Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-37619

EDESA BIOTECH, INC.

(Exact name of registrant as specified in its charter)

British Columbia, Canada		N/A
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
100 Spy Court, Markham, ON, Canada L3R 5H6		(289) 800-9600
(Address of principal executive offices and zip code)		(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Shares, without par value		EDSA		The Nasdaq Stock Market LLC

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. Yes ☒ No ☐

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). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-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-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of May 10, 2024, the registrant had 3,215,968 common shares issued and outstanding.

EDESA BIOTECH, INC.

QUARTERLY REPORT ON FORM 10-Q

Quarter Ended March 31, 2024

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		Page
PART I	FINANCIAL STATEMENTS

Item 1.	Financial Statements (Unaudited)	3
	Condensed Interim Consolidated Balance Sheets – March 31, 2024 and September 30, 2023	3
	Condensed Interim Consolidated Statements of Operations – Three and Six Months Ended March 31, 2024 and 2023	4
	Condensed Interim Consolidated Statements of Cash Flows – Six Months Ended March 31, 2024 and 2023	5
	Condensed Interim Consolidated Statements of Changes in Shareholders' Equity – Three and Six Months Ended March 31, 2024 and 2023	6
	Notes to Condensed Interim Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21

Item 4.	Controls and Procedures	21

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	22

Item 1A.	Risk Factors	22

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22

Item 3.	Defaults Upon Senior Securities	22

Item 4.	Mine Safety Disclosures	22

Item 5.	Other Information	22

Item 6.	Exhibits	23

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PART 1 – FINANCIAL INFORMATION

Item 1. Financial Statements

Edesa Biotech, Inc.

Condensed Interim Consolidated Balance Sheets

	March 31, 2024			September 30, 2023

Assets:

Current assets:
Cash and cash equivalents	$	2,799,631		$	5,361,397
Accounts and other receivable		1,112,320			626,543
Prepaid expenses and other current assets		330,267			448,912

Total current assets		4,242,218			6,436,852

Non-current assets:
Property and equipment, net		7,365			8,702
Long-term deposits		41,067			173,490
Intangible asset, net		2,129,434			2,180,020
Right-of-use assets		54,972			91,373

Total assets	$	6,475,056		$	8,890,437

Liabilities and shareholders' equity:

Current liabilities:
Accounts payable and accrued liabilities	$	2,092,580		$	1,747,150
Short-term right-of-use lease liabilities		58,143			74,714

Total current liabilities		2,150,723			1,821,864

Non-current liabilities:
Long-term right-of-use lease liabilities		-			19,773

Total liabilities		2,150,723			1,841,637

Commitments (Note 5)

Shareholders' equity:
Capital shares
Authorized unlimited common and preferred shares without par value
Issued and outstanding:
3,215,968 common shares (September 30, 2023 - 3,075,473)		47,136,168			46,643,151
Additional paid-in capital		13,373,318			13,039,265
Accumulated other comprehensive loss		(226,403	)		(214,648	)
Accumulated deficit		(55,958,750	)		(52,418,968	)

Total shareholders' equity		4,324,333			7,048,800

Total liabilities and shareholders' equity	$	6,475,056		$	8,890,437

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

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Edesa Biotech, Inc.

Condensed Interim Consolidated Statements of Operations

	Three Months Ended						Six Months Ended
	March 31, 2024			March 31, 2023			March 31, 2024			March 31, 2023

Expenses:
Research and development	$	1,176,337		$	1,458,190		$	1,880,795		$	2,815,528
General and administrative		1,044,137			952,391			2,197,108			1,973,358

Loss from operations		(2,220,474	)		(2,410,581	)		(4,077,903	)		(4,788,886	)

Other income (loss):
Reimbursement grant income		304,002			-			424,836			-
Interest income		43,193			85,718			104,159			135,147
Miscellaneous other income		14,766			-			14,766			-
Foreign exchange (loss)		(2,018	)		(8,686	)		(4,840	)		(14,627	)

		359,943			77,032			538,921			120,520

Loss before income taxes		(1,860,531	)		(2,333,549	)		(3,538,982	)		(4,668,366	)

Income tax expense		800			800			800			800

Net loss		(1,861,331	)		(2,334,349	)		(3,539,782	)		(4,669,166	)

Exchange differences on translation		(11,183	)		8,643			(11,755	)		(16,424	)

Net comprehensive loss	$	(1,872,514	)	$	(2,325,706	)	$	(3,551,537	)	$	(4,685,590	)

Weighted average number of common shares		3,192,688			2,853,331			3,160,179			2,738,848

Loss per common share - basic and diluted	$	(0.58	)	$	(0.82	)	$	(1.12	)	$	(1.70	)

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

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Edesa Biotech, Inc.

Condensed Interim Consolidated Statements of Cash Flows

	Six Months Ended
	March 31, 2024			March 31, 2023

Cash flows from operating activities:
Net loss	$	(3,539,782	)	$	(4,669,166	)
Adjustments for:
Depreciation and amortization		90,428			54,502
Share-based compensation		334,053			621,221
Gain on loan forgiveness		(14,766	)		-
Changes in working capital items:
Accounts and other receivable		(484,110	)		1,137,833
Prepaid expenses and other current assets		237,967			140,852
Accounts payable and accrued liabilities		309,523			(648,482	)

Net cash used in operating activities		(3,066,687	)		(3,363,240	)

Cash flows from financing activities:
Proceeds from issuance of common shares and warrants		590,996			3,027,496
Proceeds from exercise of warrants		-			770,531
Payments for issuance costs of common shares and warrants		(43,993	)		(121,612	)
Repayment of debt		(29,532	)		-

Net cash provided by financing activities		517,441			3,676,415

Effect of exchange rate changes on cash and cash equivalents		(12,520	)		67,158

Net change in cash and cash equivalents		(2,561,766	)		380,333
Cash and cash equivalents, beginning of period		5,361,397			7,090,919

Cash and cash equivalents, end of period	$	2,799,631		$	7,471,252

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

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Edesa Biotech, Inc.

Condensed Interim Consolidated Statements of Changes in Shareholders' Equity

	Shares #		Common Shares			Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Shareholders' Equity
Three Months Ended March 31, 2024
Balance - December 31, 2023		3,164,722	$	46,933,895		$	13,223,622		$	(215,220	)	$	(54,097,419	)	$	5,844,878

Issuance of common shares		51,246		275,765			-			-			-			275,765
Issuance costs		-		(73,492	)		-			-			-			(73,492	)
Share-based compensation		-		-			149,696			-			-			149,696
Net loss and comprehensive loss		-		-			-			(11,183	)		(1,861,331	)		(1,872,514	)

Balance - March 31, 2024		3,215,968	$	47,136,168		$	13,373,318		$	(226,403	)	$	(55,958,750	)	$	4,324,333

Three Months Ended March 31, 2023
Balance - December 31, 2022		2,764,757	$	44,473,823		$	12,417,672		$	(238,669	)	$	(46,379,370	)	$	10,273,456

Issuance of common shares upon exercise of warrants		100,760		994,618			(224,087	)		-			-			770,531
Issuance costs		-		(14,708	)		8,817			-			-			(5,891	)
Share-based compensation		-		-			287,547			-			-			287,547
Net loss and comprehensive loss		-		-			-			8,643			(2,334,349	)		(2,325,706	)

Balance - March 31, 2023		2,865,517	$	45,453,733		$	12,489,949		$	(230,026	)	$	(48,713,719	)	$	8,999,937

Six Months Ended March 31, 2024
Balance - September 30, 2023		3,075,473	$	46,643,151		$	13,039,265		$	(214,648	)	$	(52,418,968	)	$	7,048,800

Issuance of common shares		140,495		590,966			-			-			-			590,966
Issuance costs		-		(97,949	)		-			-			-			(97,949	)
Share-based compensation		-		-			334,053			-			-			334,053
Net loss and comprehensive loss		-		-			-			(11,755	)		(3,539,782	)		(3,551,537	)

Balance - March 31, 2024		3,215,968	$	47,136,168		$	13,373,318		$	(226,403	)	$	(55,958,750	)	$	4,324,333

Six Months Ended March 31, 2023
Balance - September 30, 2022		2,380,280	$	42,473,099		$	11,176,345		$	(213,602	)	$	(44,044,553	)	$	9,391,289

Issuance of common shares and warrants in equity offering		384,477		2,082,669			944,827			-			-			3,027,496
Issuance of common shares upon exercise of warrants		100,760		994,618			(224,087	)		-			-			770,531
Issuance costs		-		(96,653	)		(28,357	)		-			-			(125,010	)
Share-based compensation		-		-			621,221			-			-			621,221
Net loss and comprehensive loss		-		-			-			(16,424	)		(4,669,166	)		(4,685,590	)

Balance - March 31, 2023		2,865,517	$	45,453,733		$	12,489,949		$	(230,026	)	$	(48,713,719	)	$	8,999,937

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

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Edesa Biotech, Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Unaudited)

1. Nature of Operations

Edesa Biotech, Inc. (the Company or Edesa) is a biopharmaceutical company focused on acquiring, developing and commercializing clinical stage drugs for inflammatory and immune-related diseases with clear unmet medical needs. The Company is organized under the laws of British Columbia, Canada and is headquartered in Markham, Ontario. It operates under its wholly owned subsidiaries, Edesa Biotech Research, Inc., an Ontario, Canada corporation, and Edesa Biotech USA, Inc., a California, USA corporation.

The Company’s common shares trade on The Nasdaq Capital Market in the United States under the symbol “EDSA”.

2. Basis of Presentation

The accompanying unaudited condensed interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q. They do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with U.S. GAAP for complete financial statements. These unaudited condensed interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended September 30, 2023, which was filed with the Securities and Exchange Commission (SEC) on December 15, 2023.

The accompanying unaudited condensed interim consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated on consolidation. All adjustments (consisting of normal recurring adjustments and accruals) considered necessary for a fair presentation of the results of operations for the periods presented have been included in the interim periods. Operating results for the three and six months ended March 31, 2024 are not necessarily indicative of the results that may be expected for other interim periods or the fiscal year ending September 30, 2024.

Use of estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period or year. Actual results could differ from those estimates. Areas where significant judgment is involved in making estimates are valuation of accounts and other receivable; valuation and useful lives of property and equipment; intangible assets; right-of-use assets; deferred income taxes; the determination of fair value of share-based compensation; the determination of fair value of warrants in order to allocate proceeds from equity issuances; and forecasting future cash flows for assessing the going concern assumption.

Functional and reporting currencies

The consolidated financial statements of the Company are presented in U.S. dollars, unless otherwise stated, which is the Company’s and its wholly owned subsidiary’s, Edesa Biotech USA, Inc., functional currency. The functional currency of the Company’s wholly owned subsidiary, Edesa Biotech Research, Inc., as determined by management, is Canadian dollars.

3. Intangible Assets

Acquired license

In April 2020, the Company entered into a license agreement with a pharmaceutical development company to obtain exclusive world-wide rights to know-how, patents and data relating to certain monoclonal antibodies (the Constructs), including sublicensing rights. Unless earlier terminated, the term of the license agreement will remain in effect for 25 years from the date of first commercial sale of licensed products containing the Constructs. Subsequently, the license agreement will automatically renew for five-year periods unless either party terminates the agreement in accordance with its terms.

Under the license agreement, the Company is exclusively responsible, at its expense, for the research, development, manufacture, marketing, distribution and commercialization of the Constructs and licensed products and to obtain all necessary licenses and rights. The Company is required to use commercially reasonable efforts to develop and commercialize the Constructs in accordance with the terms of a development plan established by the parties.

