Exhibit 99.1

EUPRAXIA PHARMACEUTICALS INC.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2025

(Unaudited and Expressed in U.S. Dollars)

 

EUPRAXIA PHARMACEUTICALS INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025 and 2024

(Unaudited and Expressed in U.S. Dollars)

 

CONTENTS

 

CONSOLIDATED BALANCE SHEETS			2
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS			3
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY			4-5
CONSOLIDATED STATEMENTS OF CASH FLOWS			6
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS			7-26

 

1

EUPRAXIA PHARMACEUTICALS INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited and Expressed in U.S. Dollars, except share amounts)

 

 

		March 31, 2025				December 31, 2024
ASSETS
Current assets
Cash		$	27,454,598			$	33,101,294
Prepaid expenses and deposits			913,283				1,106,512
Amounts receivable (Note 4)			238,531				228,872
Total current assets			28,606,412				34,436,678
Non-current assets
Prepaid expenses			80,230				80,761
Property and equipment, net (Note 5)			497,282				357,893
Right-of-use asset, net (Note 6)			49,255				67,023
Total assets		$	29,233,179			$	34,942,355
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Accounts payable and accrued liabilities (Note 7)		$	2,147,217			$	3,031,527
Lease liability – current portion (Note 9)			52,774				71,859
Total liabilities			2,199,991				3,103,386
Shareholders’ equity
Preferred shares, without par value; unlimited shares authorized; issued and outstanding: 8,905,638 (December 31, 2024: 8,905,638 (Notes 12(c))			31,705,219				31,705,219
Common shares, without par value; unlimited shares authorized; issued and outstanding: 35,849,353 (December 31, 2024 - 35,641,603 (Note 12(b))			116,840,288				116,360,066
Additional paid-in capital (Notes 12(b), 12(d) and 12(e)) Deficit			21,947,012 (137,766,439	)			20,503,904 (131,003,831	)
Accumulated other comprehensive loss			(4,122,391	)			(4,160,555	)
Equity attributable to the owners of the Company			28,603,689				33,404,803
Non-controlling interest			(1,570,501	)			(1,565,834	)
Total shareholders’ equity			27,033,188				31,838,969
Total liabilities and shareholders’ equity		$	29,233,179			$	34,942,355

Nature of Business and Going Concern (Note 1)

Commitments and Contingencies (Note 15)

The accompanying notes are an integral part of these consolidated financial statements.

 

2

EUPRAXIA PHARMACEUTICALS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited and Expressed in U.S. Dollars, except share amounts)

 

 

		Three months ended March 31, 2025				Three months ended March 31, 2024
Expenses
General and administrative (Note 13)		$	3,274,394			$	2,518,023
Research and development (Note 14)			3,849,826				4,175,453
Total expenses			7,124,220				6,693,476
Other income/(expenses)
Interest income			309,452				236,369
Interest expense (Note 18)			—				(321,140	)
Loss on sale of equipment (Note 5)			(1,075	)			—
Foreign exchange gain (loss)			51,362				(143,728	)
Change in fair value of financial instruments (Note 11(a))			—				770,042
Total other income/(loss)			359,739				541,543
Loss before tax expense			(6,764,481	)			(6,151,933	)
Tax expense			(2,794	)			(5,000	)
Net loss for the period		$	(6,767,275	)		$	(6,156,933	)
Loss attributable to:
Owners of the Company		$	(6,762,608	)		$	(6,043,038	)
Non-controlling interest			(4,667	)			(113,895	)
			(6,767,275	)			(6,156,933	)
Foreign currency translation adjustment			38,164				(32,392	)
Comprehensive loss for the period		$	(6,729,111	)		$	(6,189,325	)
Loss per share – basic and diluted (Owners of the Company (Note 12(g))		$	(0.21	)		$	(0.21	)
Weighted average shares outstanding – basic and diluted			35,686,256				28,812,641

The accompanying notes are an integral part of these consolidated financial statements.

 

3

EUPRAXIA PHARMACEUTICALS INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited and Expressed in U.S. Dollars, except share amounts)

 

 

		Preferred shares				Amount				Common shares				Amount				Additional paid-in capital				Deficit				Accumulated other comprehensive loss				Non-controlling interest				Total-Shareholders’ Equity
Balance, December 31, 2023			—			$	—				27,282,165			$	92,913,585			$	17,510,469			$	(105,501,295	)		$	(2,706,552	)		$	(1,323,881	)		$	892,326
Non-brokered private placement, net of transaction costs (Note 12(b)(iii))			—				—				8,260,435				22,853,391				—				—				—				—				22,853,391
Share-based payments (Note 12(d))			—				—				—				—				213,130				—				—				—				213,130
Redemption of warrants (Notes 12(b)(i) and 12(e))			—				—				79,943				551,246				(214,062	)			—				—				—				337,184
Redemption of options (Notes 12(b)(ii) and 12(d))			—				—				10				23				(9	)			—				—				—				14
Net loss for the period			—				—				—				—				—				(6,043,038	)			—				(113,895	)			(6,156,933	)
Foreign currency translation adjustment			—				—				—				—				—				—				(32,392	)			—				(32,392	)
Balance, March 31, 2024			—			$	—				35,622,553			$	116,318,245			$	17,509,528			$	(111,544,333	)		$	(2,738,944	)		$	(1,437,776	)		$	18,106,720

The accompanying notes are an integral part of these consolidated financial statements.

 

4

EUPRAXIA PHARMACEUTICALS INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited and Expressed in U.S. Dollars, except share amounts)

 

 

		Preferred shares				Amount				Common shares				Amount				Additional paid-in capital				Deficit				Accumulated other comprehensive loss				Non-controlling interest				Total-Shareholders’ Equity
Balance, December 31, 2024			8,905,638			$	31,705,219				35,641,603			$	116,360,066			$	20,503,904			$	(131,003,831	)		$	(4,160,555	)		$	(1,565,834	)		$	31,838,969
Share-based payments (Note 12(d))			—				—				—				—				1,493,407				—				—				—				1,493,407
Redemption of warrants (Notes 12(b)(iv) and 12(e))			—				—				200,000				458,047				(41,641	)			—				—				—				416,406
Redemption of options (Notes 12(b)(v) and 12(d))			—				—				7,750				22,175				(8,658	)			—				—				—				13,517
Net loss for the period			—				—				—				—				—				(6,762,608	)			—				(4,667	)			(6,767,275	)
Foreign currency translation adjustment			—				—				—				—				—				—				38,164				—				38,164
Balance, March 31, 2025			8,905,638			$	31,705,219				35,849,353			$	116,840,288			$	21,947,012			$	(137,766,439	)		$	(4,122,391	)		$	(1,570,501	)		$	27,033,188

The accompanying notes are an integral part of these consolidated financial statements.

 

5

EUPRAXIA PHARMACEUTICALS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and Expressed in U.S. Dollars)

 

 

		Three Months ended March 31, 2025				Three Months ended March 31, 2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(6,767,275	)		$	(6,156,933	)
Items not affecting cash
Accrued interest on convertible debt (Note 11(a))			—				158,944
Depreciation (Note 5 and 6)			46,487				37,418
Interest – lease liability			1,187				1,998
Loss on sale of equipment			1,075				—
Share-based payments (Note 12(d))			1,493,407				213,130
Change in fair value of financial instruments (Note 11(a))			—				(770,042	)
Lease payments (Note 9)			(20,371	)			(16,269	)
Unrealized foreign exchange			(50,182	)			144,913
Changes in operating assets and liabilities
Accounts payable and accrued liabilities			(894,360	)			107,712
Prepaid expenses			195,636				125,202
Amounts receivable			(8,675	)			17,201
Cash used in operating activities			(6,003,071	)			(6,136,726	)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of equipment			(169,044	)			(6,789	)
Cash used in investing activities			(169,044	)			(6,789	)
CASH FLOWS FROM FINANCING ACTIVITIES
Overnight marketed public offering (net of transaction costs) (Note 12(b)(iii)			—				22,853,391
Redemption of warrants (Note 12(e))			416,406				337,184
Redemption of options (Note 12(d))			13,517				14
Repayment of loans (Note 8)			—				(20,547	)
Cash provided by financing activities			429,923				23,170,042
Increase (decrease) in cash			(5,742,192	)			17,026,527
Foreign exchange effect on cash			95,496				(460,756	)
Cash, beginning of period			33,101,294				19,341,756
Cash, end of period		$	27,454,598			$	35,907,527

Supplemental Disclosure with Respect to Cash Flows (Note 19)

The accompanying notes are an integral part of these consolidated financial statements.

