs to issue Debentures | ||||||
| Non-cash interest expense | ||||||
| Changes in operating assets and liabilities: | ||||||
| Prepaid expenses | ( |
) | ||||
| Deferred issuance costs | ( |
) | ||||
| Accounts payable | ||||||
| Accrued expenses and other current liabilities | ||||||
| Operating lease liability | ( |
) | ( |
) | ||
| Related party payable | ( |
) | ( |
) | ||
| Net cash used in operating activities | ( |
) | ( |
) | ||
| Cash flows from financing activities: | ||||||
| Net proceeds from issuance of common shares and warrants | ||||||
| Proceeds from issuance of Debentures | ||||||
| Proceeds from issuance of convertible notes | ||||||
| Proceeds from exercise of warrants | ||||||
| Costs to issue Debentures | ( |
) | ||||
| Cash paid for financing costs in connection with SEPA | ( |
) | ||||
| Net cash provided by financing activities | ||||||
| Net increase in cash and cash equivalents during the period | ||||||
| Cash and cash equivalents, beginning of the year | ||||||
| Cash and cash equivalents, end of the period | ||||||
| Supplemental disclosure of non-cash investing and financing activities | ||||||
| Right-of-use assets obtained in exchange for lease liabilities | $ | |||||
| Issuance costs included in accounts payable | $ | |||||
| Deferred issuance costs on issued shares related to SEPA | $ | |||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
4
MEDICUS PHARMA LTD.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Description of business
Medicus Pharma Ltd. (the "Company"), formerly Interactive Capital Partners Corporation, is a clinical stage, multi-strategy, life sciences, biotech company focused on investing in and accelerating clinical development programs of novel and potentially disruptive therapeutic assets.
The Company is a public limited Company originally incorporated pursuant to the provisions of the Business Corporations Act (Ontario) on April 30, 2008, as a private company named Interactive Capital Partners Corporation, with nominal assets and liabilities. The Company's registered office is located at 100 King Street West, Suite 3400, One First Canadian Place, Toronto, Ontario, Canada, and its head office is located at 300 Conshohocken State Rd., Suite 200, W. Conshohocken, PA.
Reverse Share Split
On June 25, 2024, the Company's shareholders approved an amendment to the Company's articles of incorporation to provide for the share consolidation, or reverse share split, of the Company's issued and outstanding common shares at such a consolidation ratio to be determined by the Board of Directors of the Company in its sole discretion, to permit the Company to satisfy all conditions and necessary regulatory approvals to list the common shares on a U.S. national securities exchange as the Board of Directors of the Company may determine in its sole direction (the "Share Consolidation"). The Board of Directors of the Company approved the Share Consolidation on October 15, 2024, and the Share Consolidation was completed by the Company on October 28, 2024, at the ratio of
After the completion of the Share Consolidation, the number of the Company's issued and outstanding common shares decreased from
Share and per share data presented in these consolidated financial statements for all periods presented has been adjusted for the Share Consolidation.
2. Summary of significant accounting policies
Basis of presentation and consolidation
The accompanying unaudited condensed consolidated financial statements included herein have been prepared in conformity with generally accepted accounting principles in the United States ("GAAP") and under the rules and regulations of the United States Securities and Exchange Commission ("SEC") for interim reporting. The accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, that are necessary to present fairly the Company's financial position, results of operations, and cash flows. The condensed consolidated results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and footnote disclosures of the Company normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted under the SEC's rules and regulations. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and accompanying notes thereto for the year ended December 31, 2024, included in the Company's Annual Report on Form 10-K, as amended, originally filed with the SEC on March 28, 2025 (the "2024 Annual Report"). These financial statements include the financial statements of the Company and its wholly-owned subsidiaries, SkinJect, Inc. and Medicus Pharma Inc. All intercompany balances and transactions have been eliminated on consolidation. The functional currency of the Company and its wholly-owned subsidiaries is the United States dollar.
Use of estimates
The preparation of these condensed consolidated financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, and the reported amounts of income and expenses during the reporting period. Such estimates include the valuation of stock-based awards, the incremental borrowing rate used to discount the Company's operating lease liabilities, fair value of the Debentures (as defined below), Warrants (as defined below), and the valuation allowance relating to the Company's deferred tax assets, all of which are management's best estimates. Estimates are based on historical experience, where applicable, and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. By their nature, these estimates are subject to measurement uncertainty and the effect on the financial statements of changes in estimates in future years could be significant. Management believes that the estimates utilized in preparing the financial statements are reasonable, however, actual results could differ from those estimates.
Cash and cash equivalents
Cash and cash equivalents include cash held at financial institutions and short-term investments in highly liquid marketable securities, having an original maturity of three months or less. The Company holds money market accounts with maturities of three months or less. These money market accounts are included in cash and cash equivalents on the accompanying consolidated balance sheets.
Research and development
All research and development costs are expensed as incurred. Research and development costs consist primarily of salaries, employee benefits, costs associated with preclinical studies and clinical trials (including amounts paid to clinical research organizations and other professional services). Payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received.
The Company records accruals for estimated research and development costs, comprising payments for work performed by third party contractors, laboratories, participating clinical trial sites, and others. Some of these contractors bill monthly based on actual services performed, while others bill periodically based upon achieving certain contractual milestones. For the latter, the Company accrues the expenses as goods or services are used or rendered. Clinical trial site costs related to patient enrollment are accrued as patients enter and progress through the trial. Upfront costs, such as costs associated with setting up clinical trial sites for participation in the trials, are expensed immediately once incurred as research and development expenses.
Stock-based compensation
The Company expenses stock-based compensation to employees and non-employees over the requisite service period based on the estimated grant-date fair value of the awards. The Company estimates the fair value of stock option grants and shares purchasable under the Plan (as defined below) using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management's best estimates and involve inherent uncertainties and the application of management's judgment. The Company accounts for forfeitures as they occur. All stock-based compensation costs are recorded in the statements of operations and comprehensive loss based upon the underlying employees or non-employee's roles within the Company.
Net loss per share
Basic net loss per share is calculated by dividing net loss by the weighted average number of shares outstanding during the period. Diluted net loss per share is calculated by dividing net loss by the sum of the weighted average number of shares outstanding and all additional shares that would have been outstanding if potentially dilutive shares had been exercised at the beginning of the period.
Income Taxes
Income taxes are recorded in accordance with ASC 740, Income Taxes, which provides for deferred taxes using an asset and liability approach. Deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and net operating loss and credit carryforwards using enacted tax rates in effect for the year in which the differences are expected to impact taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. For the three and six months ended June 30, 2025 and 2024, the Company recorded zero income tax expense. No tax benefit has been recorded in relation to the pre-tax loss for the three and six months ended June 30, 2025 and 2024, due to a full valuation allowance to offset any deferred tax asset related to net operating loss carry forwards attributable to the losses.