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The Company has determined that the license has multiple alternative future uses in research and development projects and sublicensing in other countries or for other disease indications. The value of the acquired license is recorded as an intangible asset with amortization over the estimated useful life of 25 years and evaluation for impairment at the end of each reporting period.

The required upfront license payment of $2.5 million was paid by issuance of Series A-1 Convertible Preferred Shares, which have been fully converted to common shares. The value of the license includes acquisition legal costs. See Note 5 for license commitments.

Intangible assets, net consisted of the following:

	March 31, 2024			September 30, 2023

The Constructs	$	2,529,483		$	2,529,483

Less: accumulated amortization		(400,049	)		(349,463	)

Total intangible assets, net	$	2,129,434		$	2,180,020

Amortization expense amounted to $0.03 million for each of the three months ended March 31, 2024 and 2023 and $0.05 million for each of the six months ended March 31, 2024 and 2023.

Total estimated future amortization of intangible assets for each fiscal year is as follows:

Year Ending
September 30, 2024	$	50,586
September 30, 2025		101,172
September 30, 2026		101,172
September 30, 2027		101,172
September 30, 2028		101,172
Thereafter		1,674,160

	$	2,129,434

4. Right-of-Use Lease with Related Party

The Company leases a facility used for executive offices from a related company. The original lease expired in December 2022 and the Company executed a two-year extension through December 2024.

The components of right-of-use lease cost were as follows:

	Three Months Ended				Six Months Ended
	March 31, 2024		March 31, 2023		March 31, 2024		March 31, 2023
Right-of-use lease cost, included in general and administrative on the Statements of Operations	$	19,793	$	21,443	$	39,909	$	40,342

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Lease terms and discount rates were as follows:

March 31,

2024

September 30,

2023

Remaining lease term (months):

Estimated incremental borrowing rate:

9.2

9.2

The future minimum lease payments under right-of-use leases at March 31, 2024 were as follows:

Year Ending
September 30, 2024	$	39,957
September 30, 2025		19,978

Total lease payments		59,935
Less imputed interest		1,792

Present value of right-of-use lease liabilities		58,143
Present value included in current liabilities		58,143

Present value included in long-term liabilities	$	-

Cash flow information was as follows:

	Six Months Ended
	March 31, 2024		March 31, 2023
Cash paid for amounts included in the measurement of right-of-use lease liabilities, included in accounts payable and accrued liabilities on the Statements of Cash Flow.	$	39,957	$	38,907

5. Commitments

Research and other commitments

The Company has commitments for contracted research organizations who perform clinical trials for the Company’s ongoing clinical studies and other service providers. Approximate aggregate future contractual payments at March 31, 2024 are as follows:

Year Ending

September 30, 2024	$	433,000
September 30, 2025		49,000
September 30, 2026		36,000
September 30, 2027		42,000
September 30, 2028		-

	$	560,000

License and royalty commitments

In April 2020, through its Ontario subsidiary, the Company entered into a license agreement with a third party to obtain exclusive world-wide rights to the Constructs, including sublicensing rights. An intangible asset for the acquired license has been recognized. See Note 3 for intangible assets. Under the license agreement, the Company is committed to payments of up to an aggregate amount of $356 million contingent upon meeting certain milestones outlined in the license agreement, primarily relating to future potential commercial approval and sales milestones. The Company also has a commitment to pay royalties based on any net sales of products containing the Constructs in the countries where the Company directly commercializes the products containing the Constructs and a percentage of any sublicensing revenue received by the Company and its affiliates in the countries where it does not directly commercialize the products containing the Constructs. No milestone, royalty or sublicensing payments were made to the third party during the three and six months ended March 31, 2024 and 2023.

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In 2016, through its Ontario subsidiary, the Company entered into a license agreement with a third party to obtain exclusive rights to certain know-how, patents and data relating to a pharmaceutical product. The Company will use the exclusive rights to develop the product for therapeutic, prophylactic and diagnostic uses in topical dermal applications and anorectal applications. No intangible assets have been recognized under the license agreement with the third party. Under the license agreement, the Company is committed to payments of various amounts to the third party upon meeting certain milestones outlined in the license agreement, up to an aggregate amount of $18.4 million. Upon divestiture of substantially all of the assets of the Company, the Company shall pay the third party a percentage of the valuation of the licensed technology sold as determined by an external objective expert. The Company also has a commitment to pay the third party a royalty based on net sales of the product in countries where the Company, or an affiliate, directly commercializes the product and a percentage of sublicensing revenue received by the Company and its affiliates in the countries where it does not directly commercialize the product. A milestone payment of $0.06 million and $0.12 million were to the third party during the three and six months ended March 31, 2023 and no milestone payments were made during the three and six months ended March 31, 2024.

In March 2021, through its Ontario subsidiary, the Company entered into a license agreement with the inventor of the same pharmaceutical product to acquire global rights for all fields of use beyond those named under the 2016 license agreement. The Company is committed to remaining payments of up to an aggregate amount of $68.9 million, primarily relating to future potential commercial approval and sales milestones. In addition, if the Company fails to file an investigational new drug application or foreign equivalent (IND) for the product within a certain period of time following the date of the agreement, the Company is required to remit to the inventor a fixed license fee quarterly as long as the requirement to file an IND remains unfulfilled. For the three and six months ended March 31, 2024, the Company recorded an expense of $25,000 and $50,000 as a result of meeting milestones outlined in the 2021 license agreement. There were no milestones achieved in the three and six months ended March 31, 2023 and no expenses were incurred.

6. Capital Shares

Equity offerings

On November 2, 2022, the Company completed a private placement of units consisting of 384,475 common shares, Class A warrants to purchase up to an aggregate of 192,248 common shares and Class B warrants to purchase up to an aggregate of 192,248 common shares. Net proceeds from the offering were $2.9 million, which were allocated between the relative fair values of the common shares (using a fair value of $2.7 million) and the common share purchase warrants (using a total fair value of $1.2 million). The warrants became exercisable December 23, 2022. The Class A warrants have an exercise price of $10.50 per share and will expire on December 23, 2025. The Class B warrants have an exercise price of $7.00 per share and expired on December 23, 2023. The warrants are considered contracts on the Company’s own shares and are classified as equity.

Equity distribution agreement

On March 27, 2023, the Company entered into an equity distribution agreement with Canaccord, pursuant to which the Company may offer and sell, from time to time, common shares through an at-the-market equity offering program for up to $20 million in gross proceeds, subject to certain offering limitations that currently allow the Company to offer and sell common shares having an aggregate gross sales price of up to $8.4 million. The Company has no obligation to sell any of the common shares and may at any time suspend sales or terminate the equity distribution agreement in accordance with its terms. During the six months ended March 31, 2024, the Company sold a total of 140,495 common shares pursuant to the agreement for gross proceeds of approximately $0.5 million after deducting commissions and direct costs.

Black-Scholes option valuation model

The Company uses the Black-Scholes option valuation model to determine the fair value of share-based compensation for share options and compensation warrants granted and the fair value of warrants issued. Option valuation models require the input of highly subjective assumptions including the expected price volatility. The Company calculates expected volatility based on historical volatility of the Company’s share price. When there is insufficient data available, the Company uses a peer group that is publicly traded to calculate expected volatility. The Company adopted interest-free rates by reference to the U.S. treasury yield rates. The Company calculated the fair value of share options granted based on the expected life of 5 years considering expected forfeitures during the option term of 10 years. Expected life of warrants is based on warrant terms. The Company did not and is not expected to declare any dividends. Changes in the subjective input assumptions can materially affect the fair value estimates, and therefore the existing models do not necessarily provide a reliable single measure of the fair value of the Company’s warrants and share options.

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Warrants

A summary of the Company’s warrants activity is as follows:

	Number of Warrant Shares (#)			Weighted Average Exercise Price
Six Months Ended March 31, 2024
Balance - September 30, 2023		720,909		$	19.51

Expired		(110,122	)		7.00

Balance - March 31, 2024		610,787		$	21.76

Six Months Ended March 31, 2023
Balance - September 30, 2022		521,718		$	28.00

Issued		384,496			8.75
Exercised		(100,760	)		7.63

Balance - March 31, 2023		805,454		$	21.35

The weighted average contractual life remaining on the outstanding warrants at March 31, 2024 is 35 months.

The following table summarizes information about the warrants outstanding at March 31, 2024:

Number of Warrants (#)		Exercise Prices		Expiry Dates
	1,070	$	33.67	June 2024
	1,687	C$	22.40	January 2025
	173,614	$	10.50	December 2025
	15,627	$	56.00	February 2026
	27,399	$	31.94	March 2027
	391,390	$	24.64	September 2027
	610,787

The fair value of warrants granted during the six months ended March 31, 2023 was estimated using the Black-Scholes option valuation model using the following assumptions:

	Six Months Ended March 31, 2023
	Class A Warrants			Class B Warrants

Risk free interest rate		4.54	%		4.76	%
Expected life	3.14 years			1.14 years
Expected share price volatility		90.73	%		89.70	%
Expected dividend yield		0.00	%		0.00	%

Share options

The Company adopted an Equity Incentive Compensation Plan in 2019 (the 2019 Plan) administered by the independent members of the Board of Directors, which amended and restated prior plans. Options, restricted shares and restricted share units are eligible for grant under the 2019 Plan. The total number of shares available for issuance under the terms of the 2019 Plan is 575,737. The remaining number of shares available to grant at March 31, 2024 is 69,728.

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The Company’s 2019 Plan allows options to be granted to directors, officers, employees and certain external consultants and advisers. Under the 2019 Plan, the option term is not to exceed 10 years and the exercise price of each option is determined by the independent members of the Board of Directors.

Options have been granted under the 2019 Plan allowing the holders to purchase common shares of the Company as follows:

	Number of Options (#)			Weighted Average Exercise Price		Weighted Average Grant Date Fair Value
Six Months Ended March 31, 2024
Balance - September 30, 2023		420,615		$	25.60	$	18.84

Granted		500			4.10		3.10
Forfeited		(1,333	)		15.55		11.08
Expired		(106	)		596.82		596.82

Balance - March 31, 2024		419,676		$	25.47	$	18.70

Six Months Ended March 31, 2023
Balance - September 30, 2022		314,853		$	32.62	$	23.94

Granted		47,571			10.01		7.49
Expired		(34	)		2,129		2,129

Balance - March 31, 2023		362,390		$	29.40	$	21.63

During the three and six months ended March 31, 2024, the independent members of the Board of Directors granted 500 employee options and no director options. During the three and six months ended March 31, 2024 and 2023, there were no employee or director options granted. The options have a term of 10 years and an exercise price equal to the Nasdaq closing price on the grant date.

The weighted average contractual life remaining on the outstanding options at March 31, 2024 is 79 months.

The following table summarizes information about the options under the 2019 Plan outstanding and exercisable at March 31, 2024:

Number of Options (#)		Exercisable at March 31, 2024 (#)		Range of Exercise Prices		Expiry Dates
	391		391	$	246.96 - 596.82	June 2024 - Mar 2025
	42,348		42,348	$	15.12	May 2024 - Dec 2028
	46,285		46,285	$	22.12	May 2024 - Feb 2030
	56,722		56,722	$	52.08 - 56.49	May 2024 - Oct 2030
	93,304		93,012	$	36.75 - 40.18	Apr 2024 - Sep 2031
	68,381		53,171	$	20.58 - 25.97	Apr 2024 - Feb 2032
	112,245		41,943	$	4.10 - 10.01	Apr 2024 - Oct 2033
	419,676		333,872

The options exercisable at March 31, 2024 had a weighted average exercise price of $29.27, $7.00 intrinsic value and a weighted average remaining life of 72 months. There were 85,804 options at March 31, 2024 that had not vested with a weighted average exercise price of $10.70, no intrinsic value and a weighted average remaining life of 107 months.