 

6

EUPRAXIA PHARMACEUTICALS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025 and 2024

(Unaudited and Expressed in U.S. Dollars, except share amounts)

 

 

1.	NATURE OF BUSINESS AND GOING CONCERN

Eupraxia Pharmaceuticals Inc. (the “Company”) was incorporated under the laws of the province of Alberta on May 12, 2011, under the name Plaza Capital Partners Inc. On May 11, 2012, the Company changed its name to Eupraxia Pharmaceuticals Inc. and continued from the province of Alberta to the province of British Columbia.

On October 10, 2012, Eupraxia Holdings, Inc. (“Holdings”) was incorporated under the laws of the State of Delaware, USA. On November 16, 2012, Holdings was registered as an extra-provincial corporation under the laws of the province of British Columbia, Canada. On October 10, 2012, Eupraxia Pharmaceuticals USA, LLC (“Eupraxia USA”) was incorporated under the laws of the State of Delaware. On November 16, 2012, Eupraxia USA was registered as an extra-provincial corporation under the laws of the province of British Columbia. On January 7, 2021, Eupraxia Pharma, Inc. (“Eupraxia Pharma”) was incorporated under the laws of the State of Delaware. On July 4, 2022, Eupraxia Pharmaceuticals Australia Pty Ltd. (“Eupraxia Australia”) was incorporated under the laws of the state of Victoria, Australia. On May 17, 2023, Eupraxia Pharma USA Inc. (“Eupraxia Pharma USA”) was incorporated under the laws of the State of Delaware.

On March 9, 2021, the Company completed its initial public offering on the Toronto Stock Exchange (“TSX”) and began trading under the symbol “EPRX”. On April 5, 2024, the Company began trading on the Nasdaq Capital Market under the symbol “EPRX”.

The Company is a clinical stage biotechnology company leveraging its proprietary Diffusphere™ technology to optimize drug delivery for applications with significant unmet medical need. The address of the Company’s corporate office and principal place of business is 201- 2067 Cadboro Bay Road, Victoria, British Columbia, Canada.

These unaudited interim consolidated financial statements of the Company have been prepared on a going concern basis with the assumption that the Company will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. At March 31, 2025, the Company had cash of $27,454,598. The Company has not yet generated revenue from operations. The Company incurred a net loss of $6,767,275 during the three months ended March 31, 2025, and as of that date, the Company’s accumulated deficit was $137,766,439. As the Company is in the research and development stage, the recoverability of the costs incurred to date is dependent upon the ability of the Company to obtain the necessary funding to complete the research and development of its projects and upon future commercialization or proceeds from the monetization of research activities.

The Company will periodically have to raise funds to continue operations and recently raised $31,705,219 through a non-brokered private placement of 8,905,638 convertible preferred shares on October 31, 2024. Although it has been successful in doing so in the past, there is no assurance it will be able to do so in the future, especially with the ongoing geopolitical uncertainty affecting the global capital markets. The Company is active in its pursuit of additional funding through potential partnering and other strategic activities as well as grants to fund future research and development activities, and additional equity financing.

The continued operations of the Company are dependent on its ability to generate future cash flows or obtain additional funding. There is a risk that in the future, additional financing will not be available on a timely basis or on terms acceptable to the Company. These events and conditions may cast substantial doubt about the Company’s ability to continue as a going concern. These unaudited interim consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that might be necessary should the Company be unable to continue in business.

 

7

EUPRAXIA PHARMACEUTICALS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025 and 2024

(Unaudited and Expressed in U.S. Dollars, except share amounts)

 

 

2.	BASIS OF PRESENTATION

These unaudited interim consolidated financial statements are presented in U.S. dollars and have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”). These unaudited interim consolidated financial statements include the accounts of the Company and the accounts of its subsidiaries. All significant intercompany transactions and balances have been eliminated upon consolidation.

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with U.S. GAAP and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, these consolidated financial statements do not include all the information and footnotes required for complete consolidated financial statements and should be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2024 included in the Company’s 2024 40-F filed with SEC and on SEDAR+ on March 21, 2025.

These unaudited interim consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of results for the interim periods presented. The results of operations for the three months ended March 31, 2025, and 2024 are not necessarily indicative of results that can be expected for a full year. These unaudited interim consolidated financial statements follow the same significant accounting policies as those described in the notes to the audited consolidated financial statements of the Company included in the Company’s 2024 Form 40-F for the year ended December 31, 2024.

 

3.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Measurement

The unaudited interim consolidated financial statements have been prepared on a historical cost basis, except for certain financial instruments which are measured at fair value. The unaudited interim consolidated financial statements are presented in U.S. dollars, which is the Company’s reporting currency. The Company’s functional currency is the Canadian dollar.

The preparation of unaudited interim consolidated financial statements in accordance with U.S. GAAP requires the Company to make estimates and judgments in certain circumstances that affect the reported amounts of assets, liabilities, expenses, and related disclosure. On an ongoing basis, the Company evaluates its estimates, most notably those related to accrual of expenses including clinical and preclinical study expense accruals, stock-based compensation and the valuation allowance for deferred taxes. Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from these estimates.

Consolidation

These unaudited interim consolidated financial statements include the accounts of the Company and the accounts of its subsidiaries. The financial statements of subsidiaries are included in the unaudited interim consolidated financial statements from the date that control commences until the date that control ceases. Control exists when an entity is exposed to or has rights to variable returns from its involvement with the entity and has the ability to affect these returns through its power over the entity. All significant intercompany transactions and balances have been eliminated.

Recently Adopted Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirement. The Company adopted this ASU in 2025 and will apply this standard to tax note disclosures presented in the consolidated financial statements on an annual basis.

 

8

EUPRAXIA PHARMACEUTICALS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025 and 2024

(Unaudited and Expressed in U.S. Dollars, except share amounts)

 

 

3.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Recent Accounting Pronouncements Not Yet Adopted

The Company has not yet adopted certain new standards, amendments and interpretations to existing standards, which have been published but are only effective for accounting periods beginning after January 1, 2025. The new and amended standards are not expected to have a material impact on the Company’s consolidated financial statements.

 

4.	AMOUNTS RECEIVABLE

 

		March 31, 2025				December 31, 2024
GST/HST recoverable		$	90,700			$	82,097
Other refundable tax credits (1)			147,831				146,775
Total		$	238,531			$	228,872

 

(1)	Other refundable tax credits represent tax incentives for R&D costs incurred by Eupraxia Australia (Note 14 – Research and Development Expenses).

 

5.	PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

 

		Computers				Office furniture and equipment				Leasehold Improvements				Lab Equipment				Total
Cost
As at January 1, 2024		$	85,625			$	67,996			$	128,767			$	525,264			$	807,652
Additions			13,953				5,701				—				104,819				124,473
Disposals			(13,219	)			(7,890	)			—				(15,473	)			(36,582	)
Foreign currency adjustments			(7,122	)			(5,438	)			(10,408	)			(54,992	)			(77,960	)
As at December 31, 2024			79,237				60,369				118,359				559,618				817,583
Additions			4,548				1,118				—				163,378				169,044
Disposals			—				(1,192	)			—				—				(1,192	)
Foreign currency adjustments			72				54				108				169				403
As at March 31, 2025			83,857				60,349				118,467				723,165				985,838
Accumulated Depreciation
As at January 1, 2024			56,181				49,667				115,816				176,401				398,065
Depreciation			12,668				6,349				8,148				86,867				114,032
Disposals			(7,774	)			(5,698	)			—				(12,653	)			(26,125	)
Foreign currency adjustments			(4,895	)			(4,058	)			(9,787	)			(7,542	)			(26,282	)
As at December 31, 2024			56,180				46,260				114,177				243,073				459,690
Depreciation			2,961				707				1,144				23,807				28,619
Disposals			—				(117	)			—				—				(117	)
Foreign currency adjustments			47				41				101				175				364
As at March 31, 2025			59,188				46,891				115,422				267,055				488,556

 

9

EUPRAXIA PHARMACEUTICALS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025 and 2024

(Unaudited and Expressed in U.S. Dollars, except share amounts)

 

 

5.	PROPERTY AND EQUIPMENT (continued)

 

Net Book Value
As at December 31, 2024		$	23,057			$	14,109			$	4,182			$	316,545			$	357,893
As at March 31, 2025		$	24,669			$	13,458			$	3,045			$	456,110			$	497,282

During the three months ended March 31, 2025 and 2024, depreciation expense of $28,619 and $24,940, respectively, was recognized with $1,804 included in general and administrative and $26,815 included in research and development ($8,877 and $16,063 for general and administrative, and research and development in 2024, respectively).

 

6.	RIGHT-OF-USE ASSET

On May 13, 2024, the Company extended the lease of its office space until November 30, 2025. The lease extension increased the right-of-use asset by $78,580. The following table presents details of movement in the carrying value of the right-of-use asset:

 

		March 31, 2025				December 31, 2024
Balance, beginning		$	67,023			$	46,660
Depreciation			(17,868	)			(57,687	)
Lease extension			—				78,580
Foreign exchange			100				(530	)
Balance, ending		$	49,255			$	67,023

During the three months ended March 31, 2025 and 2024, depreciation expense of $17,868 and $12,478 respectively, was recognized with $6,695 included in general and administrative and $11,173 included in research and development ($4,441 and $8,037 for general and administrative, and research and development in 2024, respectively).