Fair value of financial instruments
Financial instruments, including cash and cash equivalents and accounts payable are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. The fair value of lease obligations approximates their carrying amounts as a market rate of interest is attached to their repayment. The fair value of Debentures is recorded at an initial value with a gain/loss for the difference between the transaction price and the par value. The Company will subsequently remeasure the Debentures at fair value at each reporting period with the gain or loss recognized in the statements of operations and comprehensive loss. The Company measures the fair value of financial assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The Company uses three levels of inputs that may be used to measure fair value:
Level 1-Inputs used to measure fair value are unadjusted quoted prices that are available in active markets for identical assets or liabilities as of the reporting date.
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-Unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment are used to measure fair value. These values are generally determined using pricing models for which the assumptions utilize management's estimates of market participant assumptions. The determination of fair value for Level 3 investments and other financial instruments involves the most management judgment and subjectivity.
Concentration of credit risk
Cash and cash equivalents are financial instruments that are potentially subject to concentrations of credit risk. The Company's cash and cash equivalents are deposited in accounts at large financial institutions, and amounts may exceed federally insured limits. The Company believes it is not exposed to significant credit risk due to the financial strength of the depository institutions in which the cash and cash equivalents are held. The Company maintains its cash equivalents in money market funds that invest in U.S. Treasury and agency securities.
Foreign currency transactions
Foreign exchange transaction gains and losses are included in general and administrative expense in the Company's consolidated statement of operations and comprehensive loss.
Operating segments
Operating segments are identified as components of an entity about which separate discrete financial information is available for evaluation by the chief operating decision-maker ("CODM") in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business in one operating segment.
Recently adopted accounting pronouncements
In November 2023, the FASB issued ASU 2023-07 "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" to expand the disclosures required by public entities for reportable segments, thereby responding to stakeholders' requests for more detailed information about expenses within each reportable segment. The expanded disclosures now require public entities to disclose significant expenses for reportable segments in both interim and in annual reporting periods, while entities with only a single reportable segment must now provide all segment disclosures required both in ASC 280 and under the amendments in ASU 2023-07. ASU 2023-07 is effective for interim periods beginning January 1, 2025. See Note 11 for enhanced segment reporting disclosures.
In December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topics 740): Improvements to Income Tax Disclosures" to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for our annual periods beginning January 1, 2025, with early adoption permitted. The disclosures will be implemented as required for the year-ended December 31, 2025. The Company is currently evaluating the impact of adopting this guidance.
Recently issued accounting pronouncements
In November 2024, the FASB issued ASU 2024-03 "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures" to provide greater transparency about the components of specific expense categories in the income statements. The effective dates of ASU 2024-03 were subsequently clarified by ASU 2025-01. ASU 2025-01 is effective for our annual period beginning January 1, 2027, with early adoption permitted. We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures.
In November 2024, the FASB issued ASU 2024-04 "Debt-Debt with Conversion and Other Options (Subtopic 470-20: Induced Conversions of Convertible Debt Instruments", to improve consistency and relevance of accounting for induced conversions of convertible debt instruments and it addresses scenarios involving convertible debt instruments and cash conversion features and those not currently convertible. ASU 2024-04 is effective for our annual period beginning January 1, 2026, with early adoption permitted for entities that adopted the amendment in ASU 2020-06. We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures.
There were no other significant updates to the recently issued accounting standards which may be applicable to the Company. Although there are several other new accounting pronouncements issued or proposed by the FASB, the Company does not believe any of those accounting pronouncements have had or will have a material impact on its financial position or operating results.
3. Balance sheet components
Prepaid expenses and other current assets include the following:
| June 30, 2025 | December 31, 2024 | |||||
| (Unaudited) | ||||||
| Insurance | $ | $ | ||||
| Contract research organizations | ||||||
| Professional services | ||||||
| Prepaid services | ||||||
| $ | $ |
Accrued expenses and other current liabilities include the following:
| June 30, 2025 | December 31, 2024 | |||||
| (Unaudited) | ||||||
| Accrued legal fees | $ | $ | ||||
| Accrued compensation and benefits | ||||||
| Accrued other | ||||||
| $ | $ |
4. Leases
As of June 30, 2025, the Company had one operating lease for its corporate office that commenced in 2024, for which the Company recorded a right-of-use asset and lease liability as of the commencement date. The Company's lease does not contain a purchase option. Where the Company's lease contains an option to extend the lease term, the extended lease term is only included in the measurement of the lease when it is reasonably certain to remain in the lease beyond the non-cancellable term. The Company's lease also contains variable lease costs, which pertain to common area maintenance and other operating charges, that are expensed as incurred.
Balance sheet information related to the Company's lease is presented below:
|
Six Months Ended June 30, |
Year Ended December 31, |
|||||
| 2025 | 2024 | |||||
| Operating lease | ||||||
| Operating lease right-of-use assets | $ | $ | ||||
| Operating lease liabilities - current | ||||||
| Operating lease liabilities - non-current |
Other information related to leases is presented below:
|
Six Months Ended June 30, |
Six Months Ended June 30, |
|||||
| 2025 | 2024 | |||||
| Lease cost | ||||||
| Operating lease cost | $ | $ | ||||
| Other information | ||||||
| Operating cash flows used in operating leases | ||||||
| Remaining lease term (in years) | ||||||
| Discount rate |
As of June 30, 2025, the annual future minimum lease payments of the Company's operating lease liabilities were as follows:
| 2025 | $ | ||
| 2026 | |||
| 2027 | |||
| Total future minimum lease payments, undiscounted | |||
| Present value discount | ( |
) | |
| Total lease liability | $ |
5. Share capital
Authorized
The Company has authorized an unlimited number of common shares participating, voting and without par value. Each holder of common shares is entitled to one vote for each share owned on all matters voted upon by shareholders.
