10-Q

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, 2023

☐ 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: 1-32001

APTOSE BIOSCIENCES INC.

(Exact Name of Registrant as Specified in Its Charter)


Canada (State or other jurisdiction of incorporation or organization)		98-1136802 (I.R.S. Employer Identification No.)

251 Consumers Road, Suite 1105 Toronto, Ontario, Canada		M2J 4R3
(Address of principal executive offices)		(Zip Code)

647-479-9828

(Registrant’s telephone number, including area code)

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, no par value	APTO	Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 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 Exchange Act). Yes ☐ No ☒

As of May 8, 2023, the registrant had 93,653,662 common shares outstanding.

TABLE OF CONTENTS


		Page

PART I—FINANCIAL INFORMATION		5
	Item 1 – Financial Statements	5
	Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
	Item 3 – Qualitative and Quantitative Disclosures about Market Risk	27
	Item 4 – Controls and Procedures	27

PART II—OTHER INFORMATION		28
	Item 1 – Legal Proceedings	28
	Item 1A – Risk Factors
	Item 6 – Exhibits	29
	Signatures	30

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Report contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and “forward-looking information” within the meaning of applicable Canadian securities law, which we collectively refer to as “forward-looking statements”. Such forward-looking statements reflect our current beliefs and are based on information currently available to us. In some cases, forward-looking statements can be identified by terminology such as “may,” “would,” “could,, “will,” “should,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” “hope,” “foresee” or the negative of these terms or other similar expressions concerning matters that are not historical facts.

Many factors could cause our actual results, performance or achievements to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements, including, among others:

•

our lack of product revenues and net losses and a history of operating losses;

•

our early stage of development, particularly the inherent risks and uncertainties associated with (i) developing new drug candidates generally, (ii) demonstrating the safety and efficacy of these drug candidates in clinical studies in humans, and (iii) obtaining regulatory approval to commercialize these drug candidates;

•

our need to raise substantial additional capital in the future and our ability to raise such funds when needed and on acceptable terms;

•

further equity financing, which may substantially dilute the interests of our existing shareholders;

•

clinical studies and regulatory approvals of our drug candidates are subject to delays, and may not be completed or granted on expected timetables, if at all, and such delays may increase our costs and could substantially harm our business;

•

our reliance on external contract research/manufacturing organizations for certain activities and if we are subject to quality, cost, or delivery issues with the preclinical and clinical grade materials supplied by contract manufacturers, our business operations could suffer significant harm;

•

clinical studies are long, expensive and uncertain processes and the FDA, or other similar foreign regulatory agencies that we are required to report to, may ultimately not approve any of our product candidates;

•

our ability to comply with applicable governmental regulations and standards;

•

our inability to achieve our projected development goals in the time frames we announce and expect;

•

difficulties in enrolling patients for clinical trials may lead to delays or cancellations of our clinical trials;

•

our reliance on third parties to conduct and monitor our preclinical studies;

•

our ability to attract and retain key personnel, including key executives and scientists;

•

any misconduct or improper activities by our employees;

•

our exposure to exchange rate risk;

•

our ability to commercialize our business attributed to negative results from clinical trials;

•

the marketplace may not accept our products or product candidates due to the intense competition and technological change in the biotechnical and pharmaceuticals, and we may not be able to compete successfully against other companies in our industries and achieve profitability;

•

our ability to obtain and maintain patent protection;

•

our ability to afford substantial costs incurred with defending our intellectual property;

•

our ability to protect our intellectual property rights and not infringe on the intellectual property rights of others;

•

our business is subject to potential product liability and other claims;

•

potential exposure to legal actions and potential need to take action against other entities;

•

commercialization limitations imposed by intellectual property rights owned or controlled by third parties;

•

our ability to maintain adequate insurance at acceptable costs;

•

our ability to find and enter into agreements with potential partners;

•

extensive government regulation;

•

data security incidents and privacy breaches could result in increased costs and reputational harm;

•

our share price has been and is likely to continue to be volatile;

•

future sales of our common shares by us or by our existing shareholders could cause our share price to drop;

•

changing global market and financial conditions;

•

changes in an active trading market in our common shares;

•

difficulties by non-Canadian investors to obtain and enforce judgments against us because of our Canadian incorporation and presence;

•

potential adverse U.S. federal tax consequences for U.S. shareholders because we are a “passive foreign investment company”;

•

our “smaller reporting company” status;

•

any failures to maintain an effective system of internal controls may result in material misstatements of our financial statements, or cause us to fail to meet our reporting obligations or fail to prevent fraud;

•

our ability to issue and sell common shares under the 2022 ATM Facility (as defined below) or the 2022 Base Shelf (as defined below);

•

our broad discretion in how we use the proceeds of the sale of common shares; and

•

our ability to expand our business through the acquisition of companies or businesses.

More detailed information about risk factors and their underlying assumptions are included in our Annual Report on Form 10-K for the year ended December 31, 2022, under Item 1A – Risk Factors. Except as required under applicable securities legislation, we undertake no obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise.

PART I—FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

Condensed Consolidated Interim Financial Statements

(Unaudited)

APTOSE BIOSCIENCES INC.