 

7.	ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

 

		March 31, 2025				December 31, 2024
Research and development		$	1,264,405			$	573,465
General and administrative			837,602				943,376
Wages and payroll remittances			45,210				20,705
Employee bonus payable			—				1,493,981
Total		$	2,147,217			$	3,031,527

 

8.	LOANS PAYABLE

On September 10, 2021, the Company entered into a Master Loan and Security Agreement (“Loan Agreement”) whereby the Company borrowed $235,000 to purchase production and test equipment (see Note 5 – Property and Equipment).

The Loan Agreement had a term of 36 months commencing September 13, 2021. The Loan Agreement accrued interest at 5.84% per annum with monthly payments (principal and interest) being made on the 1st of each month, beginning October 1, 2021. As part of the agreement, the Company granted the lender first priority interest on the equipment it purchased. The loan was repaid on September 19, 2024 with the first priority interest being removed.

 

10

EUPRAXIA PHARMACEUTICALS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025 and 2024

(Unaudited and Expressed in U.S. Dollars, except share amounts)

 

 

8.	LOANS PAYABLE (continued)

 

Below is a breakdown of loan balance as at March 31, 2025 and December 31, 2024:

 

		March 31, 2025				December 31, 2024
Balance, beginning		$	—			$	62,709
Loan repayment			—				(62,651	)
Foreign exchange adjustment			—				(58	)
Balance, ending		$	—			$	—

 

9.	LEASE LIABILITY

The Company entered into an operating lease agreement for its Victoria, BC facility (of approximately 4,900 square feet of office space). The Company signed an extension agreement on May 13, 2024 to extend the term of the lease by 12 months, expiring November 30, 2025.

The cost components of the operating lease were as follows as at:

 

		March 31, 2025				December 31, 2024
Lease Cost
Operating lease expense		$	20,368			$	65,739
Variable lease expense			17,398				71,147
Lease term and Discount Rate
Weighted average remaining lease term (years)			0.67				0.92
Weighted average discount rate			9.02	%			9.02	%

Variable lease costs are payments that vary because of changes in facts or circumstances and include common area maintenance and property taxes related to the premises. Variable lease costs are excluded from the calculation of minimum lease payments.

The Company’s future minimum lease payments as of March 31, 2025 are as follows:

 

Year ending December 31:
2025			54,224
Total undiscounted future minimum lease payments		$	54,224
Less: imputed interest			(1,450	)
Present value of lease liabilities at March 31, 2025		$	52,774

 

11

EUPRAXIA PHARMACEUTICALS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025 and 2024

(Expressed in U.S. Dollars, except share amounts)

 

 

9.	LEASE LIABILITY (continued)

 

During the three months ended March 31, 2025, the Company subleased approximately 616 square feet office space with amounts totaling $6,833 for the three months ended March, 2025 ($6,099 – three months ended March 31, 2024) being recorded as a reduction to general and administrative expenses.

During the year ended December 31, 2024, Management identified that lease payments should be presented within cash flows from operating activities as opposed to cash flows from financing activities in the consolidated statements of cash flows. As such, Management changed the presentation for the comparative periods to conform to the requirements under U.S. GAAP with lease payments of $16,269 for the three months ended March 31, 2024 being presented within cash flows from operating activities as opposed to cash flows from financing activities.

 

10.	AURITEC LICENSE AGREEMENT

Eupraxia Pharmaceuticals USA LLC (“Eupraxia LLC”) entered into an amended and restated license agreement with Auritec Pharmaceuticals Inc. (“Auritec”) on October 9, 2018 (as further amended, the “Amended and Restated License Agreement”). Under the terms of the Amended and Restated License Agreement, Auritec has granted Eupraxia LLC an exclusive license (including the right to sublicense to its affiliates and third parties) under the licensed patents held by Auritec and for all the technical information and know-how relating to the technology claimed in the licensed patents held by Auritec with respect to the use of Auritec’s “Plexis Platform” for the delivery of fluticasone in all medical fields (except for otolaryngology and the prevention, treatment and control of all diseases, disorders and conditions of the eye and its adnexa (collectively, the “Excluded Fields”)), to develop, make, have made, manufacture, use, commercialize, sell, sub-license, offer for sale, import, and have imported products for the delivery of fluticasone drug products using the Plexis Platform in all medical fields except the Excluded Fields (“Licensed Products”).

Pursuant to the terms of the Amended and Restated License Agreement, Eupraxia USA LLC has paid $5,000,000 to Auritec (the “Upfront Fee”). In addition, Eupraxia LLC has agreed to pay Auritec up to $30,000,000 upon achievement of certain regulatory and commercial milestones related to products licensed under the Amended and Restated License Agreement (“Licensed Products”) as well as a royalty of 4% of net sales of Licensed Products by Eupraxia LLC or its affiliates, subject to certain reductions.

The following table summarizes the remaining milestone payment schedule. During the year ended December 31, 2024, the Company paid $5,000,000 to Auritec upon successful completion of the Phase 2b study.

 

Milestone Event		Milestone Payment
First OA Regulatory Approval			5,000,000
Second OA Regulatory Approval			5,000,000
Non-OA Indication Regulatory Approval			10,000,000
First calendar year in which aggregate Net Sales by Eupraxia USA, its affiliates and sublicenses exceed $500,000,000			5,000,000
Maximum amount payable		$	25,000,000

 

12

EUPRAXIA PHARMACEUTICALS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025 and 2024

(Expressed in U.S. Dollars, except share amounts)

 

 

10.	AURITEC LICENSE AGREEMENT (continued)

 

Eupraxia LLC also agreed to pay to Auritec 20% of sublicensing royalties or other consideration based on net sales of Licensed Products. Eupraxia LLC further agreed to pay Auritec a percentage of Non-Royalty Monetization Revenue (as defined in the Amended and Restated License Agreement), which includes payments received for a sale of Eupraxia LLC or sale or sublicense of a Licensed Product, which percentage ranges from 10% to 30% depending on the development stage of the most-advanced Licensed Product, up to a maximum of $100,000,000. The following table summarizes the Non-Royalty Monetization Revenue percentage schedule:

 

Date of Execution		Percentage of Non-Royalty Monetization Revenue
Prior to Successful Completion of a Phase 2b Study			30	%
After Successful Completion of a Phase 2b Study but prior to Successful Completion of a Phase 3 Study			20	%
After Successful Completion of a Phase 3 Study but prior to Regulatory Approval of a Product in the Eupraxia Field from FDA in the United States			15	%
After Regulatory Approval of a Product in the Eupraxia Field from FDA in the United States			10	%

Either party may terminate the Amended and Restated License Agreement in the event of the other party’s bankruptcy, liquidation, or dissolution. Auritec may also terminate upon a material breach of the Amended and Restated License Agreement by Eupraxia LLC that is not cured within 60 days (15 days in the case of a payment breach). Further, if Eupraxia LLC directly or indirectly challenges any claim in any Auritec patent licensed under the Amended and Restated License Agreement, or assist a third party in doing so, Auritec may immediately terminate the Amended and Restated License Agreement. If Auritec directly or indirectly challenges any Eupraxia patent contemplated in the Amended and Restated License Agreement other than as reasonably required to defend Auritec patents as a basis for such challenge, or assists a third party in doing so, Eupraxia LLC may immediately terminate the Amended and Restated License Agreement.

 

11.	CONVERTIBLE DEBT

 

a)

Silicon Valley Bank

On June 21, 2021, the Company entered into a contingent convertible debt agreement (the “Debt Agreement”) with SVB and concurrently drew down, in full, the CDN$10,000,000 principal amount under the Debt Agreement.

The Debt Agreement had a term of 36 months (or 48 months at SVB’s election) and accrued interest at the greater of 2.45% and the Canadian prime rate, requiring monthly interest payments. An additional payment in kind accrued interest at a rate of 7% per annum, which was partially settled at maturity. During the three months ended March 31, 2024, the Canadian prime rate was 7.20% for the entire period.