On October 28, 2024, the Company completed a reverse share split at the ratio of
Conversion of convertible notes
On May 3, 2024, the Company issued convertible notes in the principal amount of $
Prior to January 1, 2025, the convertible notes would automatically convert to common shares in the event that the Company completed an initial public offering in the United States, at a conversion price equal to the greater of (
Subsequently, the note holders were given the option to convert at a conversion price of $
Private placement
On June 28, 2024, the Company issued
Regulation A Offering
On March 10, 2025, the Company closed a Tier II Regulation A offering for gross proceeds of $
June 2025 Public Offering
On June 2, 2025, the Company closed a public offering of
The fair value of the Regulation A Warrants and June 2030 Warrants were estimated using the Black-Scholes model with the following assumptions:
| Issue Date March 10, 2025 |
Issue Date June 2, 2025 |
|||||
| Valuation date share price | $ | $ | ||||
| Exercise price | $ | $ | ||||
| Dividend yield | ||||||
| Risk-free interest rate | ||||||
| Expected warrant life | ||||||
| Expected volatility |
As of June 30, 2025,
Initial Public Offering
On November 14, 2024, the Company completed its initial public offering ("IPO") with the sale of
Total gross proceeds from the IPO were $
The incremental costs directly associated with the issuance were recognized as a deduction in equity and allocated based on the relative fair values of the Public Warrants and common shares on a standalone basis.
The fair value of the common shares was based on the Company's share price on the day of issuance of $
The fair value of the Public Warrants was estimated using the Black-Scholes option pricing model with the following inputs:
| 2024 | |||
| Valuation date share price | $ | ||
| Exercise price | $ | ||
| Expected dividend yield | |||
| Risk-free interest rate | |||
| Expected term (in years) | |||
| Expected volatility |
As of June 30, 2025,
The number of Warrants outstanding as of June 30, 2025:
| Warrants outstanding | ||||||
| Expiry date | Exercise price | Number outstanding | ||||
| $ | ||||||
| $ | ||||||
| $ | ||||||
Standby Equity Purchase Agreement
On February 10, 2025, the Company also announced that it had entered into a standby equity purchase agreement (the "SEPA") with YA II PN, Ltd. ("Yorkville"). Pursuant to the SEPA and subject to the satisfaction of certain conditions, Yorkville has committed to purchase the Company's common shares, no par value, in increments up to an aggregate gross sales price of up to $
6. Stock-based compensation
At June 30, 2025, the Company had in place a stock option plan for employee, non-employee directors, and consultants of the Company (the "Plan"). The Plan provides both for the direct award or sale of shares and for the grant of options to purchase shares. Under the plan the total number of shares available for options cannot exceed
On June 25, 2024, the Board of Directors of the Company approved the acceleration of vesting for all outstanding share options to June 25, 2024, resulting in the Company recognizing the remaining expense for all share options outstanding and unvested as of that date.
The following table summarizes option transactions for the Plan:
|
Number of options |
Weighted average exercise price $ |
Weighted average remaining contractual life (years) |
Aggregate intrinsic value $ |
|||||||||
| Outstanding at December 31, 2024 | ||||||||||||
| Granted | - | |||||||||||
| Outstanding at June 30, 2025 | ||||||||||||
| Exercisable at June 30, 2025 | ||||||||||||
| Unvested at June 30, 2025 |
As of June 30, 2025, there were $
The weighted average grant date fair value of awards for options granted during the six months ended June 30, 2025 was $
| June 30, 2025 | |||
| Weighted-average | |||
| Exercise price | $ | ||
| Share price | $ | ||
| Dividend | |||
| Risk-free interest | |||
| Estimated life (years) | |||
| Expected volatility |
For the three and six months ended June 30, 2025, stock-based compensation expense was $
7. Net loss per share
Basic and diluted net loss per share attributable to ordinary shareholders was calculated as follows:
| Three months ended June 30, | Six months ended June 30, | |||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||
| Net loss attributable to shareholders | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) |
| Weighted average number of common shares outstanding during the year | ||||||||||||
| Basic and diluted net loss per share attributable to shareholders | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) |
The Company's potentially dilutive securities for the three and six months ended June 30, 2025 and 2024, include stock options, warrants, and notes payable. The Company excluded the potential ordinary shares outstanding at each period end from the computation of diluted net loss per share attributable to ordinary shareholders for the three and six months ended June 30, 2025 and 2024 because including them would have had an anti-dilutive effect.
8. Related party transactions
On October 18, 2023, the Company signed an agreement with RBx Capital, LP ("RBx"), a family office controlled by the Company's Executive Chairman and CEO, that provides for certain managerial positions to be filled from within RBx. RBx is responsible for the payment and provision of all wages, bonuses, and benefits for these positions. Reimbursable salaries paid to RBx pursuant to this agreement are $
9. Fair value measurements
The accounting guidance for fair value establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1: Observable inputs such as quoted prices in active markets;
Level 2: Inputs, other than the quoted prices in active markets that are observable either directly or indirectly; and
Level 3: Unobservable inputs in which there is little or no market data, or which require the reporting entity to develop its own assumptions
The following table presents information about the Company's financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values:
| June 30, 2025 | ||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||
| Current assets: | ||||||||||||
| Money market funds | $ | $ | $ | $ | ||||||||
| Total assets measured at fair value | $ | $ | $ | $ | ||||||||
| Liabilities: | ||||||||||||
| Debentures | $ | $ | $ | $ | ||||||||
| Total liabilities measured at fair value | $ | $ | $ | $ | ||||||||
| December 31, 2024 | ||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||
| Current assets: | ||||||||||||
| Money market funds | $ | $ | $ | $ | ||||||||
| Total assets measured at fair value | $ | $ | $ | $ | ||||||||
The Company's cash equivalents are classified as Level 1. The fair value of the Company's cash and cash equivalents is determined based on market pricing that is both objective and publicly available.
The Company did not reclassify any investments between levels in the fair value hierarchy during the periods presented.
As of June 30, 2025 and December 31, 2024, the carrying amounts of the Company's other financial instruments, which include cash, accounts payable, and accrued expenses, approximate fair values because of their short-term maturities.
10. Commitment and contingencies
Commitments
As of June 30, 2025, the Company had no long-term commitments.
Contingencies
In the ordinary course of business, from time to time, the Company may be involved in various claims related to operations, rights, commercial, employment or other claims. Although such matters cannot be predicted with certainty, management does not consider the Company's exposure to such claims to be material to these consolidated financial statements.
11. Segment reporting
The Company manages the business activities on a consolidated basis and operates as one reportable segment that constitutes all of the consolidated entity, which is the business of advancing the clinical development program of the Company's product, while opportunistically identifying, evaluating, and acquiring accretive assets, properties or businesses. The Company's CODM is its Chief Executive Officer. The accounting policies of the segment are the same as those described in the summary of significant accounting policies. The CODM uses consolidated net loss to measure segment loss, allocate resources and assess performance. The significant segment expense categories (general and administrative and research and development) are consistent with those presented on the face of the statements of operations and comprehensive loss. Other segment items are interest (income) expense which are consistent with those presented on the face of the statements of operations and comprehensive loss. Additionally, the CODM reviews cash forecast models to determine where the Company will invest in planned research and development activities.