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The fair value of options granted during the six months ended March 31, 2024 and 2023 was estimated using the Black-Scholes option valuation model using the following assumptions:

	Six Months Ended March 31, 2024			Six Months Ended March 31, 2023

Risk free interest rate		4.92	%	3.62% - 4.18%
Expected life	5 years			5 years
Expected share price volatility		97.26	%	95.3% - 97.34 %
Expected dividend yield		0.00	%		0.00	%

The Company recorded $0.1 million and $0.3 million of share-based compensation expenses for the three months ended March 31, 2024 and 2023, respectively and $0.3 million and $0.6 million for the six months ended March 31, 2024 and 2023.

As of March 31, 2024, the Company had approximately $0.2 million of unrecognized share-based compensation expense, which is expected to be recognized over a period of 30 months.

Restricted Share Units (RSU)

The Company’s 2019 Plan allows restricted share units (RSUs) to be granted to directors, officers, employees and certain external consultants and advisers. Under the 2019 Plan, the RSU term is not to exceed 10 years. The fair value is based on the 5-day VWAP of the Company’s common shares up to the date of grant. The initial grant of RSUs was in August 2023. There were no RSUs granted in the comparative period.

The following is a summary of changes in the status of RSUs from October 1, 2023 through March 31, 2024:

	Number of RSU (#)		Weighted Average Grant Date Fair Value
Six Months Ended March 31, 2024
Balance - September 30, 2023		33,045	$	5.60

Granted		8,651		4.77

Balance - March 31, 2024		41,696	$	5.43

The following table summarizes information about the RSUs under the 2019 Plan outstanding and exercisable at March 31, 2024:

Number of

RSU (#)

Expiry Date

Fully-vested RSUs

33,045

August 2033

8,651

January 2034 - March 2034

All RSUs that were granted vested immediately upon the grant date. The outstanding RSUs can be converted to common shares by the holder at any time prior to the expiry date. There is no future unrecorded compensation expense for the RSUs.

7. Government Contributions

Reimbursement grant income for the Company’s federal grant with the Canadian government’s SIF is recorded based on the claim period of eligible costs.

In February 2021, the Company entered into a multi-year contribution agreement (the 2021 SIF Agreement) with the Canadian Government’s Strategic Innovation Fund. Under the 2021 SIF Agreement, the Government of Canada committed up to C$14.1 million in nonrepayable funding which was intended to support research and development related to our EB05 clinical program. No further funding will be received from the 2021 SIF Agreement.

In October 2023, the Company entered into a multi-year contribution agreement (the 2023 SIF Agreement) with the Canadian Government’s Strategic Innovation Fund. Under the 2023 SIF Agreement, the Government of Canada committed up to C$23 million in partially repayable funding toward (i) conducting and completing the Company’s Phase 3 clinical study of its experimental drug EB05 in critical-care patients with Acute Respiratory Distress Syndrome (ARDS) caused by COVID-19 or other infectious agents, (ii) submitting EB05 for governmental approvals and manufacturing scale-up, following, and subject to, completing the Phase 3 study and (iii) conducting two non-clinical safety studies to assess the potential long-term impact of EB05 exposure (the Project). Of the C$23 million committed by SIF, up to C$5.8 million is not repayable by the Company. The remaining C$17.2 million is conditionally repayable starting in 2029 only if and when the Company earns gross revenue. The repayable portion would be payable over fifteen (15) years based on a percentage rate of the Company’s annual revenue growth. The maximum amount repayable under the Agreement is 1.4 times the original repayable amount. In addition, the Company is entitled to partial reimbursement of certain eligible expenses under the Agreement.

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Under the Agreement, the Company agreed to certain financial and non-financial covenants and other obligations in relation to the Project. Pursuant to the Agreement, certain customary events of default, such as the Company’s or Edesa Biotech Research’s breach of their covenants and obligations under the Agreement, their insolvency, winding up or dissolution, and other similar events, may permit the Government of Canada to declare an event of default under the Agreement. Upon an event of default, subject to applicable cure, the Government of Canada may exercise a number of remedies, including suspending or terminating funding under the Agreement, demanding repayment of funding previously received and/or terminating the Agreement.

The funding and any associated conditional repayments are not secured by any assets of Edesa Biotech Research or the Company.

The Agreement will expire on the later of December 31, 2042 or the date of the last repayment, unless earlier terminated, subject to certain provisions that extend three (3) years beyond the term or early termination of the Agreement.

Under the 2023 SIF Agreement the Company recorded grant income of $0.3 million and $0.4 million for the three and six months ended March 31, 2024. No grant income was recorded under the 2023 SIF Agreement for the three and six months ended March 31, 2023.

8. Financial Instruments

(a) Fair values

The Company uses the fair value measurement framework for valuing financial assets and liabilities measured on a recurring basis in situations where other accounting pronouncements either permit or require fair value measurements.

The Company follows the fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs are inputs that reflect assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

There are three levels of inputs that may be used to measure fair value:

	·	Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
	·	Level 2 – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets and liabilities in markets that are not active.
	·	Level 3 – Unobservable inputs for the asset or liability that are supported by little or no market activity.

The carrying value of certain financial instruments such as cash and cash equivalents, accounts and other receivable, accounts payable and accrued liabilities approximates fair value due to the short-term nature of such instruments.

(b) Interest rate and credit risk

Interest rate risk is the risk that the value of a financial instrument might be adversely affected by a change in interest rates. The Company does not believe that the results of operations or cash flows would be affected to any significant degree by a significant change in market interest rates, relative to interest rates on cash and cash equivalents due to the short-term nature of these balances.

The Company is also exposed to credit risk at period end from the carrying value of its cash and cash equivalents and accounts and other receivable. The Company manages this risk by maintaining bank accounts with a Canadian Chartered Bank and a U.S. bank believed to be credit worthy and money market mutual funds of U.S. government securities. The Company’s cash is not subject to any external restrictions. The Company assesses the collectability of accounts receivable through a review of the current aging and terms, as well as an analysis of historical collection rates, general economic conditions and credit status of government agencies. Credit risk for the reimbursement grant and HST refunds receivable are not considered significant since amounts are due from the Canadian government’s SIF and the Canada Revenue Agency.

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(c) Foreign exchange risk

The Company and its subsidiary have balances in Canadian dollars that give rise to exposure to foreign exchange (FX) risk relating to the impact of translating certain non-U.S. dollar balance sheet accounts as these statements are presented in U.S. dollars. A strengthening U.S. dollar will lead to a FX loss while a weakening U.S. dollar will lead to a FX gain. The Company has not entered into any agreements or purchased any instruments to hedge possible currency risks. At March 31, 2024, the Company and its Canadian subsidiary had assets denominated in Canadian dollars of approximately C$1.9 million and the U.S. dollar exchange rate at this date was equal to 1.3545 Canadian dollars. Based on the exposure at March 31, 2024, a 10% annual change in the Canadian/U.S. exchange rate would impact the Company’s loss and other comprehensive loss by approximately $0.1 million.

(d) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty raising liquid funds to meet commitments as they fall due. In meeting its liquidity requirements, the Company closely monitors its forecasted cash requirements with expected cash drawdown.

9. Loss per Share

The Company had securities outstanding which could potentially dilute basic earnings per share in the future but were excluded from the computation of diluted loss per share in the periods presented, as their effect would have been anti-dilutive.

10. Related Party Transactions

During the three and six months ended March 31, 2024 and 2023, the Company paid cash of $20,000 and $40,000, respectively, for a ROU lease from a company controlled by the Company’s CEO. These transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by both parties. On December 31, 2022, the Company executed a two-year lease extension through December 31, 2024 in accordance with the terms of the original lease agreement. Rent of approximately $7,000 was payable at March 31, 2024. There was no rent payable at March 31, 2023.

In October 2023, we entered into $10.0 million revolving credit agreement with Pardeep Nijhawan Medicine Professional Corporation, an entity controlled by Dr. Pardeep Nijhawan, MD, our Chief Executive Officer and Secretary and member of our board of directors (Credit Agreement), providing an unsecured revolving credit facility, with a credit limit of $3.5 million (Credit Limit) which was available immediately. The line of credit bears interest at the Canadian Imperial Bank of Commerce US Base-Interest Rate plus 3% per annum and has a maturity date of March 31, 2026, unless terminated earlier by either party with 90 days’ notice. Advances under the line of credit are tied to a borrowing base (Borrowing Base) consisting of eligible grant receivables from SIF, future potential license fee receivables and any other accounts receivable. At no time shall the aggregate principal amount of all advances outstanding exceed the lesser of (i) the Credit Limit and (ii) an amount equal to 85% of the Borrowing Base. The Company has not drawn any funds from the Credit Agreement. During the three and six months ended March 31, 2024 the Company incurred a standby charge of $13,000 and $25,000. There was no standby charge in the three and six months ended March 31, 2023.

11. Subsequent Events

Subsequent to the quarter, we collected the receivable from 2023 SIF Agreement for $0.7 million from Canadian government.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following management’s discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed interim consolidated financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q as of March 31, 2024 and our audited consolidated financial statements for the year ended September 30, 2023 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission, or the SEC, on December 15, 2023.

This Quarterly Report on Form 10-Q contains forward-looking statements. When used in this report, the words “expects,” “anticipates,” “suggests,” “believes,” “intends,” “estimates,” “plans,” “projects,” “continue,” “ongoing,” “potential,” “expect,” “predict,” “believe,” “intend,” “may,” “will,” “should,” “could,” “would” and similar expressions are intended to identify forward-looking statements. You should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including the risks described in our Annual Report on Form 10-K for the year ended September 30, 2023 and other reports we file with the Securities and Exchange Commission. Although we believe the expectations reflected in the forward-looking statements are reasonable, they relate only to events as of the date on which the statements are made. We do not intend to update any of the forward-looking statements after the date of this report to conform these statements to actual results or to changes in our expectations, except as required by law.

The discussion and analysis of our financial condition and results of operations are based on our unaudited condensed interim consolidated financial statements for the three months ended March 31, 2024 and March 31, 2023, and for the six months ended March 31, 2024 and 2023 included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which we have prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate such estimates and judgments, including those described in greater detail below. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties, and other factors, which may be beyond our control, and which may cause our actual results, performance, or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as “may,” “can,” “anticipate,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “seek,” “estimate,” “continue,” “plan,” “point to,” “project,” “predict,” “could,” “intend,” “target,” “potential” and other similar words and expressions of the future.

There are a number of important factors that could cause the actual results to differ materially from those expressed in any forward-looking statement made by us. These factors include, but are not limited to:

	·	our ability to obtain funding for our operations;
	·	our estimates regarding our expenses, revenues, anticipated capital requirements and our needs for additional financing;
	·	the timing of the commencement, progress and receipt of data from any of our preclinical and clinical trials;
	·	the expected results of any preclinical or clinical trial and the impact on the likelihood or timing of any regulatory approval;
	·	the therapeutic benefits, effectiveness and safety of our product candidates;
	·	the timing or likelihood of regulatory filings and approvals;
	·	changes in our strategy or development plans;
	·	the volatility of our common share price;
	·	the rate and degree of market acceptance and clinical utility of any future products;
	·	the effect of competition;
	·	our ability to protect our intellectual property as well as comply with the terms of license agreements with third parties;
	·	our ability to identify, develop and commercialize additional products or product candidates;
	·	reliance on key personnel;
	·	general changes in economic or business conditions; and
	·	other risks and uncertainties, including those listed under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended September 30, 2023

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Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. You should refer to the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended September 30, 2023, filed with the SEC, on December 15, 2023, for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. We operate in an evolving environment and new risk factors and uncertainties may emerge from time to time. It is not possible for management to predict all risk factors and uncertainties. As a result of these factors, we cannot assure you that the forward-looking statements in this report will prove to be accurate. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise. You should review the factors and risks and other information we describe in the reports we will file from time to time with the SEC.