 

13

EUPRAXIA PHARMACEUTICALS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025 and 2024

(Expressed in U.S. Dollars, except share amounts)

 

 

11.	CONVERTIBLE DEBT (continued)

 

a)

Silicon Valley Bank (continued)

 

On June 21, 2024, the loan under the Debt Agreement matured and a portion of the balance of $4,494,795 (CDN$6,161,016) was paid to SVB representing principal and interest. On September 11, 2024, the remaining balance of $4,580,018 (CDN$6,204,092) was paid to SVB representing the remaining principal and interest. This payment extinguished the liability the Company had with SVB. The convertible debt balance is comprised of the following:

 

 

Balance - December 31, 2023		$	10,336,003
Accrued interest			320,318
Interest paid			(161,375	)
Change in fair value			(770,042	)
Foreign exchange			(247,200	)
Balance - March 31, 2024		$	9,477,704
Accrued interest			281,319
Interest paid			(198,665	)
Change in fair value			(430,499	)
Loan repayment			(9,074,813	)
Foreign exchange			(55,046	)
Balance - December 31, 2024		$	—

 

b)

Yabema Capital Limited

On August 1, 2024, the Company entered into a new CDN$12 million convertible debt facility (the “Convertible Debt Facility”). Under the Convertible Debt Facility, Yabema Capital Limited and other current Eupraxia shareholders (together, the “Lenders”) made available for drawdown an aggregate amount of CDN$12 million for a period of 120 days following entry into the agreement. The Convertible Debt Facility was to mature 24 months from August 1, 2024 (the closing date) and could be extended for an additional 12 months at the Lenders’ option. The decision to draw on the facility within 120 days of closing was at the discretion of Eupraxia and was subject to the full and final release of the Debt Agreement. Commitment fees of $355,582 (CDN$480,000) were incurred by the Company.

The aggregate unpaid principal amount and any accrued and unpaid interest thereon would be convertible at the discretion of the lenders into Eupraxia common shares at a conversion price equal to CDN$4.84375 per common share.

The Company granted the Lenders a security interest in all of its assets, excluding its patents and other intellectual property. As a result of the closing of the Convertible Preferred Share Offering, on October 31, 2024 (see Note 12 – Convertible Preferred Shares), the Company entered into a Termination and Release Agreement (the “Termination Agreement”) with the Lenders to terminate the Convertible Debt Facility and discharge all security interests.

 

14

EUPRAXIA PHARMACEUTICALS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025 and 2024

(Expressed in U.S. Dollars, except share amounts)

 

 

12.	SHARE CAPITAL AND OTHER COMPONENTS OF EQUITY

 

a)

Authorized

 

•

An unlimited number of Common shares, with no par value, with one vote per share.

 

•

An unlimited number of Preferred shares, with no par value.

 

b)

Issued (Common Shares)

Capital transactions which took place during the year ended December 31, 2024 are as follows:

 

i)

During the year ended December 31, 2024, 80,243 common shares were issued on the exercise of warrants for gross proceeds of $337,816. The weighted average share price during the period in which these warrants were exercised was CDN$5.50. On exercise, $214,125 was transferred from additional paid-in capital to share capital.

 

ii)

During the year ended December 31, 2024, 18,760 common shares were issued on the exercise of options for gross proceeds of $25,245. The weighted average share price during the period in which these options were exercised was CDN$4.71. On exercise, $15,904 was transferred from additional paid-in capital to share capital.

 

iii)

On March 15, 2024, the Company closed an overnight marketed public offering (the “Offering”). Pursuant to the Offering, the Company issued 8,260,435 common shares at a price of CDN$4.10 for aggregate gross proceeds of $25,026,073, which includes the issuance of 943,435 Shares upon exercise of the over-allotment option.

As consideration for the services rendered by the Underwriter in connection with the Offering, the Company paid the Underwriters a cash commission of $1,501,564 which is equal to 6% of the gross proceeds raised under the Offering. An additional $309,652 in legal and agents’ expenses were also paid to the Underwriters. The Company incurred an additional $361,466 in share issuance costs associated with the Offering.

Capital transactions which took place during the three months ended March 31, 2025 are as follows:

 

iv)

During the three months ended March 31, 2025, 200,000 common shares were issued on the exercise of warrants for gross proceeds of $416,406. The weighted average share price during the period in which these warrants were exercised was CDN$6.06. On exercise, $41,641 was transferred from additional paid-in capital to share capital.

 

v)

During the three months ended March 31, 2025, 7,750 common shares were issued on the exercise of options for gross proceeds of $13,517. The weighted average share price during the period in which these options were exercised was CDN$4.91. On exercise, $8,658 was transferred from additional paid-in capital to share capital.

 

15

EUPRAXIA PHARMACEUTICALS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025 and 2024

(Expressed in U.S. Dollars, except share amounts)

 

 

12.	SHARE CAPITAL AND OTHER COMPONENTS OF EQUITY (continued)

 

b)

Issued (Preferred Shares)

On October 31, 2024, the Company issued convertible preferred shares in a non-brokered private placement (the “Private Placement”). Pursuant to the Convertible Preferred Share Offering, the Company issued 8,905,638 convertible preferred shares (the “Preferred Shares”) at a price of CDN$5.00 for aggregate gross proceeds of $31,997,837 (CDN$44,528,190).

The Company paid $242,116 (CDN$336,928) in legal expenses and an additional $50,502 ($70,279) in listing fees were paid in association with the Preferred Share Offering. Each Preferred Share is convertible at the option of the holder at any time into one common share without additional consideration.

The Preferred Shares would also mandatorily convert into common shares on a one-to-one basis, without additional consideration, upon the earliest of: (i) the common shares of the Company trade at a price of CDN$15.00 per common share on the Toronto Stock Exchange or the Nasdaq Stock Market LLC based on an average daily trading volume of at least 50,000 common shares during the rolling six-month period, or (ii) the holders of the Preferred Shares representing 75% of the outstanding Preferred Shares vote or consent to convert all outstanding Preferred Shares, in the event a liquidating event such as an amalgamation, arrangement, merger, reorganization or similar transaction occurs, provided that the conversion ratio will not be adjusted unless the Company receives all necessary TSX and shareholder approvals.

The Preferred Shares have a redemption feature that is subject to the occurrence of certain events, all of which are in the control of the Company. Accordingly, the Preferred Shares are classified as permanent equity.

The Preferred Shares will not initially be entitled to any dividends. Following the third anniversary of closing of the Private Placement, and subject to shareholder approval, any unconverted Preferred Shares will be entitled to a quarterly dividend equal to 1.5% (6% annually) of the original issue price, payable in additional Preferred Shares (the “PIK Preferred Shares”). If shareholder approval for the PIK Preferred Shares is not obtained by the third anniversary of closing, the quarterly dividends will be paid in cash at a rate of 2% (8% annually). No dividends will be payable on Common Shares while any Preferred Shares remain issued and outstanding. The Preferred Shares were not issued at a discount, so the impact of this feature is limited to the amounts allocable to common shareholders in calculating earnings per share.

 

16

EUPRAXIA PHARMACEUTICALS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025 and 2024

(Expressed in U.S. Dollars, except share amounts)

 

 

12.	SHARE CAPITAL AND OTHER COMPONENTS OF EQUITY (continued)

 

d)

Options

Under the Amended Stock Option Plan (the “Amended Plan”), approved by the Board of Directors on October 27, 2021, and ratified by Shareholders on December 3, 2021, the Board of Directors may grant stock options to directors, officers, employees and consultants of the Company up to an aggregate of 18.5% of the Company’s then issued and outstanding common shares.

Options granted under the Amended Plan have lives of up to ten years from the date of grant. The vesting schedule of all granted options is determined at the discretion of the Board. Unless otherwise determined by the Board, in its sole discretion, all grants of options will vest over a three-year period, with the first twenty-five percent (25%) of the Options vesting on the date of grant, and the remaining options vesting over the following thirty-six-month period in three equal instalments on an annual basis.

The following table summarizes the Company’s option transactions:

 

		Number of options				Weighted average exercise price (CDN$)
Outstanding, December 31, 2023			3,518,250				6.27
Exercised			(18,760	)			1.90
Cancelled			(220,500	)			5.15
Granted			2,028,880				4.10
Outstanding, December 31, 2024			5,307,870				5.50
Exercised			(7,750	)			2.51
Cancelled			(697,750	)			7.17
Expired			(181,250	)			8.00
Granted			1,151,000				5.14
Outstanding, March 31, 2025			5,572,120			$	5.15

 

17

EUPRAXIA PHARMACEUTICALS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025 and 2024

(Expressed in U.S. Dollars, except share amounts)

 

 

12.	SHARE CAPITAL AND OTHER COMPONENTS OF EQUITY (continued)

 

d)

Options (continued)

 