12. Debentures
On May 2, 2025, the Company entered into a securities purchase agreement with Yorkville, under which the Company has issued and sold three debentures (the "Debentures") to Yorkville in an aggregate principal amount totaling $
The Company elected the fair value option to account for the Debentures. The underlying methodology used was a discounted cash flow approach. The Company initially recorded the Debentures at fair value with any differences between the transaction price and fair value recorded as a gain or loss in the statement of operations and comprehensive loss. It was determined that the Debentures were issued at fair value and therefore there was no gain or loss at the issuance date. Based on the fair value option, the Company will subsequently remeasure the Debentures at fair value at each reporting period with the gain or loss recognized in the statements of operations and comprehensive loss. The Debentures were remeasured to reflect changes in market yields at June 30, 2025, resulting in a change in fair value of $
13. Antev Agreement
On June 29, 2025, the Company, Antev Limited ("Antev") and certain securityholders of Antev entered into a definitive securities exchange agreement (the "Definitive Agreement"), pursuant to which the Company has agreed to acquire all of the issued and outstanding shares of Antev, on a fully diluted basis, in exchange for
14. Liquidity
The Company has incurred operating losses and negative cash flows from operations since its inception. As of June 30, 2025, the Company had an accumulated deficit of $
On February 10, 2025, the Company announced that it had entered into the SEPA. Subject to the satisfaction of certain conditions, Yorkville has committed to purchase the Company's common shares up to an aggregate gross sales price of $
On March 10, 2025, the Company closed its Tier II Regulation A offering for gross proceeds of approximately $
On May 2, 2025, the Company entered into a securities purchase agreement with Yorkville whereby, in three separate tranches, the Company issued three Debentures totaling $
On May 29, 2025, the Company entered into a placement agency agreement with Maxim Group LLC, relating to the June 2025 Public Offering. The aggregate gross proceeds to the Company from the offering, which closed on June 2, 2025, were $
On July 14, 2025, the Company entered into an inducement agreement with a certain accredited and institutional holder to exercise
The Company expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. If the Company is unable to secure additional capital, it may be required to take additional measures to reduce costs in order to conserve its cash in amounts sufficient to sustain operations and meet its obligations. These measures could cause significant delays or entirely prevent the Company's continued efforts to commercialize its current or future products, which are critical to the realization of its business plan and the future operations of the Company. This uncertainty, along with the Company's history of losses, indicates that there is substantial doubt about the Company's ability to continue as a going concern within one year after the date that the financial statements are issued. The accompanying condensed consolidated financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern.
In addition to accessing public markets through the exercise of outstanding warrants, additional public and private debt and equity financings, and the SEPA, management believes that the Company has access to additional capital resources through public and/or private equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements. However, it is possible that the Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into strategic alliances or other arrangements on favorable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of the Company's shareholders. If the Company is unable to obtain funding, the Company could be required to delay, reduce or eliminate research and development programs, product portfolio expansion, or future commercialization efforts, which could adversely affect its business prospects. The Company is subject to risks associated with any specialty biotechnology company that has substantial expenditures for research and development. There can be no assurance that the Company's research and development projects will be successful, that products developed will obtain necessary regulatory approval, or that any approved product will be commercially viable.
15. Subsequent Events
On July 9, 2025 and July 14, 2025, the Company sold
On July 14, 2025, the Company entered into an inducement agreement with a certain accredited and institutional holder to exercise
Subsequent to June 30, 2025, the Company has paid down a total of $
16
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
This Item and other sections of this Quarterly Report on Form 10-Q contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties that impact our business. In particular, we encourage you to review the risks and uncertainties described in "Risk Factors" in Part I, Item 1A in the 2024 Annual Report and Part II, Item 1A of this Quarterly Report on Form 10-Q. These risks and uncertainties could cause actual results to differ materially from those projected or implied by our forward-looking statements contained in this Quarterly Report on Form 10-Q. These forward-looking statements are made as of the date of this Form 10-Q, and we do not intend, and do not assume any obligation, to update these forward-looking statements, except as required by law. All amounts are expressed in United States dollars unless otherwise stated.
Company Overview
Medicus Pharma Ltd. (the "Company") is a clinical stage, multi-strategy life sciences, biotech company focused on investing in and accelerating clinical development programs of novel and potentially disruptive therapeutic assets. The Company looks into opportunities across all therapeutics areas where an unmet need exists for improved patient safety and efficacy. The Company is opportunistically exploring to expand its drug development pipeline through qualified and accretive acquisitions and partnerships.
The Company has two wholly owned subsidiaries, Medicus Pharma Inc., a company incorporated in the state of Delaware on October 12, 2023, and SkinJect, Inc. ("SkinJect"), a company incorporated in the state of Pennsylvania on March 3, 2015.
SkinJect is focused on the development of a novel "innovation combination product", as an investigational new drug, using uniquely designed, patent protected doxorubicin-containing dissolvable microneedle arrays ("D-MNAs") for the treatment of certain skin cancers. To that end, the Company licensed certain technology co-developed by the University of Pittsburgh and Carnegie Mellon University. The Company established and validated fabrication processes relative to the D-MNAs, completed pre-clinical testing and secured approval to proceed with clinical trials activity from the Food and Drug Administration ("FDA").
The Company then completed a dose escalation study ("SKNJCT-001") that assessed the safety of D-MNA patch in patients with Basal Cell Carcinoma ("BCC"). There were no serious systemic or local adverse events nor any demonstrated alterations in any clinical measurements during the trial. The conclusion of the study was that D-MNA patch was well tolerated with no evidence of dose limiting toxicity.
The Company had initiated a clinical study ("SKNJCT-002") aimed at evaluating clinical efficacy. The first part involved the enrollment of 15 healthy volunteers and was designed to study the penetration of placebo-containing Dynamic Mechanical Allodynia patches at five different anatomic locations. After the first seven health volunteers were enrolled, due to the variability of array application observed by the investigator, SkinJect made the decision to pause the trial. The study was never resumed, and it was ultimately closed without further enrollment. There were no adverse events reported in the enrolled subjects.
In January 2024, the Company submitted the clinical design for a randomized, double-blinded, placebo-controlled, multi-center study ("SKNJCT-003") enrolling up to 60 subjects presenting with nodular type of BCC of the skin. The FDA responded in March 2024 and requested additional clinical information. A final protocol was submitted to the FDA in July 2024, which included the information requested by the FDA, along with updated chemistry, manufacturing and controls (CMC), stability and sterility data. On July 31, 2024, the FDA responded to the latest submission and requested certain additional information and clarification. The Company responded to the FDA on August 2, 2024 and commenced patient recruitment on August 27, 2024.