Overview

We are a biopharmaceutical company developing innovative ways to treat inflammatory and immune-related diseases.

Our approach is to acquire, develop and commercialize drug candidates based on mechanisms of action that have demonstrated proof-of-concept in human subjects. We prioritize our efforts on disease indications where there is compelling scientific rationale, no approved therapies or where there are unmet medical needs, and where there are large addressable market opportunities, among other factors. We have multiple late-stage product candidates in our development pipeline.

Our most advanced drug candidate is EB05 (paridiprubart). EB05 represents a new class of emerging therapies called Host-Directed Therapeutics (HDTs) that are designed to modulate the body’s own immune response when confronted with infectious diseases or even chemical agents. Importantly, these therapies are designed to work across multiple infectious diseases and threats, and could be stockpiled preemptively ahead of outbreaks. Because they are threat agnostic, HDTs like paridiprubart have the potential to become standard of care in Intensive Care Units (ICUs) and critical countermeasures for both pandemic preparedness and biodefense. We are currently evaluating EB05 as a potential treatment for Acute Respiratory Distress Syndrome (ARDS), a life-threatening form of respiratory failure. Recruitment in a Phase 3 study is ongoing.

In addition to EB05, we are developing product candidates for a number of chronic inflammatory and dermatological conditions. We intend to file an investigational new drug application (IND) with the U.S. Food and Drug Administration (FDA) for a future Phase 2 study of paridiprubart as a potential treatment for patients with progressive pulmonary fibrosis, a serious chronic disease that causes lung inflammation and scarring. For our EB06 monoclonal candidate, we have received regulatory approval by Health Canada to conduct a future Phase 2 study in patients with moderate to severe nonsegmental vitiligo, a common autoimmune disorder that causes skin to lose its color in patches. We plan to seek regulatory approval for this vitiligo study in the U.S. as well. In addition, we are developing an sPLA2 inhibitor, EB01 (daniluromer), as a topical treatment for chronic Allergic Contact Dermatitis (ACD), a common occupational skin condition. We intend to seek strategic arrangements to further develop and/or monetize this late-stage clinical asset, following favorable Phase 2b results of 1.0% EB01 cream.

Recent Developments

Phase 3 Clinical Study of EB05

During the quarter, we began transitioning the day-to-day management of our ongoing EB05 trial to a new clinical research organization (CRO). We believe that the change will provide us access to more powerful analytical tools, expanded recruitment capabilities, greater visibility of enrollment trends, and a quicker turnaround of trial results.

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Significant Accounting Policies and Estimates

See Note 2 to our financial statements included in our Annual Report on Form 10-K for the year ended September 30, 2023 for a discussion of our significant accounting policies and estimates. There have been no material changes to such significant accounting policies or estimates.

Results of Operations

Comparison of the Three Months Ended March 31, 2024 and 2023

Total operating expenses decreased by $0.2 million to $2.2 million for the three months ended March 31, 2024 compared to $2.4 million for the same period last year:

	·	Research and development (R&D) expenses decreased by $0.3 million to $1.2 million for the three months ended March 31, 2024 compared to $1.5 million for the same period last year primarily due to decreased external research expenses related to our completed EB01 phase 2 study and a reduction in noncash share-based compensation, partially offset by an increase in expenses for our ongoing EB05 phase 3 clinical study. Our R&D expenses consist primarily of employee-related expenses, including salaries, benefits, taxes, travel, and share-based compensation expense for personnel in R&D functions; expenses related to process development and production of product candidates paid to contract manufacturing organizations, including the cost of acquiring, developing, and manufacturing research material; costs associated with clinical activities, including expenses for contract research organizations; and clinical trials and activities related to regulatory filings for our product candidates, including regulatory consultants.

	·	General and administrative (G&A) expenses increased by $0.1 million to $1.0 million for the three months ended March 31, 2024 compared to $0.9 million for the same period last year primarily due to increased fees for professional services, partially offset by a decrease in noncash share-based compensation. Our G&A expenses consist primarily of salaries and related costs for our employees in administrative, executive and finance functions. G&A expenses also include professional fees for legal, accounting, audit, tax and consulting services, insurance, office, and travel expenses.

Total other income increased by $283,000 to $360,000 for the three months ended March 31, 2024 compared to $77,000 for the same period last year and was composed of the following:

	·	Grant income increased by $0.3 million to $0.3 million for the three months ended March 31, 2024. There was no grant income in the comparative period. The increase is related to the grant income associated with the activities under the 2023 SIF Agreement.

	·	Interest income decreased by $43,000 to $43,000 for the three months ended March 31, 2024 compared to $86,000 for the same period last year primarily due to lower cash balances.

	·	Miscellaneous other income was $15,000 for the three months ended March 31, 2024 related to loan forgiveness on a Canada Emergeny Business Account (CEBA) loan that was repaid in the quarter.

	·	Foreign exchange loss was $2,000 for the three months ended March 31, 2024 compared to a loss of $9,000 for the three months ended March 31, 2023.

For the three months ended March 31, 2024, our net loss was $1.9 million, or $0.58 per common share, compared to a net loss of $2.3 million, or $0.82 per common share for the three months ended March 31, 2023.

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Comparison of the Six Months Ended March 31, 2024 and 2023

Total operating expenses decreased by $0.7 million to $4.1 million for the six months ended March 31, 2024 compared to $4.8 million for the same period last year:

	·	R&D expenses decreased by $0.9 million to $1.9 million for the six months ended March 31, 2024 compared to $2.8 million for the same period last year primarily due to decreased external research expenses related to our completed EB01 phase 2 study and a decrease in non-cash share-based compensation and labor costs, partially offset by an increase in expenses for our ongoing EB05 phase 3 clinical study. Our R&D expenses consist primarily of employee-related expenses, including salaries, benefits, taxes, travel, and share-based compensation expense for personnel in R&D functions; expenses related to process development and production of product candidates paid to contract manufacturing organizations, including the cost of acquiring, developing, and manufacturing research material; costs associated with clinical activities, including expenses for contract research organizations; and clinical trials and activities related to regulatory filings for our product candidates, including regulatory consultants.

	·	G&A expenses increased by $0.2 million to $2.2 million for the six months ended March 31, 2024 compared to $2.0 million for the same period last year primarily due to increased fees for professional services, partially offset by a decrease in non-cash share-based compensation. Our G&A expenses consist primarily of salaries and related costs for our employees in administrative, executive and finance functions. G&A expenses also include professional fees for legal, accounting, audit, tax and consulting services, insurance, office, and travel expenses.

Total other income increased by $0.4 million to $0.5 million for the six months ended March 31, 2024 compared to $0.1 million for the same period last year and was composed of the following:

	·	Grant income increased by $0.4 million to $0.4 million for the six months ended March 31, 2024. There was no grant income in the comparative period. The increase is related to the grant income associated with the activities under the 2023 SIF Agreement.

	·	Interest income decreased by $31,000 to $104,000 for the six months ended March 31, 2024 compared to $135,000 for the same period last year primarily due to a decrease in cash balances.

	·	Miscellaneous other income was $15,000 for the six months ended March 31, 2024 related to loan forgiveness on the CEBA loan that was repaid in the quarter.

	·	Foreign exchange loss was $4,800 for the six months ended March 31, 2024 compared to a loss of $14,600 for the six months ended March 31, 2023.

For the six months ended March 31, 2024, our net loss was $3.5 million, or $1.12 per common share, compared to a net loss of $4.7 million, or $1.70 per common share for the six months ended March 31, 2023.

Capital Expenditures

Our capital expenditures primarily consist of computer and office equipment. There were no significant capital expenditures for the three and six months ended March 31, 2024 and 2023.

Liquidity and Capital Resources

As a clinical-stage company we have not generated significant revenue, and we expect to incur operating losses as we continue our efforts to acquire, develop, seek regulatory approval for and commercialize product candidates and execute on our strategic initiatives. Our operations have historically been funded through issuances of common shares, exercises of common share purchase warrants, convertible preferred shares, convertible loans, government grants and tax incentives.

Our primary use of cash is to fund our operating expenses, which consist of R&D and G&A expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in accounts payable and accrued expenses. Net cash used in operating activities was $3.1 million and $3.4 million for the six months ended March 31, 2024 and 2023, respectively. We incurred net losses of $3.5 million and $4.7 million for the six months ended March 31, 2024 and 2023.

In October 2023, we entered into the 2023 SIF Agreement with the Canadian Government’s SIF. Under the 2023 SIF Agreement, the Government of Canada committed up to C$23 million in partially repayable funding. Of the C$23 million committed by SIF, up to C$5.8 million is not repayable by us. The remaining C$17.2 million is conditionally repayable starting in 2029 only if and when we earn gross revenue. In February 2021, we entered into the 2021 SIF Agreement, pursuant to which we were eligible to receive cash reimbursements up to C$14.1 million in the aggregate for certain R&D expenses related to our EB05 clinical development program. All potential funding available under the 2021 SIF Agreement has been received. For the three and six months ended March 31, 2024 we recorded grant income of $0.3 million and $0.4 million respectively, related to the 2023 SIF Agreement. There was no grant income recognized in the comparative periods.

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In October 2023, we entered into $10.0 million revolving credit agreement with Pardeep Nijhawan Medicine Professional Corporation, an entity controlled by Dr. Pardeep Nijhawan, MD, our Chief Executive Officer and Secretary and member of our board of directors (Credit Agreement), providing an unsecured revolving credit facility, with a credit limit of $3.5 million (Credit Limit) which was available immediately. The line of credit bears interest at the Canadian Imperial Bank of Commerce US Base-Interest Rate plus 3% per annum and has a maturity date of March 31, 2026, unless terminated earlier by either party with 90 days’ notice. Advances under the line of credit are tied to a borrowing base (Borrowing Base) consisting of eligible grant receivables from SIF, future potential license fee receivables and any other accounts receivable. At no time shall the aggregate principal amount of all advances outstanding exceed the lesser of (i) the Credit Limit and (ii) an amount equal to 85% of the Borrowing Base. We have not drawn any funds from the Credit Agreement.

In August 2022, we filed a $150.0 million shelf registration statement. In March 2023, we entered into an equity distribution agreement with Canaccord, as sales agent, pursuant to which we may offer and sell, from time to time, common shares through an at-the-market equity offering program for up to $20 million in gross proceeds, subject to certain offering limitations that currently allow us to offer and sell common shares having an aggregate gross sales price of up to $8.4 million (Canaccord ATM). There was approximately $6.5 million of available capacity on the Canaccord ATM as of March 31, 2024. We have no obligation to sell any of the common shares and may at any time suspend sales or terminate the equity distribution agreement in accordance with its terms. For the three months ended March 31, 2024, we sold a total of 51,246 common shares pursuant to the agreement for net proceeds of $0.2 million after deducting commissions and costs of $70,000. For the six months ended March 31, 2024, we sold a total of 140,495 common shares pursuant to the agreement for net proceeds of $0.5 million after deducting commissions and costs of $100,000.