Grant Date		Options Outstanding				Options Exercisable				Exercise Price (CDN$)				Expiry Date				Remaining Contractual Life (years)
Nov 2, 2015			95,000				95,000			$	8.00				Nov 2, 2025				0.60
Mar 5, 2018 Mar 9, 2021			339,750 654,450				339,750 654,450			$ $	8.00 8.00				Mar 5, 2028 Mar 9, 2031				2.93 5.95
Mar 9, 2021 May 3, 2021			1,800 257,000				1,800 257,000			$ $	8.00 8.00				Mar 9, 2031 May 3, 2031				5.95 6.10
Dec 9, 2021			60,000				60,000			$	2.02				Dec 9, 2031				6.70
Mar 31, 2022			354,740				354,740			$	1.90				Mar 31, 2032				7.01
Dec 9, 2022			734,300				574,475			$	3.85				Dec 9, 2032				7.70
May 18, 2023			180,000				90,000			$	6.84				May 18, 2033				8.14
May 30, 2023			17,200				8,600			$	6.75				May 30, 2033				8.17
Sep 27, 2023			60,000				30,000			$	7.16				Sep 27, 2033				8.50
May 13, 2024			1,456,880				576,720			$	3.96				May 13, 2034				9.12
May 28, 2024			50,000				25,000			$	3.82				May 28, 2034				9.16
August 9, 2024			70,000				22,500			$	3.48				Aug 9, 2034				9.36
December 10, 2024			90,000				90,000			$	4.66				December 10, 2034				9.70
March 25, 2025			1,151,000				527,750			$	5.14				March 25, 2035				9.99
			5,572,120				3,707,785			$	5.15								7.89

The share-based compensation expense was determined based on the fair value of options at the date of measurement using the Black-Scholes option pricing model with the following weighted-average assumptions:

 

Options granted during the period ended		March 31, 2025
Expected dividend yield			0.00	%
Expected forfeiture rate			0.00	%
Weighted average annual volatility			72.33	%
Weighted average risk-free interest rate			2.76	%
Weighted average expected option life			5.54 years
Weighted average share price (CDN$)		$	5.14
Weighted average exercise price (CDN$)		$	5.14
Weighted average fair value of options granted (CDN$)		$	2.53

There were no options granted during the three months ended March 31, 2024. Share-based payments for the three months ended March 31, 2025, was $1,493,407 (2024 - $213,130) (See Note 13 – General & Administrative Expenses and Note 14 – Research & Development Expenses for breakdown by function).

As of March 31, 2025, the unrecognized stock-based compensation expense related to the non-vested stock options was $2,399,667, which is expected to be recognized over a weighted-average period of 2.55 years.

 

18

EUPRAXIA PHARMACEUTICALS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025 and 2024

(Expressed in U.S. Dollars, except share amounts)

 

 

12.	SHARE CAPITAL AND OTHER COMPONENTS OF EQUITY (continued)

 

e)

Warrants

The following table summarizes the Company’s warrant transactions:

 

		Number of warrants				Weighted average exercise price (CDN$)
Outstanding December 31, 2023			9,119,330			$	5.49
Exercised			(80,243	)			5.61
Expired			(231,110	)			5.88
Outstanding December 31, 2024			8,807,977			$	5.48
Exercised			(200,000	)			3.00
Outstanding March 31, 2025			8,607,977			$	5.53

As at March 31, 2025, the following warrants were outstanding:

 

Expiry date		Exercise price (CDN$)				Remaining contractual life (years)				Warrants outstanding and exercisable
120 days after holder ceases to be a Director/ Officer or consultant		$	0.7572				N/A				243,421
120 days after former spouse ceases to be a Director/ Officer or consultant			0.7572				N/A				137,500
120 days after holder ceases to be a Director/ Officer or consultant(1)			0.4984				N/A				315,500
March 9, 2026			11.20				1.19				2,826,024
April 20, 2026			3.00				1.30				4,996,250
April 20, 2026			2.05				1.30				50,054
April 29, 2026			11.20				1.33				39,228
		$	5.53								8,607,977

 

(1)	Represents warrants to acquire 315,500 units consisting of one Common Share and one additional warrant at an exercise price of CDN$0.75. These underlying warrants expire two years from the date of exercise of the primary warrant.

 

19

EUPRAXIA PHARMACEUTICALS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025 and 2024

(Expressed in U.S. Dollars, except share amounts)

 

 

12.	SHARE CAPITAL AND OTHER COMPONENTS OF EQUITY (continued)

 

f)

Class B Non-Voting shares

On January 31, 2021, the Company entered into a contribution agreement with the Chief Scientific Officer of the Company, and certain of the Company’s subsidiaries (the “Contribution Agreement”). Pursuant to the Contribution Agreement, the Company acquired AMDM Holdings Inc., a corporation wholly-owned by the Chief Scientific Officer, which held 5% of the equity interest in the Company’s subsidiary, Eupraxia USA. In exchange, the Company issued to the Chief Scientific Officer 225 non-voting Class B shares (the “Class B Shares”) in Eupraxia Pharma Inc. representing 5% of the outstanding securities of Eupraxia Pharma. The Company holds the remaining 95% of such securities, which consists of 4,275 voting Class A shares.

Each Class B Share is exchangeable into common shares of the Company based on an exchange rate of 2,500 common shares for each Class B Share, subject to adjustments upon the occurrence of certain events, for a total of 562,500 common shares. The Class B Shares are exchangeable by the Chief Scientific Officer at her election, provided that the Company may force the exchange of the Class B Shares into common shares of the Company at any time on or after January 31, 2031, or on or after January 31, 2026, if the Company is listed on a stock exchange and is a reporting issuer in Canada at such time. The Company may also force the exchange of the Class B Shares into common shares if there is a change of control transaction involving the Company, a change in law which makes the exchange necessary or desirable or if there are a de minimis number of Class B Shares outstanding. If the Company is listed on a stock exchange at the time of the applicable exchange, the Company may elect to pay the Chief Scientific Officer cash in lieu of issuing common shares, with such cash amount to be determined based on the then current market price of the common shares of the Company.

 

g)

Earnings (loss) per Share

As a result of the Preferred Shares being classified as increasing rate preferred stock with dividends not being declared until the third anniversary of closing of the Private Placement, the Company has calculated an implied dividend in determining the loss attributable to common shareholders. The impact on loss per share on the Consolidated Statements of Operations and Comprehensive Loss is as follows:

 

Three Months ended March 31,		2025				2024
Loss attributable to the Owners of the Company		$	(6,762,608	)		$	(6,043,038	)
Less: implied dividend on Preferred Shares			620,515				—
Adjusted Loss attributable to the Owners of the Company			(7,383,123	)			(6,043,038	)
Weighted average shares outstanding - basic and diluted			35,686,256				28,812,641
Loss per Share - Basic and Diluted (Owners of the Company)		$	(0.21	)		$	(0.21	)

 

20

EUPRAXIA PHARMACEUTICALS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025 and 2024

(Expressed in U.S. Dollars, except share amounts)

 

 

13.	GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses are comprised of the following:

 

Three Months ended March 31,		2025				2024
Office expenses		$	240,116			$	111,309
Insurance			261,223				101,433
Travel			77,574				122,422
Professional fees			447,450				1,101,798
Public company costs			411,067				404,558
Salaries and benefits			709,931				521,876
Share based payments (Note 12(d))			1,127,033				154,627
Total expenses during the period		$	3,274,394			$	2,518,023

 

14.	RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses are comprised of the following:

 

Three Months ended March 31,		2025				2024
Preclinical		$	231,277			$	261,636
Clinical			704,085				1,032,960
Manufacturing & analytical			1,312,645				1,746,744
Regulatory			2,182				34,984
Direct research and development			2,250,189				3,076,324
Pipeline development			932				—
Other research and development			283,055				172,946
Salaries and benefits			949,276				867,680
Share based payments (Note 12(d))			366,374				58,503
Total expenses during the period		$	3,849,826			$	4,175,453

 

21

EUPRAXIA PHARMACEUTICALS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025 and 2024

(Expressed in U.S. Dollars, except share amounts)

 

 

15.	COMMITMENTS AND CONTINGENCIES

 

i.

The Company may be required to make milestone, royalty, and other research and development funding payments under agreements with third parties (see Note 10 – Auritec License Agreement). These payments are contingent upon the achievement of specific development, regulatory and/or commercial milestones. The Company has not accrued these payments as at March 31, 2025 due to the uncertainty over whether these milestones will be achieved.

 

ii.

Eupraxia has entered into a number of service contracts with its vendors. Some of those contracts have cancellation clauses which state Eupraxia would pay a cancellation fee of between 15% and 100% of the next service milestone if it terminates the contract. As of March 31, 2025 and 2024, there have been no cancellation of contracts that would trigger a cancellation fee.

 

iii.

The Company has entered into service agreements with third parties that include indemnification provisions that are customary in the industry. These indemnification provisions generally require the Company to compensate the other party for certain damages and costs incurred as a result of third-party claims or damages arising from these transactions.

The maximum amount of potential future indemnification is unlimited; however, the Company currently holds commercial general liability insurance. This insurance limits the Company’s exposure and may enable it to recover a portion of any future amounts paid. Historically, the Company has not made any indemnification payments under such agreements and the Company believes that the fair value of these indemnification obligations is minimal. Accordingly, the Company has not recognized any liabilities relating to these obligations for any period presented.