The SKNJCT-003 Phase 2 clinical study is currently underway in nine clinical sites across United States. In March 2025, the Company announced a positively trending interim analysis for SKNJCT-003 demonstrating more the 60% clinical clearance. The interim analysis was conducted after more than 50% of the then-targeted 60 patients in the study were randomized. The findings of the interim analysis are preliminary and may or may not correlate with the findings of the study once completed. In April 2025, the investigational review board increased the number of participants in SKNJCT-003 to 90 subjects. The Company also announced expanding clinical trial sites in Europe.
In May 2025, the Company received notice that a study may proceed with approval from United Arab Emirates (UAE) Department of Health (DOH) to commence clinical study (SKNJCT-004) to non-invasively treat BCC of the skin. The study is expected to randomize 36 patients in four clinical sites in the UAE. Cleveland Clinic Abu Dhabi is the principal investigator, along with Sheikh Shakbout Medical City, Burjeel Medical City, and American Hospital of Dubai. Insights Research Organization and Solutions (IROS), a UAE-based contract research organization that is an M42 portfolio company, is coordinating the clinical study for the Company.
In June 2025, the Company announced submission of a product development plan to the FDA to treat external Squamous Cell Carcinoma (SCC) in horses. The Company, in December 2024, received a minor use in major species designation (MUMS) for its dissolvable doxorubicin-containing microneedle array (D-MNA) to treat external squamous cell carcinoma (SCC) in horses. MUMS is a status similar to Orphan Drug status for human drugs. It entitles the Company to an extended 7-year period of exclusive marketing following approval, provided that the Company meets all the requirements for maintaining the designation.
In June 2025, the Company entered into a definitive agreement to acquire Antev Limited, a UK-based clinical biotech company developing Teverelix, a next-generation GnRH antagonist, as first in market product for cardiovascular high-risk prostate cancer patients and patients with first acute urinary retention (AURr) episodes due to enlarged prostate.
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The Share Consolidation
On June 25, 2024, the Company's shareholders approved an amendment to the Company's articles of incorporation to provide for the share consolidation (the "Share Consolidation"), or reverse stock split, of the Company's issued and outstanding common shares at such a consolidation ratio to be determined by the Company's Board of Directors in its sole discretion, to permit the Company to satisfy all conditions and necessary regulatory approvals to list the common shares on a U.S. national securities exchange as the Company's Board of Directors may determine in its sole direction. The Company's Board of Directors approved the Share Consolidation on October 15, 2024, and the Share Consolidation was completed by the Company on October 28, 2024, at the ratio of 1-for-2.
After the completion of the Share Consolidation, the number of the Company's issued and outstanding common shares decreased from 21,693,560 to 10,846,721. The par value of the Company's common shares remains unchanged at $nil per share after the Share Consolidation. The Share Consolidation was completed in preparation for a U.S. listing.
Initial Public Offering
On November 14, 2024, the Company completed its initial public offering ("IPO") with the sale of 970,000 Units at the price of $4.125 per Unit, with each Unit (the "Unit") consisting of one common share and one warrant (the "Public Warrants" and with the Regulation A Warrants and the June 2030 Warrants, the "Warrants") to purchase one common share at the exercise price of $4.64 per share. The Public Warrants expire five years from their date of issuance on November 15, 2029. In addition, the underwriters exercised an option to purchase 145,500 Public Warrants (the "Overallotment Warrants") at a price of $0.01 per warrant.
Total gross proceeds from the IPO were $4.0 million, including the proceeds from the Overallotment Warrants. The Company incurred total issuance costs of $2.1 million, including underwriter fees, and legal and other professional fees incurred directly related to the issuance.
Regulation A Offering
On March 10, 2025, the Company completed an offering of 1,490,000 units at $2.80 per unit pursuant to Tier II of Regulation A under the Securities Act, with each unit consisting of one common share and one warrant (each a "Regulation A Warrant") to purchase one common share (the "Regulation A Offering"). The Regulation A Warrants have an exercise price of $2.80 and expire on March 10, 2030. The aggregate gross proceeds to the Company from the Regulation A Offering were $4.2 million. As of June 30, 2025, 133,800 of the 1,490,000 Regulation A Warrants have been exercised for cash , with 5,000 being exercised in the three months ended March 31, 2025, for proceeds to the Company of $374,640 ($14,000 of which related to the three months ended March 31, 2025).
Debentures
On May 2, 2025, the Company the Company entered into a securities purchase agreement with the Investor (as defined below), under which the Company has issued and sold three debentures (the "Debentures") to the Investor in an aggregate principal amount totaling $5,000,000 during the three months ended June 30, 2025. The Debentures were issued at a discounted price of 90% for proceeds to the Company of $4,500,000. Interest will accrue on the outstanding principal amount of each Debenture at an annual rate of 8%, subject to a potential increase to 18% per annum upon the occurrence of certain events of default. The Debentures will mature on February 2, 2026 and are required to be repaid using proceeds from the SEPA (as defined below).
June 2025 Public Offering
On June 2, 2025, the Company closed a public offering with gross proceeds of $7.0 million. The Company issued 2,260,000 units at a price of $3.10 per unit. Each unit consisted of one common share of the Company and one warrant to purchase one common share (the "June 2030 Warrants"). The June 2030 Warrants have an exercise price of $3.10 per share and will expire on June 2, 2030. As of June 30, 2025 no warrants have been exercised for cash.