In November 2022, we completed a private placement of units consisting of 384,475 common shares, 12-month warrants to purchase up to an aggregate of 192,248 common shares and 3-year warrants to purchase up to an aggregate of 192,248 common shares. The gross proceeds from this offering were approximately $3.0 million, before offering expenses.

At March 31, 2024, we had an accumulated deficit of $56.0 million and working capital of $2.1 million, including $2.8 million in cash and cash equivalents. Subsequent to the quarter, we collected the receivable from 2023 SIF Agreement for $0.7 million from Canadian government. We plan to finance company operations over the course of the next twelve months with cash and cash equivalents on hand, including net proceeds from the Canaccord ATM, advances under the Credit Agreement and reimbursements of eligible R&D expenses under the 2023 SIF Agreement with the Canadian government. Management has flexibility to adjust this timeline by making changes to planned expenditures related to, among other factors, the size and timing of clinical trial expenditures and manufacturing campaigns, staffing levels, and the acquisition or in-licensing of new product candidates. To help fund our operations and meet our obligations in the future, we plan to seek additional financing through the sale of equity, government grants, debt financings or other capital sources, including potential future licensing, collaboration or similar arrangements with third parties or other strategic transactions. If we raise additional funds by issuing equity securities, our shareholders will experience dilution. Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Any debt financing or additional equity that we raise may contain terms, such as liquidation and other preferences that are not favorable to us or our existing shareholders. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish valuable rights to our technologies, future revenue streams or product candidates or to grant licenses on terms that may not be favorable to us. Adequate funding may not be available to us on acceptable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, scale back or discontinue the development of our product candidates.

We expect to continue to incur substantial additional operating losses for at least the next several years as we continue to develop our product candidates and seek marketing approval and, subject to obtaining such approval, the eventual commercialization of our product candidates. If we obtain marketing approval for our product candidates, we will incur significant sales, marketing and outsourced manufacturing expenses. In addition, we expect to incur additional expenses to add operational, financial and information systems and personnel, including personnel to support our planned product commercialization efforts. We also expect to incur significant costs to comply with corporate governance, internal controls and similar requirements applicable to us as a public company. To continue to grow our business over the longer term, we plan to commit substantial resources to research and development, clinical trials of our product candidates, and other operations and potential product acquisitions and in licensing. We have evaluated and expect to continue to evaluate a wide array of strategic transactions as part of our plan to acquire or in license and develop additional products and product candidates to augment our internal development pipeline. Strategic transaction opportunities that we may pursue could materially affect our liquidity and capital resources and may require us to incur additional indebtedness, seek equity capital or both. In addition, we may pursue development, acquisition or in licensing of approved or development products in new or existing therapeutic areas or continue the expansion of our existing operations. Accordingly, we expect to continue to opportunistically seek access to additional capital to license or acquire additional products, product candidates or companies to expand our operations, or for general corporate purposes. Strategic transactions may require us to raise additional capital through one or more public or private debt or equity financings or could be structured as a collaboration or partnering arrangement. We have no arrangements, agreements, or understandings in place at the present time to enter into any acquisition, in licensing or similar strategic business transaction.

Table of Contents

Cash Flows

Net cash used in operating activities

Net cash used in operating activities was $3.1 million for the six months ended March 31, 2024 compared to $3.4 million for the six months ended March 31, 2023, primarily due to a decrease in R&D expenses of $0.9 million, partially offset by a reduction in non-cash stock based compensation of $0.3 million and a reduction of $0.6 million in the recovery of working capital.

Net cash used in investing activities

There was no cash used in investing activities for the six months ended March 31, 2024 and 2023, respectively.

Net cash provided by financing activities

Net cash provided by financing activities was $0.5 million for the six months ended March 31, 2024 as compared to $3.7 million for the six months ended March 31, 2023. In the current period, we received proceeds of $0.6 million from the Canaccord ATM, partially offset by issuance costs of $44,000 and the repayment of debt of $29,500. In the comparative period, we received proceeds of $3.0 million from a private placement in November 2022, offset by issuance costs of $0.1 million for net proceeds of $2.9 million. We also received $0.8 million in proceeds from the exercise of warrants.

Research and Development

Our primary business is the development of innovative therapeutics for inflammatory and immune-related diseases with clear unmet medical needs. We focus our resources on R&D activities, including the conduct of clinical studies and product development, and expense such costs as they are incurred. R&D expenses, which have historically varied based on the level of activity in our clinical programs, are significantly influenced by study initiation expenses and patient recruitment rates, and as a result are expected to continue to fluctuate, sometimes substantially. Our R&D expenses were $1.2 million and $1.9 million for the three and six months ended March 31, 2024 compared to $1.5 million and $2.8 million for the three and six months ended March 31, 2023. The decrease was due primarily to lower external research expenses related to our ongoing clinical studies.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company and are not required to provide disclosure under this item.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining disclosure controls and procedures to provide reasonable assurance that material information related to our Company, including our consolidated subsidiaries, is made known to senior management, including our Chief Executive Officer and the Chief Financial Officer, by others within those entities on a timely basis so that appropriate decisions can be made regarding public disclosure.

We carried out an evaluation, under the supervision and with the participation of our management, including our Principal Executive Officer and our Principal Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2024. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Our Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures as of March 31, 2024, were effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may be involved in legal proceedings, claims and litigation arising in the ordinary course of business. We are not currently a party to any material legal proceedings or claims outside the ordinary course of business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Item 1A. Risk Factors.

There have been no material changes to the risk factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended September 30, 2023, filed with the Securities and Exchange Commission on December 15, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None of the Company's directors and officers adopted, modified, or terminated a Rule 10b-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company's fiscal quarter ended March 31, 2024 (each as defined in Item 408 of Regulation S-K under the Securities Exchange Act of 1934, as amended).

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Item 6. Exhibits

EXHIBIT INDEX

Exhibit No.		Description

31.1		Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

31.2		Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32.1*		Certification of the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32.2*		Certification of the Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Label Linkbase Document

101.PRE		XBRL Taxonomy Presentation Linkbase Document

* The information in this exhibit is furnished and deemed not filed with the Securities and Exchange Commission for purposes of section 18 of the Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of Edesa Biotech, Inc. under the Securities Act of 1933, as amended, or the Exchange Act of 1934, as amended, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	EDESA BIOTECH, INC.

Date: May 10, 2024	/s/ Pardeep Nijhawan
	Pardeep Nijhawan, MD, Director, Chief Executive Officer and Corporate Secretary
	(Principal Executive Officer)

Date: May 10, 2024	/s/ Stephen Lemieux
	Stephen Lemieux, Chief Financial Officer
	(Principal Financial Officer)

nullnullnullnull

Cover - shares	6 Months Ended
Cover - shares	Mar. 31, 2024	May 10, 2024
Cover [Abstract]
Entity Registrant Name	EDESA BIOTECH, INC.
Entity Central Index Key	0001540159
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--09-30
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Mar. 31, 2024
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2024
Entity Common Stock Shares Outstanding		3,215,968
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	001-37619
Entity Incorporation State Country Code	Z4
Entity Address Address Line 1	100 Spy Court
Entity Address City Or Town	Markham
Entity Address State Or Province	ON
Entity Address Country	CA
Entity Address Postal Zip Code	L3R 5H6
City Area Code	289
Local Phone Number	800-9600
Security 12b Title	Common Shares, without par value
Trading Symbol	EDSA
Security Exchange Name	NASDAQ
Entity Interactive Data Current	Yes

Condensed Interim Consolidated Balance Sheets - USD ($)	Mar. 31, 2024	Sep. 30, 2023
Current assets:
Cash and cash equivalents	$ 2,799,631	$ 5,361,397
Accounts and other receivable	1,112,320	626,543
Prepaid expenses and other current assets	330,267	448,912
Total current assets	4,242,218	6,436,852
Non-current assets:
Property and equipment, net	7,365	8,702
Long-term deposits	41,067	173,490
Intangible asset, net	2,129,434	2,180,020
Right-of-use assets	54,972	91,373
Total assets	6,475,056	8,890,437
Current liabilities:
Accounts payable and accrued liabilities	2,092,580	1,747,150
Short-term right-of-use lease liabilities	58,143	74,714
Total current liabilities	2,150,723	1,821,864
Non-current liabilities:
Long-term right-of-use lease liabilities	0	19,773
Total liabilities	2,150,723	1,841,637
Shareholders' equity:
Capital shares Issued and outstanding: 3,215,968 common shares (September 30, 2023 - 3,075,473)	47,136,168	46,643,151
Additional paid-in capital	13,373,318	13,039,265
Accumulated other comprehensive loss	(226,403)	(214,648)
Accumulated deficit	(55,958,750)	(52,418,968)
Total shareholders' equity	4,324,333	7,048,800
Total liabilities and shareholders' equity	$ 6,475,056	$ 8,890,437

Condensed Interim Consolidated Balance Sheets (Parenthetical) - shares	Mar. 31, 2024	Sep. 30, 2023
Condensed Interim Consolidated Balance Sheets
Capital Shares, Issued	3,215,968	3,075,473
Capital Shares, Outstanding	3,215,968	3,075,473

Condensed Interim Consolidated Statements of Operations - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Mar. 31, 2024	Mar. 31, 2023
Expenses:
Research and development	$ 1,176,337	$ 1,458,190	$ 1,880,795	$ 2,815,528
General and administrative	1,044,137	952,391	2,197,108	1,973,358
Loss from operations	(2,220,474)	(2,410,581)	(4,077,903)	(4,788,886)
Other income (loss):
Reimbursement grant income	304,002	0	424,836	0
Interest income	43,193	85,718	104,159	135,147
Miscellaneous other income	14,766	0	14,766	0
Foreign exchange (loss)	(2,018)	(8,686)	(4,840)	(14,627)
Total other income (loss)	359,943	77,032	538,921	120,520
Loss before income taxes	(1,860,531)	(2,333,549)	(3,538,982)	(4,668,366)
Income tax expense	800	800	800	800
Net loss	(1,861,331)	(2,334,349)	(3,539,782)	(4,669,166)
Exchange differences on translation	(11,183)	8,643	(11,755)	(16,424)
Net comprehensive loss	$ (1,872,514)	$ (2,325,706)	$ (3,551,537)	$ (4,685,590)
Weighted average number of common shares	3,192,688	2,853,331	3,160,179	2,738,848
Loss per common share - basic and diluted	$ (0.58)	$ (0.82)	$ (1.12)	$ (1.70)

Condensed Interim Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Cash flows from operating activities:
Net loss	$ (3,539,782)	$ (4,669,166)
Adjustments for:
Depreciation and amortization	90,428	54,502
Share-based compensation	334,053	621,221
Gain on loan forgiveness	(14,766)	0
Changes in working capital items:
Accounts and other receivable	(484,110)	1,137,833
Prepaid expenses and other current assets	237,967	140,852
Accounts payable and accrued liabilities	309,523	(648,482)
Net cash used in operating activities	(3,066,687)	(3,363,240)
Cash flows from financing activities:
Proceeds from issuance of common shares and warrants	590,996	3,027,496
Proceeds from exercise of warrants	0	770,531
Payments for issuance costs of common shares and warrants	(43,993)	(121,612)
Repayment of debt	(29,532)	0
Net cash provided by financing activities	517,441	3,676,415
Effect of exchange rate changes on cash and cash equivalents	(12,520)	67,158
Net change in cash and cash equivalents	(2,561,766)	380,333
Cash and cash equivalents, beginning of period	5,361,397	7,090,919
Cash and cash equivalents, end of period	$ 2,799,631	$ 7,471,252