 

16.	SEGMENTED INFORMATION

The Company operates as a single reportable segment with the CODM being the Company’s Chief Executive Officer who manages the Company’s operations on a consolidated basis. The accounting policies of the segment are the same as those described in the summary of significant accounting policies.

As the Company does not currently generate revenue, the CODM assesses Company performance through the achievement of pre-clinical and clinical research goals while evaluating the Company’s performance and allocates resources to the operations of the Company on a total company basis. This enables the CEO to assess the overall level of resources available and how to best deploy these resources.

The CODM uses net loss to monitor budget versus actual results and to analyze cash flows in assessing performance of the segment and allocating resources. The measure of segment assets is reported on the consolidated balance sheet as total consolidated assets, with a majority of these assets located in Canada.

 

22

EUPRAXIA PHARMACEUTICALS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025 and 2024

(Expressed in U.S. Dollars, except share amounts)

 

 

16.	SEGMENTED INFORMATION (continued)

 

The following table presents information about significant segment expenses and segment loss:

 

Three Months ended March 31,		2025				2024
Direct external research and development costs
EP-104IAR		$	9,764			$	2,075,762
EP-104GI			1,982,822				738,926
Pre-clinical			258,536				261,636
Salaries and benefits			1,659,207				1,389,556
Share based payments			1,493,407				213,130
Other Research and Development expenses			283,054				172,946
Other General and Administrative expenses			1,437,430				1,841,520
Total segment expenses			7,124,220				6,693,476
Reconciling items:
Interest income			309,452				236,369
Interest expense			—				(321,140	)
Loss on sale of equipment			(1,075	)			—
Foreign exchange gain (loss)			51,362				(143,728	)
Change in fair value of financial instruments			—				770,042
Tax expense			(2,794	)			(5,000	)
Net loss for the period		$	(6,767,275	)		$	(6,156,933	)

 

17.	FINANCIAL INSTRUMENTS

The Company’s financial instruments for the current and comparative periods consist of cash, amounts receivable, accounts payable and accrued liabilities and payable to Auritec.

There were no changes to the Company’s risk exposures or management of risks during the three months ended March 31, 2025. The Company’s risk exposures and the impact on the Company’s financial instruments are summarized below:

Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Company believes it has no significant credit risk, as its cash and cash equivalents and short-term investments, being its primary exposure to credit risk, are held with a large Canadian bank. The Company’s maximum exposure to credit risk is the carrying value of these financial assets.

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to the extent possible to meet liabilities when due. As at March 31, 2025, the Company had cash of $27,454,598 (2024 - $33,101,294) in addition to current liabilities of $2,199,991 (2024 - $3,103,386). Management is currently working on certain strategic alternatives including, but not limited to raising additional capital.

 

23

EUPRAXIA PHARMACEUTICALS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025 and 2024

(Expressed in U.S. Dollars, except share amounts)

 

 

17.	FINANCIAL INSTRUMENTS (continued)

Liquidity risk (continued)

 

There is no assurance, however, that any or all of these alternatives will materialize or that additional funding will be available, if and when needed.

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate cash flow risk; and to the extent that the prevailing market interest rates differ from the interest rate on the Company’s monetary assets and liabilities, the Company is exposed to interest rate price risk.

Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company is exposed to currency risk due to its frequency of transactions in US dollars. The Company does not use derivatives to hedge against this risk, however, it does purchase US dollars to cover anticipated costs that will be denominated in US dollars.

At March 31, 2025, the Company held cash of $16,345,478 (2024 – $3,740,799) and had accounts payable and accrued liabilities of $603,067 (2024 – $376,541) denominated in US dollars which were translated to Canadian dollars at 1.4376 (2024 – 1.4389). The impact of a 10% change in the exchange rates would have an impact of approximately $1,574,241 (2024 – $336,426) on profit or loss. The Company held cash of $604,065 (2024 - $149,736), accounts payable and accrued liabilities of $349,143 (2024 - $120,361) and had $269,669 in accounts receivable (2024 - $258,074) denominated in Australian Dollars which were translated into Canadian Dollars at 0.8971 (2024 – 0.8915). The impact of a 10% change in the exchange rate would have an impact of approximately $32,736 (2024 - $17,810) on profit or loss. The Company also has cash in accounts payable in Great British pounds and Euros. The impact of a 10% change in the exchanges of these currencies would have an immaterial effect on future cash flows.

Other price risk

Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk and foreign currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer or by factors affecting all similar financial instruments traded in the market. The Company is not exposed to significant price risk with respect to commodity or equity prices.

 

24

EUPRAXIA PHARMACEUTICALS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025 and 2024

(Expressed in U.S. Dollars, except share amounts)

 

 

17.	FINANCIAL INSTRUMENTS (continued)

 

Fair Value Measurement

The Company categorizes its financial instruments measured at fair value into one of three different levels depending on the observation of inputs used in the measurement.

Level 1: Fair value is based on unadjusted quoted prices for identical assets or liabilities in active markets

Level 2: Fair value is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3: Fair value is based on valuation techniques that require one or more significant unobservable inputs

The Company’s financial instruments consist of cash, amounts receivable and accounts payable and accrued liabilities. The carrying value of the Company’s financial instruments approximate their fair values due to their short-term maturities.

The following table summarizes information regarding the classification and carrying values of the Company’s financial instruments measured at amortized cost:

 

Financial assets/liabilities		March 31, 2025				December 31, 2024
Cash		$	27,454,598			$	33,101,294
Amounts receivable		$	238,531			$	228,872
Accounts payable and accrued liabilities		$	2,199,991			$	3,031,527

 

18.	INTEREST EXPENSE

Interest expense is comprised of the following:

 

Three Months ended March 31,		2025				2024
Interest on SVB debt facility (Note 11(a))		$	—			$	320,318
Other interest and accretion			—				822
Total		$	—			$	321,140

 

25

EUPRAXIA PHARMACEUTICALS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025 and 2024

(Expressed in U.S. Dollars, except share amounts)

 

 

19.	SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

The Company paid interest of $nil during the three months ended March 31, 2025 (2024 - $162,195).

The Company received interest of $308,188 during the three months ended March 31, 2025 (2024 - $236,369).

The Company did not have non-cash transactions for three months ended March 31, 2025 and March 31, 2024.

 

26

Exhibit 99.2

 

EUPRAXIA PHARMACEUTICALS INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

For the Three Months ended March 31, 2025

 

1

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2025

This management’s discussion and analysis (“MD&A”) has been prepared as of May 6, 2025 and should be read in conjunction with the unaudited interim consolidated financial statements of Eupraxia Pharmaceuticals Inc. (“Eupraxia” or the “Company”) as at and for the three months ended March 31, 2025 and the related notes thereto and in conjunction with the audited consolidated financial statements of the Company and related notes thereto for the years ended December 31, 2024 and 2023 which are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). All dollar amounts are expressed in U.S. dollars unless otherwise noted. In this MD&A, unless the context requires otherwise, references to “we” or “our” are references to Eupraxia. Additional information relating to the Company is available in our annual information form (“AIF”), filed on SEDAR+ and EDGAR on March 21, 2025.

All regulatory filings to-date and communication from the Company have been made referencing EP-104IAR. In the interest of greater clarity for investors, the Company will use EP-104IAR when referring to the product candidate that is intended for intra-articular (“IAR”) injections for indications such as osteoarthritis (“OA”), EP-104GI when referring to the product candidate that is intended for submucosal injections in the GI tract for indications such as eosinophilic esophagitis (“EoE”), and simply refer to the product candidate as EP-104 in conjunction with topics that are related to both EP-104IAR and EP-104GI.

Forward-Looking Statements

Certain statements and information in this MD&A contain forward-looking statements or forward-looking information under applicable securities legislation that may not be based on historical fact, including, without limitation, statements containing the words “may,” “might,” “will,” “likely,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “objective,” “goal,” “outlook,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “forecast,” “estimate,” “potential,” “target,” “seek,” “contemplate,” “continue,” “design,” and “ongoing,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words and similar expressions. Forward-looking statements include estimates, plans, expectations, opinions, forecasts, projections, targets, guidance or other statements that are not statements of fact. Such forward-looking statements are made as of the date of this MD&A.