Results of Operations
The following table outlines our statements of loss and comprehensive loss for the three and six months ended June 30, 2025 and 2024:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||
| $ | $ | Change | $ | $ | Change | |||||||||||||
| General and administrative | 4,576,524 | 2,276,676 | 2,299,848 | 7,696,584 | 3,662,657 | 4,033,927 | ||||||||||||
| Research and development | 1,439,564 | 1,277,158 | 162,406 | 3,445,778 | 1,598,535 | 1,847,243 | ||||||||||||
| Total operating expenses | 6,016,088 | 3,553,834 | 2,462,254 | 11,142,362 | 5,261,192 | 5,881,170 | ||||||||||||
| Loss from operations | (6,016,088 | ) | (3,553,834 | ) | (2,462,254 | ) | (11,142,362 | ) | (5,261,192 | ) | (5,881,170 | ) | ||||||
| Other income (expense): | ||||||||||||||||||
| Interest income, net | 40,004 | (79,025 | ) | 119,029 | 63,870 | (79,025 | ) | 142,895 | ||||||||||
| Change in fair value of Debentures | (200,000 | ) | - | (200,000 | ) | (200,000 | ) | - | (200,000 | ) | ||||||||
| Total other income (expense) | (159,996 | ) | (79,025 | ) | (80,971 | ) | (136,130 | ) | (79,025 | ) | (57,105 | ) | ||||||
| Net loss and comprehensive loss | (6,176,084 | ) | (3,632,859 | ) | (2,543,225 | ) | (11,278,492 | ) | (5,340,217 | ) | (5,938,275 | ) | ||||||
| Net loss per common share (basic and diluted) | (0.43 | ) | (0.44 | ) | (0.81 | ) | (0.66 | ) | ||||||||||
General and administrative
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||
| $ | $ | Change | $ | $ | Change | |||||||||||||
| Professional fees | 1,944,559 | 621,040 | 1,323,519 | 3,305,037 | 1,059,342 | 2,245,695 | ||||||||||||
| Consulting fees | 383,270 | 483,380 | (100,110 | ) | 668,216 | 939,194 | (270,978 | ) | ||||||||||
| Salaries, benefits, and compensation | 908,599 | 303,390 | 605,209 | 1,378,393 | 540,359 | 838,034 | ||||||||||||
| General office, insurance and administrative expenditures | 724,800 | 716,422 | 8,378 | 1,264,698 | 894,232 | 370,466 | ||||||||||||
| Business development and investor relations | 615,296 | 152,444 | 462,852 | 1,080,240 | 229,530 | 850,710 | ||||||||||||
| 4,576,524 | 2,276,676 | 2,299,848 | 7,696,584 | 3,662,657 | 4,033,927 | |||||||||||||
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General and administrative
General and administrative expenses for the three and six months ended June 30, 2025 and 2024 are comprised of:
Professional fees increased by $1,323,519 and $2,245,695 for the three and six months ended June 30, 2025, compared to the equivalent period in the prior year. The increase was primarily due to increases in legal and accounting fees related to the Company's operations, as well as financing and transactional activities. Professional fees include fees incurred for legal and accounting services that fluctuate from period to period based on the nature of the transactions the Company undertakes. The primary reason for the increase is due to increased regulatory requirements following the Company's initial public offering, transition to U.S. domestic issuer status, multiple financing transactions and the Antev acquisition.
Consulting fees decreased by $100,110 and $270,978 for the three and six months ended June 30, 2025, compared to the equivalent period in the prior year. Consulting fees include fees paid to individuals and professional firms who provide advisory services to the Company and fluctuate from period to period based on the nature of the transactions the Company undertakes. The primary reason for the decrease is due to decreased business activity in the current year compared to the prior year when the Company was focused on completing the initial public offering.
Salaries, wages and benefits increased by $605,209 and $838,034 for the three and six months ended June 30, 2025, compared to the equivalent period in the prior year. The increase was primarily due to an increase in headcount from the previous year.
General office, insurance and administration expenditures increased by $8,378 and $370,466 for the three and six months ended June 30, 2025, compared to the equivalent period in the prior year. The increase was primarily due to the Company now incurring more significant insurance related expenses and general office related expenditures in support of expanded operations.
Business development and investor relations and market awareness expenses increased by $462,852 and $850,710 for the three and six months ended June 30, 2025, compared to the equivalent period in the prior year. The increase was primarily a result of increased marketing efforts in the current year as a result of the Company being a listed public entity on the Nasdaq.
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There is an expected increase in general and administrative expenses associated with being a public company, including costs related to accounting, audit, legal, regulatory, and tax-related services associated with maintaining compliance with applicable securities law requirements and financing and other transactional activities; additional director and officer insurance costs; and investor and public relations costs.
Research and development
Research and development ("R&D") costs include costs incurred under agreements with third-party contract research organizations, contract manufacturing organizations and other third parties that conduct preclinical and clinical activities on our behalf and manufacture our product candidates, and other costs associated with our R&D programs, including laboratory materials and supplies.
R&D expenses increased by $162,406 and $1,847,243 for the three and six months ended June 30, 2025, compared to the equivalent periods in the prior year. This increase is primarily due to costs incurred related to SKNJCT-003 which had increased clinical trial activity in the current year.
We expect our R&D expenses to increase substantially for the foreseeable future as we continue with the SKNJCT-003 study and trials.
The principal risks related to the Company's future performance are that the trials are unsuccessful, the Company does not receive FDA approval to proceed with the next stage of its research and development, may be placed on clinical hold by the FDA, or the Company is unsuccessful in obtaining future funding needed to continue its research and development. These are customary risks for a development stage pharmaceutical Company and are less acute than for a Company with a less advanced product. Nevertheless, there can be no assurance that the Company will be able to complete its clinical trials, that the trials will be successful, or that the product will ultimately reach commercialization.
Other income (expense):
Interest income, net, was $40,004 and $63,870 for the three and six months ending June 30, 2025, respectively. Interest income for the three and six months ended June 30, 2025 relates to interest income earned on short-term money market investments. Interest expense, net was $79,025 for the three and six months ending June 30, 2024, related to interest on convertible note payables.
Change in fair value of Debentures was $200,000 for both the three and six months ending June 30, 2025. The $200,000 relates to the remeasurement of the Debentures at fair value at the reporting date.
Liquidity and Capital Resources
We are a clinical stage development company and we currently do not earn any revenues from our preclinical programs and are therefore considered to be in the R&D stage. As required, the Company will continue to finance its operations through the sale of equity or pursue non-dilutive funding sources available to the Company in the future. The continuation of our R&D activities is dependent on our ability to obtain financing.
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The financial statements and this Management's Discussion and Analysis of Financial Condition and Results of Operations (this "MD&A") have been prepared on the basis of accounting principles applicable to a going concern, which assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations.
The Company expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. If the Company is unable to secure additional capital, it may be required to take additional measures to reduce costs in order to conserve its cash in amounts sufficient to sustain operations and meet its obligations. These measures could cause significant delays or entirely prevent the Company's continued efforts to commercialize its current or future products, which are critical to the realization of its business plan and the future operations of the Company. This uncertainty, along with the Company's history of losses, indicates that there is substantial doubt about the Company's ability to continue as a going concern within one year after the date that the financial statements are issued. The accompanying condensed consolidated financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern.
In addition to accessing public markets through the exercise of outstanding warrants, additional public and private debt and equity financings, and the SEPA (as defined below), management believes that the Company has access to additional capital resources through public and/or private equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements. However, it is possible that the Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into strategic alliances or other arrangements on favorable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of the Company's shareholders. If the Company is unable to obtain funding, the Company could be required to delay, reduce or eliminate research and development programs, product portfolio expansion, or future commercialization efforts, which could adversely affect its business prospects. The Company is subject to risks associated with any specialty biotechnology company that has substantial expenditures for research and development. There can be no assurance that the Company's research and development projects will be successful, that products developed will obtain necessary regulatory approval, or that any approved product will be commercially viable.