Condensed Interim Consolidated Statements of Changes in Shareholders' Equity - USD ($)	Total	Common Shares	Additional Paid-In Capital	Accumulated other comprehensive loss	Retained Earnings (Accumulated Deficit)
Balance, shares at Sep. 30, 2022		2,380,280
Balance, amount at Sep. 30, 2022	$ 9,391,289	$ 42,473,099	$ 11,176,345	$ (213,602)	$ (44,044,553)
Issuance of common shares and warrants in equity offering, shares		384,477
Issuance of common shares and warrants in equity offering, amount	3,027,496	$ 2,082,669	944,827	0	0
Issuance of common shares upon exercise of warrants, shares		100,760
Issuance of common shares upon exercise of warrants, amount	770,531	$ 994,618	(224,087)	0	0
Issuance costs	(125,010)	(96,653)	(28,357)	0	0
Share-based compensation	621,221	0	621,221	0	0
Net loss and comprehensive loss	(4,685,590)	$ 0	0	(16,424)	(4,669,166)
Balance, shares at Mar. 31, 2023		2,865,517
Balance, amount at Mar. 31, 2023	8,999,937	$ 45,453,733	12,489,949	(230,026)	(48,713,719)
Balance, shares at Dec. 31, 2022		2,764,757
Balance, amount at Dec. 31, 2022	10,273,456	$ 44,473,823	12,417,672	(238,669)	(46,379,370)
Issuance of common shares upon exercise of warrants, shares		100,760
Issuance of common shares upon exercise of warrants, amount	770,531	$ 994,618	(224,087)	0	0
Issuance costs	(5,891)	(14,708)	8,817	0	0
Share-based compensation	287,547	0	287,547	0	0
Net loss and comprehensive loss	(2,325,706)	$ 0	0	8,643	(2,334,349)
Balance, shares at Mar. 31, 2023		2,865,517
Balance, amount at Mar. 31, 2023	8,999,937	$ 45,453,733	12,489,949	(230,026)	(48,713,719)
Balance, shares at Sep. 30, 2023		3,075,473
Balance, amount at Sep. 30, 2023	7,048,800	$ 46,643,151	13,039,265	(214,648)	(52,418,968)
Issuance costs	(97,949)	(97,949)	0	0	0
Share-based compensation	334,053	0	334,053	0	0
Net loss and comprehensive loss	(3,551,537)	$ 0	0	(11,755)	(3,539,782)
Issuance of common shares, shares		140,495
Issuance of common shares, amount	$ 590,966	$ 590,966	0	0	0
Balance, shares at Mar. 31, 2024	0	3,215,968
Balance, amount at Mar. 31, 2024	$ 4,324,333	$ 47,136,168	13,373,318	(226,403)	(55,958,750)
Balance, shares at Dec. 31, 2023		3,164,722
Balance, amount at Dec. 31, 2023	5,844,878	$ 46,933,895	13,223,622	(215,220)	(54,097,419)
Issuance costs	(73,492)	(73,492)	0	0	0
Share-based compensation	149,696	0	149,696	0	0
Net loss and comprehensive loss	(1,872,514)	$ 0	0	(11,183)	(1,861,331)
Issuance of common shares, shares		51,246
Issuance of common shares, amount	$ 275,765	$ 275,765	0	0	0
Balance, shares at Mar. 31, 2024	0	3,215,968
Balance, amount at Mar. 31, 2024	$ 4,324,333	$ 47,136,168	$ 13,373,318	$ (226,403)	$ (55,958,750)

Nature of Operations

6 Months Ended

Mar. 31, 2024

Nature of Operations

Nature of Operations

1. Nature of Operations

The Company’s common shares trade on The Nasdaq Capital Market in the United States under the symbol “EDSA”.

Basis of presentation

6 Months Ended

Mar. 31, 2024

Basis of presentation

Basis Of Presentation

2. Basis of Presentation

Use of estimates

Functional and reporting currencies

Intangible Assets

6 Months Ended

Mar. 31, 2024

Intangible Assets

Intangible Assets

3. Intangible Assets

Acquired license

Intangible assets, net consisted of the following:

	March 31, 2024			September 30, 2023

The Constructs	$	2,529,483		$	2,529,483

Less: accumulated amortization		(400,049	)		(349,463	)

Total intangible assets, net	$	2,129,434		$	2,180,020

Amortization expense amounted to $0.03 million for each of the three months ended March 31, 2024 and 2023 and $0.05 million for each of the six months ended March 31, 2024 and 2023.

Total estimated future amortization of intangible assets for each fiscal year is as follows:

Year Ending
September 30, 2024	$	50,586
September 30, 2025		101,172
September 30, 2026		101,172
September 30, 2027		101,172
September 30, 2028		101,172
Thereafter		1,674,160

	$	2,129,434

Right of Use Lease with Related Party

6 Months Ended

Mar. 31, 2024

Right of Use Lease with Related Party

Right-of-Use Lease with Related Party

4. Right-of-Use Lease with Related Party

The Company leases a facility used for executive offices from a related company. The original lease expired in December 2022 and the Company executed a two-year extension through December 2024.

The components of right-of-use lease cost were as follows:

	Three Months Ended				Six Months Ended
	March 31, 2024		March 31, 2023		March 31, 2024		March 31, 2023
Right-of-use lease cost, included in general and administrative on the Statements of Operations	$	19,793	$	21,443	$	39,909	$	40,342

Lease terms and discount rates were as follows:

March 31,

2024

September 30,

2023

Remaining lease term (months):

Estimated incremental borrowing rate:

9.2

9.2

The future minimum lease payments under right-of-use leases at March 31, 2024 were as follows:

Year Ending
September 30, 2024	$	39,957
September 30, 2025		19,978

Total lease payments		59,935
Less imputed interest		1,792

Present value of right-of-use lease liabilities		58,143
Present value included in current liabilities		58,143

Present value included in long-term liabilities	$	-

Cash flow information was as follows:

	Six Months Ended
	March 31, 2024		March 31, 2023
Cash paid for amounts included in the measurement of right-of-use lease liabilities, included in accounts payable and accrued liabilities on the Statements of Cash Flow.	$	39,957	$	38,907

Commitments

6 Months Ended

Mar. 31, 2024

Commitments

Commitments

5. Commitments

Research and other commitments

Year Ending

September 30, 2024	$	433,000
September 30, 2025		49,000
September 30, 2026		36,000
September 30, 2027		42,000
September 30, 2028		-

	$	560,000

License and royalty commitments

Capital shares

6 Months Ended

Mar. 31, 2024

Capital shares

Capital Shares

6. Capital Shares

Equity offerings

Equity distribution agreement

Black-Scholes option valuation model

Warrants

A summary of the Company’s warrants activity is as follows:

	Number of Warrant Shares (#)			Weighted Average Exercise Price
Six Months Ended March 31, 2024
Balance - September 30, 2023		720,909		$	19.51

Expired		(110,122	)		7.00

Balance - March 31, 2024		610,787		$	21.76

Six Months Ended March 31, 2023
Balance - September 30, 2022		521,718		$	28.00

Issued		384,496			8.75
Exercised		(100,760	)		7.63

Balance - March 31, 2023		805,454		$	21.35

The weighted average contractual life remaining on the outstanding warrants at March 31, 2024 is 35 months.

The following table summarizes information about the warrants outstanding at March 31, 2024:

Number of Warrants (#)		Exercise Prices		Expiry Dates
	1,070	$	33.67	June 2024
	1,687	C$	22.40	January 2025
	173,614	$	10.50	December 2025
	15,627	$	56.00	February 2026
	27,399	$	31.94	March 2027
	391,390	$	24.64	September 2027
	610,787

The fair value of warrants granted during the six months ended March 31, 2023 was estimated using the Black-Scholes option valuation model using the following assumptions:

	Six Months Ended March 31, 2023
	Class A Warrants			Class B Warrants

Risk free interest rate		4.54	%		4.76	%
Expected life	3.14 years			1.14 years
Expected share price volatility		90.73	%		89.70	%
Expected dividend yield		0.00	%		0.00	%

Share options

Options have been granted under the 2019 Plan allowing the holders to purchase common shares of the Company as follows:

	Number of Options (#)			Weighted Average Exercise Price		Weighted Average Grant Date Fair Value
Six Months Ended March 31, 2024
Balance - September 30, 2023		420,615		$	25.60	$	18.84

Granted		500			4.10		3.10
Forfeited		(1,333	)		15.55		11.08
Expired		(106	)		596.82		596.82

Balance - March 31, 2024		419,676		$	25.47	$	18.70

Six Months Ended March 31, 2023
Balance - September 30, 2022		314,853		$	32.62	$	23.94

Granted		47,571			10.01		7.49
Expired		(34	)		2,129		2,129

Balance - March 31, 2023		362,390		$	29.40	$	21.63

The weighted average contractual life remaining on the outstanding options at March 31, 2024 is 79 months.

The following table summarizes information about the options under the 2019 Plan outstanding and exercisable at March 31, 2024:

Number of Options (#)		Exercisable at March 31, 2024 (#)		Range of Exercise Prices		Expiry Dates
	391		391	$	246.96 - 596.82	June 2024 - Mar 2025
	42,348		42,348	$	15.12	May 2024 - Dec 2028
	46,285		46,285	$	22.12	May 2024 - Feb 2030
	56,722		56,722	$	52.08 - 56.49	May 2024 - Oct 2030
	93,304		93,012	$	36.75 - 40.18	Apr 2024 - Sep 2031
	68,381		53,171	$	20.58 - 25.97	Apr 2024 - Feb 2032
	112,245		41,943	$	4.10 - 10.01	Apr 2024 - Oct 2033
	419,676		333,872

The fair value of options granted during the six months ended March 31, 2024 and 2023 was estimated using the Black-Scholes option valuation model using the following assumptions:

	Six Months Ended March 31, 2024			Six Months Ended March 31, 2023

Risk free interest rate		4.92	%	3.62% - 4.18%
Expected life	5 years			5 years
Expected share price volatility		97.26	%	95.3% - 97.34 %
Expected dividend yield		0.00	%		0.00	%

As of March 31, 2024, the Company had approximately $0.2 million of unrecognized share-based compensation expense, which is expected to be recognized over a period of 30 months.

Restricted Share Units (RSU)

The following is a summary of changes in the status of RSUs from October 1, 2023 through March 31, 2024:

	Number of RSU (#)		Weighted Average Grant Date Fair Value
Six Months Ended March 31, 2024
Balance - September 30, 2023		33,045	$	5.60

Granted		8,651		4.77

Balance - March 31, 2024		41,696	$	5.43

The following table summarizes information about the RSUs under the 2019 Plan outstanding and exercisable at March 31, 2024:

Number of

RSU (#)

Expiry Date

Fully-vested RSUs

33,045

August 2033

8,651

January 2034 - March 2034

Government Contributions

6 Months Ended

Mar. 31, 2024

Government Contributions

Government Contributions

7. Government Contributions

Reimbursement grant income for the Company’s federal grant with the Canadian government’s SIF is recorded based on the claim period of eligible costs.

The funding and any associated conditional repayments are not secured by any assets of Edesa Biotech Research or the Company.

Financial instruments

6 Months Ended

Mar. 31, 2024

Financial instruments

Financial Instruments

8. Financial Instruments

(a) Fair values

There are three levels of inputs that may be used to measure fair value:

	·	Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
	·	Level 2 – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets and liabilities in markets that are not active.
	·	Level 3 – Unobservable inputs for the asset or liability that are supported by little or no market activity.