Forward-looking statements are necessarily based on estimates and assumptions made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as factors that we believe are appropriate. Forward-looking statements in this MD&A include, but are not limited to, statements relating to:

 

•

the Company’s business strategies and objectives, including current and future plans, expectations and intentions;

 

•

the Company’s intent to use capital resources previously identified for EP-104IAR to continue the development of EP-104GI;

 

•

the Company’s intention to evaluate funding alternatives for the continued development of EP-104IAR, including potential partnership opportunities;

 

•

the Company’s ability to obtain sufficient funding for its operations, including funding for research, development and commercial activities;

 

•

the Company’s projected operating expenses and capital expenditures;

 

•

the Company’s ability to achieve profitability;

 

•

projected revenues, future trends, opportunities and growth in the Company’s industry and the drug development markets;

 

•

the Company’s ability to maintain and enhance its competitive advantages and technological advantages;

 

•

the entry into commercial partnerships and commercialization of the Company’s technology;

 

•

the Company’s ability to enter into definitive agreements with its contract research organizations (“CROs”);

 

•

the Company’s ability to enter into co-development and/or collaborative partnerships;

 

•

the Company’s clinical development programs and activities and the estimated timing thereof;

 

2

•

the timing, status and results of clinical trials, including with respect to patient recruitment and data readout, including the Company’s belief that its planned clinical trials will support a future New Drug Application (“NDA”) submission for EP-104IAR;

 

•

the success of regulatory submissions;

 

•

the obtaining of potential regulatory approval;

 

•

the hiring of additional research and development team members;

 

•

the potential for the Company’s technology to impact the drug delivery process;

 

•

the development of additional intellectual property, ability to patent or otherwise protect such developed intellectual property and licenses with third parties for intellectual property;

 

•

the ability of patents and notices of allowance to provide protection over intellectual property in applicable jurisdictions;

 

•

the Company’s ability to protect, expand upon and exploit its existing intellectual property;

 

•

the entry into sponsored research agreements and the benefits therefrom;

 

•

the competitive advantages of the Company and its technology;

 

•

the planned development and future success of the Company’s product candidates and results gathered from studies thereof;

 

•

the development of products from the Company’s competitors;

 

•

the application of regulations and standards to the Company’s future products and services or research and development activities;

 

•

the Company’s retention of funds or payment of dividends;

 

•

the translation of the Company’s technologies and expansion of its offerings into clinical applications;

 

•

the potential benefits to patients from Eupraxia’s platforms;

 

•

the value of the strategic relationship to Eupraxia’s clients and investors;

 

•

the Company’s engagement with legal and regulatory authorities in various jurisdictions;

 

•

the Company’s anticipated use of proceeds from the 2024 Offering (as defined herein) and its existing cash and cash equivalents and the related estimated cash runway;

 

•

the sufficiency of the Company’s existing cash and cash equivalents to fund its future operating expenses and capital expenditure requirements and potential sources of additional capital;

 

•

the issuance of common shares of the Company (the “Common Shares”) upon conversion of the Preferred Shares (as defined herein);

 

•

the demand and commercial viability of the Company’s technology; and

 

•

the demand and market acceptance for product candidates developed by the Company and for which it receives marketing authorization.

Forward-looking statements and information involve significant risks, assumptions, uncertainties and other factors that may cause actual future results or anticipated events to differ materially from those expressed or implied in any forward-looking statements or information and, accordingly, should not be read as guarantees of future performance or results. These risks and factors include, but are not limited to:

 

•

we have a limited operating history and have no products approved for commercial sale, which may make it difficult for you to evaluate our current business and predict our future success and viability;

 

•

we will require substantial additional financing to achieve our goals and a failure to obtain this necessary capital when needed could force us to delay, limit, reduce or terminate our product development or commercialization efforts, if any of our product candidates receive marketing authorization;

 

•

we are substantially dependent on the success of our lead product candidates EP-104GI, which is currently being studied in an open label Phase 1b/2a clinical study, and EP-104IAR, for which we are evaluating funding alternatives for the continued development, including potential partnership opportunities. If we are unable to complete development of, obtain approval for and commercialize EP-104GI or EP-104IAR, alone or through a potential partnership, in a timely manner, our business will be harmed;

 

•

if we breach any of the agreements under which we license rights to our product candidates or technology from third parties, we could lose license rights that are important to our business. Our current license agreement may not provide an adequate remedy for its breach by the licensor;

 

•

adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect our current and projected business operations and our financial condition and results of operations;

 

3

•

clinical trials are expensive, time consuming and difficult to design and implement and may fail to demonstrate adequate safety and efficacy of our product candidates. Furthermore, the results of previous preclinical studies and clinical trials may not be predictive of future results, and the results of our current and planned clinical trials may not satisfy the requirements of the U.S. Food and Drug Administration (the “FDA”) or comparable non-U.S. regulatory authorities or provide the basis for regulatory approval;

 

•

our lead product candidates may not be successful for their intended use;

 

•

our current and future product candidates will require regulatory approval, which is costly, and we may not be able to obtain it and we may fail to obtain regulatory approvals or only obtain approvals for limited uses or indications;

 

•

the clinical trials of our product candidates may not demonstrate safety and efficacy to the satisfaction of the FDA, European Medicine Agency (“EMA”) or other comparable foreign regulatory authorities or otherwise produce positive results;

 

•

we completely rely on third parties to provide supplies and inputs required for our product candidates and, if these third parties fail to fulfill their contractual obligations, we may be unable to pursue further development of our product candidates and our business could be substantially harmed;

 

•

we rely on CROs to provide clinical and non-clinical research services; if such CROs do not successfully carry out their contractual duties including to comply with applicable laws and regulations or meet expected deadlines, our business could be substantially harmed;

 

•

the manufacture of drugs is complex and our third-party manufacturers may encounter difficulties in production. If any of our third-party manufacturers encounter such difficulties, our ability to provide adequate supply of our product candidates for clinical trials or our products for patients, if approved, could be delayed or prevented;

 

•

our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor or other third party will discover them or that our trade secrets will be misappropriated or disclosed;

 

•

the outcome of preclinical testing and early clinical trials may not be predictive of the success of later clinical trials, and the results of our clinical trials may not satisfy the requirements of the FDA, EMA or other comparable foreign regulatory authorities. Terminating the development of any of our product candidates could materially harm our business and the market price of our Common Shares;

 

•

interim, initial, “top-line”, and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data;

 

•

any safety concerns observed in any one of our clinical trials in our targeted indications could limit the prospects for regulatory approval of our product candidates in those and other indications, which could seriously harm our business;

 

•

our current or future product candidates may cause significant adverse events, toxicities or other undesirable adverse events when used alone or in combination with other products that may result in a safety profile that could inhibit regulatory approval, prevent market acceptance, limit their commercial potential, if approved, or result in significant negative consequences;

 

•

where appropriate and applicable, we may seek approval from the FDA or comparable foreign regulatory authorities through the use of expedited approval pathways, such as Fast Track designation or Breakthrough Therapy designation. Even if we receive a designation that would allow for expedited review, we can provide no assurance that we will be able to obtain FDA approval sooner or at all;

 

•

if we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our drug candidates, if approved, we may be unable to generate any product revenue;

 

•

we have a novel technology with uncertain market acceptance if any of our product candidates are approved;

 

•

if we experience delays or difficulties in the enrollment and/or maintenance of patients in clinical trials, our clinical development activities could be delayed or otherwise adversely affected;

 

•

clinical drug development is a lengthy, expensive, and inherently uncertain process, and we may experience delays in completing, or ultimately be unable to successfully complete the clinical trials needed for regulatory approval;

 

•

the FDA, EMA and other comparable foreign regulatory authorities may not accept data from trials conducted in locations outside of their jurisdiction;

 

•

obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval of our product candidates in other jurisdictions;

 

•

if the market opportunity for any product candidate that we or our strategic partners develop is smaller than we believe, our revenue may be adversely affected and our business may suffer;

 

•

even if our product candidates receive regulatory approval, we will be subject to significant post marketing regulatory requirements and oversight;

 

•

FDA’s and other regulatory authorities’ policies may change, and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates;

 

4

•

the FDA and other regulatory agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses and failure to comply could subject us to enforcement action;

 

•

disruptions at the FDA and other government agencies caused by actions taken by the current U.S.