As of June 30, 2025, the Company had cash and cash equivalents of $9,669,546 compared to cash and cash equivalents of $4,164,323 as of December 31, 2024. During the six months ended June 30, 2025, the Company received net proceeds of $9,790,015 from the issuance of common shares and warrants in connection with the Regulation A Offering and June 2025 Public Offering, received net proceeds of $4,500,000 from the issuance of the Debentures, and received proceeds of $977,399 from the exercise of warrants. As of June 30, 2025, the Company has an accumulated deficit of $40,182,395 and net loss and comprehensive loss of $6,176,084 and $11,278,492 for the three and six months ended June 30, 2025. The accumulated deficit of the Company as of June 30, 2025 was comprised of $12,384,244 of accumulated deficit of SkinJect as of September 30, 2023, the day after it became a subsidiary of the Company, and $27,798,151 of deficit accumulated by the Company on a consolidated basis since September 30, 2023. For the three and six months ended June 30, 2024, the Company had net loss and comprehensive loss of $3,632,859 and $5,340,217. The Company has a working capital surplus of $2,452,566 as of June 30, 2025.
On March 10, 2025, the Company completed the Regulation A Offering of 1,490,000 units at $2.80 per unit. As of June 30, 2025, 133,800 of the 1,490,000 Regulation A Warrants have been exercised for cash, for proceeds to the Company of $374,640.
On June 2, 2025, the Company closed its public offering with gross proceeds of $7.0 million. The Company issued 2,260,000 units at a price of $3.10 per unit. Each unit consisted of one common share of the Company and one June 2030 Warrant. The June 2030 Warrants have an exercise price of $3.10 per share and will expire June 2, 2030. As of June 30, 2025 no warrants have been exercised for cash.
As of June 30,2025, 129,905 of the 1,115,500 Public Warrants in the IPO were exercised for cash, for proceeds to the Company of $602,759.
On July 14, 2025, the Company entered into an inducement agreement with a certain accredited and institutional holder to exercise 1,340,000 Regulation A Warrants. Pursuant to the agreement, the holder, upon exercise, received new unregistered warrants to purchase up to 2,680,000 common shares upon the exercise of the new warrants. The new warrants have an exercise price of $3.75 per common share and expire five years from the date of issuance. The Company received $3,752,000 upon the exercise of the Regulation A Warrants pursuant to the inducement agreement.
Standby Equity Purchase Agreement
The Company has entered into a standby equity purchase agreement dated February 10, 2025 (the "SEPA") with YA II PN, Ltd. (the "Investor"), an investment fund managed by Yorkville Advisors Global, LP. Pursuant to the SEPA, the Company has the option, at its sole discretion, to sell up to $15,000,000 of the Company's common shares to the Investor at any time during the 36-months following the date of the SEPA.
The Investor's obligation to purchase the common shares is subject to a number of conditions, including that the Company file a registration statement with the SEC registering the resale of the common shares issuable thereunder, and that the registration statement is declared effective by the SEC.
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The issuance of common shares under the SEPA is subject to further limitations, including that the common shares beneficially owned by the Investor and its affiliates at any one time will not exceed 4.99% of the then-outstanding common shares.
Common shares issued and sold to the Investor under the SEPA will be priced at 97% of the market price (as defined in the SEPA) of the common shares during a specified three-day pricing period. The Company reserves the right to set a minimum acceptable price for the common share issuances.
Cash flows
| For the six months ended June 30 | |||||||||
| 2025 | 2024 | ||||||||
| $ | $ | Change | |||||||
| Cash used in operating activities | (9,409,825 | ) | (3,953,639 | ) | (5,456,186 | ) | |||
| Cash provided by financing activities | 14,915,048 | 10,642,500 | 4,272,548 | ||||||
| Net change in cash during the period | 5,505,223 | 6,688,861 | (1,183,638 | ) | |||||
| Cash, beginning of the period | 4,164,323 | 1,719,338 | 2,444,985 | ||||||
| Cash, end of the period | 9,669,546 | 8,408,199 | 1,261,347 | ||||||
Cash flows used in operating activities
Cash flows used in operating activities for the six months ended June 30, 2025 were $9,409,825 compared to cash flows used in operating activities of $3,953,639 for the six months ended June 30, 2024. The increase is primarily due to increased spending on research and development activities for our SKNJCT-003 study and trials and increased general and administrative expenses related to our IPO and resulting U.S. reporting obligations, along with multiple financing and other transactional activities.
Cash flows provided by financing activities
Cash flows provided by financing activities for the six months ended June 30, 2025 were $14,915,048 due to $9,790,015 of proceeds from issuance of common shares and warrants, net of offering costs, gross proceeds of $4,500,000 from the issuance of the Debentures, as well as proceeds of $977,398 from the exercises of warrants. Cash flows provided by financing activities for the six months ended June 30, 2024 were $10,642,500 consisting of $5,172,500 of proceeds from issuance of convertible notes and $5,470,000 of proceeds from issuance of common shares and warrants.
Contractual Obligations
We have no significant contractual arrangements other than those noted in our financial statements.
Off-Balance Sheet Arrangements
As of June 30, 2025, we have not entered into any off-balance sheet arrangements.
Critical Accounting Policies
Critical Accounting Policies and Estimates
We periodically review our financial reporting and disclosure practices and accounting policies to ensure that they provide accurate and transparent information relative to the current economic and business environment. As part of this process, we have reviewed our selection, application and communication of critical accounting policies and financial disclosures. Management has discussed the development and selection of the critical accounting policies with our audit committee, and our audit committee has reviewed the disclosure relating to critical accounting policies in this MD&A.
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Significant accounting judgments and estimates
Management's assessment of our ability to continue as a going concern involves making a judgment, at a particular point in time, about inherently uncertain future outcomes and events or conditions. Please see the "Liquidity and Capital Resources" section in this document for a discussion of the factors considered by management in arriving at its assessment.
Other important accounting policies and estimates made by management are the assumptions used in determining the valuation of stock-based compensation.
Research and development
All research and development costs are expensed as incurred. Research and development costs consist primarily of salaries, employee benefits, costs associated with preclinical studies and clinical trials (including amounts paid to clinical research organizations and other professional services). Payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received.
The Company records accruals for estimated research and development costs, comprising payments for work performed by third party contractors, laboratories, participating clinical trial sites, and others. Some of these contractors bill monthly based on actual services performed, while others bill periodically based upon achieving certain contractual milestones. For the latter, the Company accrues the expenses as goods or services are used or rendered. Clinical trial site costs related to patient enrollment are accrued as patients enter and progress through the trial. Upfront costs, such as costs associated with setting up clinical trial sites for participation in the trials, are expensed immediately once incurred as research and development expenses.