(b) Interest rate and credit risk

(c) Foreign exchange risk

(d) Liquidity risk

Loss per share

6 Months Ended

Mar. 31, 2024

Loss per share

Loss Per Share

9. Loss per Share

Related party transactions

6 Months Ended

Mar. 31, 2024

Related party transactions

Related Party Transactions

10. Related Party Transactions

Subsequent Events

6 Months Ended

Mar. 31, 2024

Subsequent Events

Subsequent Events

11. Subsequent Events

Subsequent to the quarter, we collected the receivable from 2023 SIF Agreement for $0.7 million from Canadian government.

Basis of Presentation (Policies)	6 Months Ended
Basis of Presentation (Policies)	Mar. 31, 2024
Basis of Presentation (Policies)
Use Of Estimates	The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period or year. Actual results could differ from those estimates. Areas where significant judgment is involved in making estimates are valuation of accounts and other receivable; valuation and useful lives of property and equipment; intangible assets; right-of-use assets; deferred income taxes; the determination of fair value of share-based compensation; the determination of fair value of warrants in order to allocate proceeds from equity issuances; and forecasting future cash flows for assessing the going concern assumption.
Functional And Reporting Currencies	The consolidated financial statements of the Company are presented in U.S. dollars, unless otherwise stated, which is the Company’s and its wholly owned subsidiary’s, Edesa Biotech USA, Inc., functional currency. The functional currency of the Company’s wholly owned subsidiary, Edesa Biotech Research, Inc., as determined by management, is Canadian dollars.

Intangible Assets (Tables)

6 Months Ended

Mar. 31, 2024

Intangible Assets

Schdule of intangible Assets

	March 31, 2024			September 30, 2023

The Constructs	$	2,529,483		$	2,529,483

Less: accumulated amortization		(400,049	)		(349,463	)

Total intangible assets, net	$	2,129,434		$	2,180,020

Estimated Future Amortization Of Intangible Assets

Year Ending
September 30, 2024	$	50,586
September 30, 2025		101,172
September 30, 2026		101,172
September 30, 2027		101,172
September 30, 2028		101,172
Thereafter		1,674,160

	$	2,129,434

Right of use Lease with Related Party (Tables)

6 Months Ended

Mar. 31, 2024

Right of Use Lease with Related Party

Components of lease cost

	Three Months Ended				Six Months Ended
	March 31, 2024		March 31, 2023		March 31, 2024		March 31, 2023
Right-of-use lease cost, included in general and administrative on the Statements of Operations	$	19,793	$	21,443	$	39,909	$	40,342

Lease Terms And Discount Rates

March 31,

2024

September 30,

2023

Remaining lease term (months):

Estimated incremental borrowing rate:

9.2

9.2

Future Minimum Lease Payments

Year Ending
September 30, 2024	$	39,957
September 30, 2025		19,978

Total lease payments		59,935
Less imputed interest		1,792

Present value of right-of-use lease liabilities		58,143
Present value included in current liabilities		58,143

Present value included in long-term liabilities	$	-

Cash Paid-lease Liabilities

	Six Months Ended
	March 31, 2024		March 31, 2023
Cash paid for amounts included in the measurement of right-of-use lease liabilities, included in accounts payable and accrued liabilities on the Statements of Cash Flow.	$	39,957	$	38,907

Commitments (Tables)

6 Months Ended

Mar. 31, 2024

Commitments

Future Contractual Payments

Year Ending

September 30, 2024	$	433,000
September 30, 2025		49,000
September 30, 2026		36,000
September 30, 2027		42,000
September 30, 2028		-

	$	560,000

Capital Shares (Tables)

6 Months Ended

Mar. 31, 2024

Capital shares

Schdule of warrant activity

	Number of Warrant Shares (#)			Weighted Average Exercise Price
Six Months Ended March 31, 2024
Balance - September 30, 2023		720,909		$	19.51

Expired		(110,122	)		7.00

Balance - March 31, 2024		610,787		$	21.76

Six Months Ended March 31, 2023
Balance - September 30, 2022		521,718		$	28.00

Issued		384,496			8.75
Exercised		(100,760	)		7.63

Balance - March 31, 2023		805,454		$	21.35

Summary of warrants outstanding

Number of Warrants (#)		Exercise Prices		Expiry Dates
	1,070	$	33.67	June 2024
	1,687	C$	22.40	January 2025
	173,614	$	10.50	December 2025
	15,627	$	56.00	February 2026
	27,399	$	31.94	March 2027
	391,390	$	24.64	September 2027
	610,787

Schdule of granted fair value warrants outstanding

	Six Months Ended March 31, 2023
	Class A Warrants			Class B Warrants

Risk free interest rate		4.54	%		4.76	%
Expected life	3.14 years			1.14 years
Expected share price volatility		90.73	%		89.70	%
Expected dividend yield		0.00	%		0.00	%

Schedule Of under 2019 Plan to purchase common shares

	Number of Options (#)			Weighted Average Exercise Price		Weighted Average Grant Date Fair Value
Six Months Ended March 31, 2024
Balance - September 30, 2023		420,615		$	25.60	$	18.84

Granted		500			4.10		3.10
Forfeited		(1,333	)		15.55		11.08
Expired		(106	)		596.82		596.82

Balance - March 31, 2024		419,676		$	25.47	$	18.70

Six Months Ended March 31, 2023
Balance - September 30, 2022		314,853		$	32.62	$	23.94

Granted		47,571			10.01		7.49
Expired		(34	)		2,129		2,129

Balance - March 31, 2023		362,390		$	29.40	$	21.63

Share Options under 2019 plan Share options Outstanding

Number of Options (#)		Exercisable at March 31, 2024 (#)		Range of Exercise Prices		Expiry Dates
	391		391	$	246.96 - 596.82	June 2024 - Mar 2025
	42,348		42,348	$	15.12	May 2024 - Dec 2028
	46,285		46,285	$	22.12	May 2024 - Feb 2030
	56,722		56,722	$	52.08 - 56.49	May 2024 - Oct 2030
	93,304		93,012	$	36.75 - 40.18	Apr 2024 - Sep 2031
	68,381		53,171	$	20.58 - 25.97	Apr 2024 - Feb 2032
	112,245		41,943	$	4.10 - 10.01	Apr 2024 - Oct 2033
	419,676		333,872

Summary of assumptions used for fair value of options granted

	Six Months Ended March 31, 2024			Six Months Ended March 31, 2023

Risk free interest rate		4.92	%	3.62% - 4.18%
Expected life	5 years			5 years
Expected share price volatility		97.26	%	95.3% - 97.34 %
Expected dividend yield		0.00	%		0.00	%

summary of changes in the status of RSUs

	Number of RSU (#)		Weighted Average Grant Date Fair Value
Six Months Ended March 31, 2024
Balance - September 30, 2023		33,045	$	5.60

Granted		8,651		4.77

Balance - March 31, 2024		41,696	$	5.43

Summary of RSUs under the 2019 Plan outstanding and exercisable

Number of

RSU (#)

Expiry Date

Fully-vested RSUs

33,045

August 2033

8,651

January 2034 - March 2034

Intangible Assets (Details) - USD ($)	Mar. 31, 2024	Sep. 30, 2023
Intangible Assets
The Constructs	$ 2,529,483	$ 2,529,483
Less: Accumulated Amortization	(400,049)	(349,463)
Total intangible assets, net	$ 2,129,434	$ 2,180,020

Intagible Assets (Details 1) - USD ($)	Mar. 31, 2024	Sep. 30, 2023
Intangible Assets
September 30, 2024	$ 50,586
September 30, 2025	101,172
September 30, 2026	101,172
September 30, 2027	101,172
September 30, 2028	101,172
Thereafter	1,674,160
Total	$ 2,129,434	$ 2,180,020

Intangible Assets (Details Narrative) - USD ($) $ in Thousands	6 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Intangible Assets
Amortization Expense	$ 30	$ 50
Useful Life	25 years
Description Of Licence Agreement	The required upfront license payment of $2.5 million was paid by issuance of Series A-1 Convertible Preferred Shares, which have been fully converted to common shares

Right-of-Use Lease with Related Party (Details) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Mar. 31, 2024	Mar. 31, 2023
General and Administrative Expense
Right-of-use lease cost, included in general and administrative on the Statements of Operations	$ 19,793	$ 21,443	$ 39,909	$ 40,342

Right-of-Use Lease with Related Party (Details 1)	6 Months Ended	12 Months Ended
Right-of-Use Lease with Related Party (Details 1)	Mar. 31, 2024	Sep. 30, 2023
Right-of-Use Lease with Related Party (Details)
Remaining Lease Term (months)	9 months	15 months
Estimated Incremental Borrowing Rate	9.20%	9.20%

Right-of-Use Lease with Related Party (Details 2) - USD ($)	Mar. 31, 2024	Sep. 30, 2023
Year Ending
September 30, 2024	$ 39,957
September 30, 2025	19,978
Total Lease Payment	59,935
Less Imputed Interest	1,792
Present value of right-of-use lease liabilities	58,143
Present value included in current liabilities	58,143	$ 74,714
Present value included in long-term liabilities	$ 0	$ 19,773

Right-of-Use Lease with Related Party (Details 3) - USD ($)	6 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Right-of-Use Lease with Related Party (Details)
Cash paid for amounts included in the measurement of right-of-use lease liabilities, included in accounts payable and accrued liabilities on the Statements of Cash Flow.	$ 39,957	$ 38,907

Commitments (Details) $ in Millions	Mar. 31, 2024 USD ($)
Year Ending September 30,
September 30, 2024	$ 433,000
September 30, 2025	49,000
September 30, 2026	36,000
September 30, 2027	42,000
September 30, 2028	0
Total	$ 560,000

Commitments (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
Commitments (Details Narrative) - USD ($)	Mar. 31, 2024	Mar. 31, 2023	Mar. 31, 2024	Mar. 31, 2023
Remaining payments of contingent	$ 356,000,000
2016 [Member] \| License Commitments [Member]
Payments to investors			$ 18,400,000
Remaining payments of contingent	68,900,000
Payments to third party	0	$ 60,000.00	0	$ 120,000
2021 [Member] \| License Commitments Agreement [Member]
Payments to investors	$ 250,000,000	$ 0	$ 500,000,000	$ 0

Capital Shares (Details) - $ / shares	6 Months Ended
Capital Shares (Details) - $ / shares	Mar. 31, 2024	Mar. 31, 2023
Capital shares
Number of warrants, beginning balance	720,909	521,718
Issued		384,496
Expired	(110,122)
Exercised		(100,760)
Number of warrants, ending balance	610,787	805,454
Weighted average exercise price, beginning balance	$ 19.51	$ 28.00
Issued		8.75
Expired	7.00
Exercised		7.63
Weighted average exercise price, ending balance	$ 21.76	$ 21.35

Capital Shares (Details 1)	6 Months Ended
Capital Shares (Details 1)	Mar. 31, 2024 $ / shares shares	Mar. 31, 2024 $ / shares shares	Sep. 30, 2023 $ / shares shares	Mar. 31, 2023 $ / shares shares	Sep. 30, 2022 $ / shares shares
Number of warrants \| shares	610,787	610,787	720,909	805,454	521,718
Weighted average exercise price \| $ / shares	$ 21.76		$ 19.51	$ 21.35	$ 28.00
Warrant 1 [Member]
Number of warrants \| shares	1,070	1,070
Weighted average exercise price \| $ / shares	$ 33.67
Expiry date	June 2024
Warrant 2 [Member]
Number of warrants \| shares	1,687	1,687
Weighted average exercise price \| $ / shares		$ 22.40
Expiry date	January 2025
Warrant 4 [Member]
Number of warrants \| shares	15,627	15,627
Weighted average exercise price \| $ / shares	$ 56.00
Expiry date	February 2026
Warrant 5 [Member]
Number of warrants \| shares	27,399	27,399
Weighted average exercise price \| $ / shares	$ 31.94
Expiry date	March 2027
Warrant 6 [Member]
Number of warrants \| shares	391,390	391,390
Weighted average exercise price \| $ / shares	$ 24.64
Expiry date	September 2027
Warrant 3 [Member]
Number of warrants \| shares	173,614	173,614
Weighted average exercise price \| $ / shares	$ 10.50
Expiry date	December 2025