 

•

presidential administration or through legislative or judicial action, funding shortages or global health concerns could hinder their ability to hire and retain key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved or commercialized in a timely manner or at all, or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business;

 

•

we rely on key personnel;

 

•

we may not be able to successfully execute our business strategy;

 

•

we are in a highly competitive industry which is continuously evolving with technological changes;

 

•

our future success will depend on our ability to continually enhance and develop our product candidates;

 

•

we may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success;

 

•

changes in methods of product candidate manufacturing or formulation may result in additional costs or delay;

 

•

if we are unable to differentiate EP-104 from existing therapies or if the FDA or other applicable regulatory authorities approve additional, and potentially less costly, therapies that compete with EP-104, our ability to successfully commercialize EP-104GI or EP-104IAR would be adversely affected;

 

•

there is uncertainty regarding U.S. tariffs and support for existing treaty and trade relationships, including with Canada, and implementation of new legislative or regulatory policies by the U.S. government could impose additional costs on the Company, result in delayed timelines, or otherwise negatively impact the Company, which could have a material adverse impact on the Company’s business;

 

•

a variety of risks associated with potential international business relationships could materially adversely affect our business;

 

•

collaboration arrangements we may enter into in the future may not be successful;

 

•

provisions of any future debt instruments may restrict our ability to pursue our business strategies;

 

•

we may acquire businesses or products, or form strategic alliances in the future, and we may not realize the benefits of such acquisitions or alliances;

 

•

we have traditionally relied on key collaborations and grants;

 

•

we are subject to evolving global laws and regulations relating to privacy, data protection and information security, which may require us to incur substantial compliance costs, and any failure or perceived failure by us to comply with such laws and regulations may harm our business and operations;

 

•

our business and operations could suffer in the event of an actual or perceived information security incident such as a cybersecurity breach, system failure, or other compromise of our systems or those of a third-party or other contractor or vendor;

 

•

we may fail to manage our growth successfully, which may adversely impact our operating results;

 

•

guidelines and recommendations published by various organizations can reduce the use of products that we may commercialize;

 

•

we use hazardous chemicals and biological materials in our business. Any claims relating to improper handling, storage or disposal of these materials could be time consuming and costly;

 

•

if product liability lawsuits are brought against us, then we may incur substantial liabilities and may be required to limit commercialization of EP-104, if approved, for any indication, and any other future products;

 

•

our employees, independent contractors, principal investigators, consultants, commercial partners and vendors may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading, which could significantly harm our business;

 

•

we may be subject to securities litigation, which is expensive and could divert management attention;

 

•

our directors and executive officers may be affiliated with other biotech companies and may have conflicts of interest;

 

•

our business may be affected by macroeconomic conditions;

 

•

our business may be affected by global geopolitical risks;

 

•

we may be responsible for corruption and anti-bribery law violations;

 

•

we are subject to foreign exchange risks;

 

•

we are subject to taxation risks and changing rules by different tax authorities;

 

•

we are subject to a number of risks and hazards and may not be sufficiently insured for all of them;

 

•

we devote significant resources to regulatory compliance as a public entity;

 

•

changes in accounting standards from IFRS to U.S. GAAP can be difficult to predict and could adversely impact how we record and report our financial condition and results of operations;

 

•

if we are unable to develop and maintain effective disclosure controls and procedures and internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and may adversely affect our business, financial condition and results of operations;

 

5

•

our success depends on our ability to protect our intellectual property and our proprietary technologies;

 

•

if the scope of any patent protection we obtain is not sufficiently broad, or if we lose any of our patent protection, our ability to prevent our competitors from commercializing similar or identical product candidates would be adversely affected;

 

•

intellectual property rights do not necessarily address all potential threats to our competitive advantage;

 

•

our patent rights may prove to be an inadequate barrier to competition;

 

•

our commercial success depends significantly on our ability to operate without infringing the patents and other proprietary rights of third parties. Claims by third parties that we infringe their proprietary rights may result in liability for damages or prevent or delay our developmental and commercialization efforts;

 

•

we may not be successful in obtaining or maintaining necessary rights to our product candidates through acquisitions and in-licenses;

 

•

we may be involved in lawsuits to protect or enforce our patents or our future licensors’ patents, which could be expensive, time consuming, and unsuccessful. Further, our issued patents or our current or future licensors’ patents could be found invalid or unenforceable if challenged in court or before administrative bodies in the United States or abroad;

 

•

intellectual property litigation may lead to unfavorable publicity that harms our reputation and causes the market price of our Common Shares to decline;

 

•

derivation proceedings may be necessary to determine priority of inventions, and an unfavorable outcome may require us to cease using the related technology or to attempt to license rights from the prevailing party;

 

•

we may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent, which might adversely affect our ability to develop and market our products and product candidates;

 

•

changes in U.S. patent law, or laws in other countries, or their interpretation could diminish the value of patents in general, thereby impairing our ability to protect our product candidates;

 

•

we may be subject to claims challenging the inventorship or ownership of our patents, the patents we license, and other intellectual property;

 

•

patent terms may be inadequate to protect our competitive position on our product candidates, if approved, for an adequate amount of time;

 

•

we may not be able to protect or enforce our intellectual property rights throughout the world;

 

•

obtaining and maintaining our patent protection depends on compliance with various procedural, documentary submission, fee payment and other requirements imposed by regulations and governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements;

 

•

if our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected;

 

•

if we are unable to protect the confidentiality of our trade secrets, the value of the Company’s technology could be materially adversely affected, harming our business and competitive position;

 

•

we may be subject to claims that we or our employees, independent contractors, or consultants have wrongfully used or disclosed alleged confidential information or trade secrets;

 

•

we may be subject to claims that we have wrongfully hired an employee from a competitor or that we or our employees, independent contractors, or consultants have wrongfully used or disclosed alleged confidential information or trade secrets of their former employers;

 

•

we may be subject to claims challenging the inventorship of our patents and other intellectual property;

 

•

our rights to develop and commercialize the Company’s technology and product candidates may be subject, in part, to the terms and conditions of any future licenses granted to us by others;

 

•

if we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties or otherwise experience disruptions to our business relationships with our future licensors, we could lose license rights that are important to our business;

 

•

the patent protection and patent prosecution for some of our product candidates may be dependent on third parties;

 

•

coverage and reimbursement may be limited or unavailable in certain market segments for our product candidates, if approved, which could make it difficult for us to sell any product candidates or therapies, if approved, profitably;

 

•

our relationships with healthcare providers and physicians and third-party payors will be subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings;

 

•

our employees, independent contractors, consultants, commercial collaborators, principal investigators, CROs, suppliers and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements;

 

6

•

our research and development activities could be affected or delayed as a result of possible restrictions on animal testing;

 

•

ongoing healthcare legislative and regulatory reform measures may have a material adverse effect on our business and results of operations;

 

•

the market price of the Common Shares may be volatile;

 

•

investors may lose their entire investment;

 

•

we have no history of dividends;

 

•

our existing executive officers and directors own a significant percentage of Common Shares and may have a significant impact over matters submitted to our shareholders for approval;

 

•

future sales of Common Shares by our existing shareholders could cause our share price to decline;

 

•

we will need to raise additional financing in the future which may dilute our share capital;

 

•

if securities or industry analysts either do not publish research about us or publish inaccurate or unfavorable research about us, our business or our market, or if they adversely change their recommendations regarding our Common Shares, the trading price or trading volume of our Common Shares could decline;

 

•

the outstanding Preferred Shares, and any future issuance of preferred shares could make it difficult for another company to acquire us or could otherwise adversely affect holders of our Common Shares, which could depress the price of our Common Shares;

 

•

our constating documents permit us to issue an unlimited number of Common Shares without additional shareholder approval;

 

•

raising additional capital may cause dilution to our shareholders, restrict our operations or require us to relinquish rights to the Company’s technologies or product candidates;

 

•

we have warrants, Preferred Shares convertible into Common Shares, and shares of a subsidiary exchangeable for Common Shares outstanding, which in each case, if exercised, converted or exchanged, respectively, could cause dilution to existing shareholders;

 

•

our Common Shares may have limited liquidity;

 

•

we cannot assure you that an active market will develop for our Common Shares on the Nasdaq Capital Market (“Nasdaq”);

 

•

United States investors may not be able to obtain enforcement of civil liabilities against us;

 

•

as a foreign private issuer, we are subject to different U.S. securities laws and rules than a domestic U.S. issuer, which may limit the information publicly available to our U.S. shareholders;

 

•

we may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses to us;

 

•

U.S. holders of our shares may suffer adverse tax consequences if we are characterized as a passive foreign investment company; and

 

•

if a U.S. holder is treated as owning at least 10% of our Common Shares, such U.S. holder may be subject to adverse U.S. federal income tax consequences.

Such statements reflect our current views with respect to future events, are subject to risks and uncertainties and are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Eupraxia as of the date of such statements, are inherently subject to significant medical, scientific, business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause our actual results, performance or achievements to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements. In making the forward-looking statements included in this MD&A, the Company has made various material assumptions, including but not limited to (i) the Company’s ability to attract and retain skilled staff; (ii) future research and development plans for the Company proceeding substantially as currently envisioned; (iii) industry growth trends, including with respect to projected and actual industry sales; (iv) the Company’s ability to obtain positive results from the Company’s research and development activities, including clinical trials; (v) sufficient working capital and the Company’s ability to control costs and raise additional financing going forward; (vi) obtaining regulatory approvals and the potential benefits of our product candidates, if approved; (vii) general business and economic conditions; (viii) the Company’s ability to achieve profitability; (ix) the Company’s ability to successfully commercialize its current product candidates, if approved, enter into commercial partnerships and develop new products; (x) the availability of financing on reasonable terms; (xi) market competition; (xii) the products and technology offered by the Company’s competitors; (xiii) the Company’s ability to protect patents and proprietary rights; and (xiv) the availability and cost of personnel, materials and supplies.

 

7