Stock-based compensation
The Company expenses stock-based compensation to employees and non-employees over the requisite service period based on the estimated grant-date fair value of the awards. The Company records the expense for stock-based compensation awards subject to vesting over the requisite service period using an estimate of the number of options that will eventually vest. The Company estimates the fair value of stock option grants and shares purchasable under the Company's equity incentive plan using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management's best estimates and involve inherent uncertainties and the application of management's judgment. The Company accounts for forfeitures as they occur. All stock-based compensation costs are recorded in the statements of operations and comprehensive loss based upon the underlying employees or non-employee's roles within the Company.
Fair Value Measurements
Our recurring fair value measurements which primarily include cash and cash equivalents and Debentures, for which we elected the fair value option.
The fair value option was elected to account for the Debentures. We used the discounted cash flow approach to determine the fair value and it was determined that there was no difference between the transaction price and the fair value and therefore there was no gain or loss was recorded at the issuance date. We will subsequently remeasure the Debentures at fair value at each reporting period with the gain or loss recognized in the statements of operations and comprehensive loss.
We measure the fair value of financial assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We maximize the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value.
Updated share information
As of June 30, 2025, we had 15,936,266 common shares issued and outstanding. In addition, there were 1,285,000 common shares issuable upon the exercise of outstanding stock options and 4,596,795 common shares issuable upon the exercise of three outstanding classes of warrants.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, we are not required to provide the information required by this Item.
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ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Quarterly Report, is recorded, processed, summarized, and reported within the time period specified in the SEC's rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our current chief executive officer and chief financial officer (our "Certifying Officers"), the effectiveness of our disclosure controls and procedures as of June 30, 2025, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of June 30, 2025, our disclosure controls and procedures were not effective, because of certain material weaknesses in our internal control over financial reporting, as further described below.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
In connection with the preparation of our consolidated financial statements for the years ended December 31, 2024 and 2023, we identified the following material weaknesses in our internal control over financial reporting that have not been remediated as of June 30, 2025: (i) lack of degree of precision in the review of materials used to record transactions in accordance with US GAAP, and (ii) lack of formalized or documented policies related to the overall information technology ("IT") system environment, including IT security and cybersecurity, centrally managed security patches and antivirus/malware protection, and user access.
Management is committed to implementing changes to our internal control over financial reporting to ensure that the control deficiencies that contributed to the material weaknesses are remediated. To address our material weaknesses, we plan to implement measures to improve our internal control over financial reporting to remediate any control deficiencies. These measures include (i) designing and implementing procedures to improve the precision and quality in the review of materials used in financial reporting, and (ii) designing and implementing policies related to our overall IT system environment.
Changes in Internal Control over Financial Reporting
During the quarter ended June 30, 2025, the Company implemented the measures described above and is in the process of evaluating the operating effectiveness of these enhancements. The material weakness cannot be considered fully remediated until these enhancements have been in place and operated for a sufficient period of time to enable management to conclude on their operating effectiveness. Other than these enhancements, there were no changes in the Company's internal control over financial reporting that occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act).
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There is no material litigation, arbitration or governmental proceeding currently pending against us or any members of our management team in their capacity as such, and we and the members of our management team have not been subject to any such proceeding in the 12 months preceding the date hereof.
Item 1A. Risk Factors
Factors that could cause our actual results to differ materially from those in this Quarterly Report on Form 10-Q include the risk factors described in the Company's 2024 Annual Report. Any of these risk factors could result in a significant or material adverse effect on the Company's business, financial condition and/or results of operations. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factors disclosed in the 2024 Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The Company issued 128,800 common shares upon the exercise of 128,800 Regulation A Warrants during the period covered by this Form 10-Q, pursuant to Regulation A. There has been no material change in the use of proceeds described in the final offering circular filed with the SEC on March 7, 2025.
Additional information required by Item 701 of Regulation S-K as to unregistered sales of equity securities of the Company during the period covered by this Quarterly Report have previously been included in Current Reports on Form 8-K filed with the SEC.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
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| No. | Description of Exhibit | |
| 2.1 | Share Exchange Agreement, dated June 29, 2025, by and between Medicus Pharma Ltd., Antev Limited and each of the securityholders of Antev Limited party thereto. (incorporated by reference from Exhibit 2.1 to the Registrant's Current Report on Form 8-K/A, filed with the SEC on July 3, 2025) | |
| 3.1* | Bylaws of Medicus Pharma Ltd., as in effect as of the date hereof | |
| 3.2* | Articles of Amendment of Medicus Pharma Ltd., effective as of August 8, 2025. | |
| 4.1 | Form of Debenture (incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K, filed on May 5, 2025) | |
| 4.2 | Form of Subscription Agreement (incorporated by reference from Exhibit 4.8 to the Company's Registration Statement on Form S-1, filed with the SEC on May 27, 2025) | |
| 4.3 | Common Share Purchase Warrant (incorporated herein by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K, filed on June 2, 2025) | |
| 4.4 | Warrant Agency Agreement, dated as of June 2, 2025, by and between Medicus Pharma Ltd. and Odyssey Transfer and Trust Company, as warrant agent (incorporated herein by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K, filed on June 2, 2025) | |
| 10.1 | Securities Purchase Agreement, by and between Medicus Pharma Ltd. and YA II PN, Ltd., dated May 2, 2025 (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed on May 5, 2025) | |
| 10.2 | Global Guaranty Agreement, by and among the subsidiaries of Medicus Pharma Ltd. set forth in Schedule I thereto, dated May 2, 2025 (incorporated herein by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K, filed on May 5, 2025) | |
| 10.3* | Employment Agreement, dated as of June 13, 2025, by and between the Company and Andrew Smith | |
| 31.1* | Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2* | Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1* | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 32.2* | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS* | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
* Filed herewith.
26
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| MEDICUS PHARMA LTD. | ||
| Date: August 11, 2025 | By: | /s/ Raza Bokhari |
| Name: | Dr. Raza Bokhari | |
| Title: | Executive Chairman and Chief Executive Officer | |
| (Principal Executive Officer) | ||
| Date: August 11, 2025 | By: | /s/ James Quinlan |
| Name: | James Quinlan | |
| Title: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) | ||
27
FAQ
What cash balance did Medicus Pharma (MDCX) report at June 30, 2025?
How large was Medicus Pharma's (MDCX) net loss for the six months ended June 30, 2025?
What financings did MDCX complete in H1 2025 and how much did they raise?
What did Medicus Pharma disclose about its internal controls and audit?
What is the status of the Antev acquisition disclosed by MDCX?