Capital Shares (Details 2)	6 Months Ended
Capital Shares (Details 2)	Mar. 31, 2024	Mar. 31, 2023
Expected life (years)	5 years	5 years
Expected share price volatility	97.26%
Expected dividend yield	0.00%	0.00%
Class A Warrants Member
Risk free interest rate	4.54%
Expected life (years)	3 years 1 month 20 days
Expected share price volatility	90.73%
Expected dividend yield	0.00%
Class B Warrants [Member]
Risk free interest rate	4.76%
Expected life (years)	1 year 1 month 20 days
Expected share price volatility	89.70%
Expected dividend yield	0.00%

Capital Shares (Details 3) - $ / shares	6 Months Ended
Capital Shares (Details 3) - $ / shares	Mar. 31, 2024	Mar. 31, 2023
Capital shares
Number of options, beginning balance	420,615	314,853
Number of options granted	500	47,571
Number of options Forfeited	1,333
Number of options expired	(106)	(34)
Number of options, ending balance	419,676	362,390
Weighted Average Exercise Price, beginning balance	$ 25.60	$ 32.62
Weighted average exercise price granted	4.10	10.01
Weighted average exercise price Forfeited	15.55
Weighted average exercise price expired	596.82	2,129
Weighted Average Exercise Price, ending balance	25.47	29.40
Weighted Average Grant Date Fair Value, beginning balance	18.84	23.94
Weighted Average Grant Date Fair Value, Granted	3.10	7.49
Weighted Average Grant Date Fair Value, Forfeited	11.08
Weighted Average Grant Date Fair Value, expired	596.82	2,129
Weighted Average Grant Date Fair Value, ending balance	$ 18.70	$ 21.63

Capital Shares (Details 4) - $ / shares	6 Months Ended
Capital Shares (Details 4) - $ / shares	Mar. 31, 2024	Sep. 30, 2023	Mar. 31, 2023	Dec. 31, 2022	Sep. 30, 2022	Mar. 31, 2022	Dec. 31, 2021	Sep. 30, 2021	Sep. 30, 2019
Number of options	419,676	420,615	362,390	2,206,961	314,853	2,261,334	1,776,005	1,776,219	319,645
Options exercisable	333,872
Weighted average exercise price	$ 25.47	$ 25.60	$ 29.40		$ 32.62			$ 5.06
Stock Option 1
Number of options	391
Options exercisable	391
Stock Option 1 \| Minumum
Weighted average exercise price	$ 246.96
Expiry dates	June 2024
Stock Option 1 \| Maximum
Weighted average exercise price	$ 596.82
Expiry dates	Mar 2025
Stock Option 2
Number of options	42,348
Options exercisable	42,348
Weighted average exercise price	$ 15.12
Stock Option 2 \| Minumum
Expiry dates	May 2024
Stock Option 2 \| Maximum
Expiry dates	Dec 2028
Stock Option 3
Number of options	46,285
Options exercisable	46,285
Weighted average exercise price	$ 22.12
Stock Option 3 \| Minumum
Expiry dates	May 2024
Stock Option 3 \| Maximum
Expiry dates	Feb 2030
Stock Option 4
Number of options	56,722
Options exercisable	56,722
Stock Option 4 \| Minumum
Weighted average exercise price	$ 52.08
Expiry dates	May 2024
Stock Option 4 \| Maximum
Weighted average exercise price	$ 56.49
Expiry dates	Oct 2030
Stock Option 5
Number of options	93,304
Options exercisable	93,012
Stock Option 5 \| Minumum
Weighted average exercise price	$ 36.75
Expiry dates	Apr 2024
Stock Option 5 \| Maximum
Weighted average exercise price	$ 40.18
Expiry dates	Sep 2031
Stock Option 6
Number of options	68,381
Options exercisable	53,171
Stock Option 6 \| Minumum
Weighted average exercise price	$ 20.58
Expiry dates	Apr 2024
Stock Option 6 \| Maximum
Weighted average exercise price	$ 25.97
Expiry dates	Feb 2032
Stock Option 7 Member
Number of options	112,245
Options exercisable	41,943
Stock Option 7 Member \| Minumum
Weighted average exercise price	$ 4.10
Expiry dates	Apr 2024
Stock Option 7 Member \| Maximum
Weighted average exercise price	$ 10.01
Expiry dates	Oct 2033

Capital Shares (Details 5)	6 Months Ended
Capital Shares (Details 5)	Mar. 31, 2024	Mar. 31, 2023
Risk Free Interest Rate	4.92%
Expected Life (years)	5 years	5 years
Expected Share Price Volatility	97.26%
Expected Dividend Yield	0.00%	0.00%
Maximum
Risk Free Interest Rate		4.18%
Expected Share Price Volatility		97.34%
Minumum
Risk Free Interest Rate		3.62%
Expected Share Price Volatility		95.30%

Capital Shares (Details 6) - $ / shares	6 Months Ended
Capital Shares (Details 6) - $ / shares	Mar. 31, 2024	Mar. 31, 2023
Weighted Average Grant Date Fair Value, Beginning balance	$ 18.84	$ 23.94
Weighted Average Grant Date Fair Value, Ending balance	$ 18.70	$ 21.63
Restricted Stock Member
Number of restricted stock option, Beginning balance	33,045
Number of restricted stock option, Granted	8,651
Number of restricted stock option, Ending balance	41,696
Weighted Average Grant Date Fair Value, Beginning balance	$ 5.60
Weighted Average Grant Date Fair Value, Granted	4.77
Weighted Average Grant Date Fair Value, Ending balance	$ 5.43

Capital Shares (Details 7) - Restricted Stock Member	6 Months Ended
Capital Shares (Details 7) - Restricted Stock Member	Mar. 31, 2024 shares
Number of vested restricted stock option, Outstanding and exercisable	33,045
Number of vested restricted stock option, expiry date	August 2033
Number of vested restricted stock option, Outstanding and exercisable Granted	8,651
Maximum
Number of vested restricted stock option, Granted expiry date	March 2034
Minumum
Number of vested restricted stock option, Granted expiry date	January 2034

Capital Shares (Details Narrative) - USD ($)		1 Months Ended	3 Months Ended		6 Months Ended
Capital Shares (Details Narrative) - USD ($)	Nov. 02, 2022	Mar. 27, 2023	Mar. 31, 2024	Mar. 31, 2023	Mar. 31, 2024	Mar. 31, 2023	Sep. 30, 2023	Sep. 30, 2022
Weighted average contractual life remaining on outstanding options					35 months
Share-based compensation			$ 100,000	$ 300,000	$ 300,000	$ 600,000
Unrecognized share-based compensation			$ 200,000		$ 200,000
Gross Proceeds		$ 20,000,000
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 21.76	$ 21.35	$ 21.76	$ 21.35	$ 19.51	$ 28.00
Aggregate gross sales price		$ 8,400,000
Common share sold during period					140,495
Proceeds from share sold during period					$ 500,000
Warrants Additional Paid In Capital [Member]
Gross Proceeds	$ 1,200,000
NovemberTwoTwoThousandTwentyTwo[Member]
Gross Proceeds	$ 2,900,000
Warrant expiry date	Dec. 23, 2022
Units of Common Shares	384,475
Black Scholes Option [Member]
Expected term					10 years
Grant date					5 years
Board of directors [Member]
Granted option shares					500
Expected Option Forfeitures Term					10 years
Employees [Member]
Granted option shares					85,804
Class of Warrant or Right, Exercise Price of Warrants or Rights			10.70		$ 10.70
Expected Option Forfeitures Term					107 months
Employees One [Member]
Intrinsic value					$ 7
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 29.27		$ 29.27
Expected Option Forfeitures Term					72 months
2019 Plan [Member]
Weighted average contractual life remaining on outstanding options					79 months
Number Of Shares Available For Issuance					575,737
Option Term					10 years
Remaining Number Of Options Available For Grant					69,728
Class A Warrants Member
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 10.50
Warrant expiry date	Dec. 23, 2025
Warrants to purchase common shares	192,248
Class B Warrants [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 7.00
Warrant expiry date	Dec. 23, 2023
Warrants to purchase common shares	192,248

Government Contributions (Details Narrative) - USD ($) $ in Millions	1 Months Ended		3 Months Ended	6 Months Ended
	Oct. 31, 2023	Feb. 28, 2021	Mar. 31, 2024	Mar. 31, 2024
Description of expiry of agreement				The Agreement will expire on the later of December 31, 2042 or the date of the last repayment, unless earlier terminated, subject to certain provisions that extend three (3) years beyond the term or early termination of the Agreement
February 2021 \| SIF Agreement Member
Grant income			$ 0.3	$ 0.4
Non repayable funding amount support R&amp;D		$ 14.1
October 2023 \| SIF Agreement Member
Description of SIF Agreement	(i) conducting and completing the Company’s Phase 3 clinical study of its experimental drug EB05 in critical-care patients with Acute Respiratory Distress Syndrome (ARDS) caused by COVID-19 or other infectious agents, (ii) submitting EB05 for governmental approvals and manufacturing scale-up, following, and subject to, completing the Phase 3 study and (iii) conducting two non-clinical safety studies to assess the potential long-term impact of EB05 exposure (the Project). Of the C$23 million committed by SIF, up to C$5.8 million is not repayable by the Company. The remaining C$17.2 million is conditionally repayable starting in 2029 only if and when the Company earns gross revenue. The repayable portion would be payable over fifteen (15) years based on a percentage rate of the Company’s annual revenue growth. The maximum amount repayable under the Agreement is 1.4 times the original repayable amount. In addition, the Company is entitled to partial reimbursement of certain eligible expenses under the Agreement
Repayable payment duration	15 years

Financial Instruments (Details Narrative) $ in Millions	6 Months Ended
Financial Instruments (Details Narrative) $ in Millions	Mar. 31, 2024 CAD ($) $ / shares
USD to CAD [Member]
Currency exchange rate \| $ / shares	$ 1.3545
Ontario Subsidary [Member]
Assets \| $	$ 1.9
Currency exchange rate description	Based on the exposure at March 31, 2024, a 10% annual change in the Canadian/U.S. exchange rate would impact the Company’s loss and other comprehensive loss by approximately $0.1 million

Related Party Transactions (Details Narrative) - USD ($)	3 Months Ended	6 Months Ended
	Mar. 31, 2024	Mar. 31, 2024	Mar. 31, 2023	Oct. 31, 2023
Rent expense		$ 7,000
CEO [Member]
Rent expense		$ 20,000	$ 40,000
October 2023 \| Revolving Credit Facility [Member]
Revolving credit				$ 10,000,000.0
Interest Rate		3.00%
Maturity date		Mar. 31, 2026
Incurred charge payment	$ 13,000	$ 25,000
Credit limit				$ 3,500,000

Subsequent events (Details Narrative)	6 Months Ended
Subsequent events (Details Narrative)	Mar. 31, 2024 USD ($) shares
Subsequent Events
Common shares issued \| shares	0
Account receivable	$ 700,000
Gross proceeds	$ 0

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