For the three months ended March 31, 2023 and 2022

APTOSE BIOSCIENCES INC.

Condensed Consolidated Interim Statements of Financial Position

(Expressed in thousands of US dollars)

(unaudited)


	March 31, 2023			December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	22,762		$	36,970
Investments		12,958			9,989
Prepaid expenses		2,047			2,303
Other current assets		162			257
Total current assets		37,929			49,519

Non-current assets:
Property and equipment		183			211
Right-of-use assets, operating leases		1,218			1,297
Total non-current assets		1,401			1,508

Total assets	$	39,330		$	51,027
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	5,519		$	6,326
Accrued liabilities		6,594			5,657
Current portion of lease liability, operating leases		306			301
Total current liabilities		12,419			12,284

Non-current liabilities:
Lease liability, operating leases		918			1,002
Total liabilities		13,337			13,286

Shareholders’ equity:
Share capital:
Common shares, no par value, unlimited authorized shares, 93,005,278 and 92,367,275 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively		437,946			437,520
Additional paid-in capital		70,367			68,869
Accumulated other comprehensive loss		(4,314	)		(4,318	)
Deficit		(478,006	)		(464,330	)
Total shareholders’ equity		25,993			37,741

Total liabilities and shareholders’ equity	$	39,330		$	51,027

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

Going concern, see Note 2.

Commitments, see Note 9.

Subsequent events, see Note 12.

APTOSE BIOSCIENCES INC.

Condensed Consolidated Interim Statements of Loss and Comprehensive Loss

(Expressed in thousands of US dollars, except for per common share data)

(unaudited)


	Three months ended March 31,
	2023			2022
Revenue	$	—		$	—

Expenses:
Research and development		8,811			7,393
General and administrative		5,285			4,107
Operating expenses		14,096			11,500

Other income/(expense):
Interest income		422			22
Foreign exchange loss		(2	)		(3	)
Total other income		420			19

Net loss	$	(13,676	)	$	(11,481	)

Other comprehensive income:
Unrealized gain on available-for-sale securities		4			—
Total comprehensive loss	$	(13,672	)	$	(11,481	)

Basic and diluted loss per common share	$	(0.15	)	$	(0.12	)

Weighted average number of common shares outstanding used in the calculation of (in thousands) Basic and diluted loss per common share		92,562			92,226

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

APTOSE BIOSCIENCES INC.

Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity

(Expressed in thousands of US dollars, except for per common share data)

(unaudited)


	Common Shares				Additional			Accumulated other
	Shares (in thousands)		Amount		paid-in capital			comprehensive loss			Deficit			Total
Balance, December 31, 2022		92,368	$	437,520	$	68,869		$	(4,318	)	$	(464,330	)	$	37,741
Common shares issued in exchange for RSUs		570		376		(376	)	-			-			-
Common shares issued under the 2022 ATM Facility		46		34	-			-			-				34
Common shares issued under the ESPP plan		21		16	-			-			-				16
Stock-based compensation	-		-			1,874		-			-				1,874
Other comprehensive gain	-		-		-				4		-				4
Net loss	-		-		-			-				(13,676	)	$	(13,676	)
Balance, March 31, 2023		93,005	$	437,946	$	70,367		$	(4,314	)	$	(478,006	)	$	25,993
Balance, December 31, 2021		92,215	$	437,386	$	63,673		$	(4,316	)	$	(422,507	)	$	74,236
Common shares issued upon exercise of stock options		14		26		(11	)	-			-				15
Stock-based compensation	-		-			2,514		-			-				2,514
Net loss	-		-		-			-				(11,481	)		(11,481	)
Balance, March 31, 2022		92,229	$	437,412	$	66,176		$	(4,316	)	$	(433,988	)	$	65,284

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

APTOSE BIOSCIENCES INC.

Condensed Consolidated Interim Statements of Cash Flows

(Expressed in thousands of US dollars)

(unaudited)


	Three months ended March 31,
	2023			2022
Cash flows used in operating activities:
Net loss for the period	$	(13,676	)	$	(11,481	)
Items not involving cash:
Stock-based compensation		1,874			2,514
Depreciation and amortization		28			32
Loss on disposal of property and equipment		—			4
Amortization of right-of-use assets		103			114
Interest on lease liabilities		25			7
Unrealized foreign exchange loss		(4	)		(2	)
Accrued interest on investments		(5	)		(11	)
Changes in non-cash operating assets and liabilities:
Prepaid expenses		256			214
Other current assets		95			32
Operating lease liabilities		(128	)		(143	)
Accounts payable		(807	)		(555	)
Accrued liabilities		937			(370	)
Cash used in operating activities		(11,302	)		(9,645	)

Cash flows from financing activities:
Issuance of common shares under 2022 ATM Facility		34			—
Issuance of common shares under ESPP plan		16			—
Issuance of common shares upon exercise of stock options		—			15
Cash from financing activities		50			15

Cash flows from/(used in) investing activities:
Maturity (acquisition) of investments, net		(2,960	)		7,505
Cash from/(used in) investing activities		(2,960	)		7,505

Effect of exchange rate fluctuations on cash and cash equivalents		4			2
Decrease in cash and cash equivalents	$	(14,208	)	$	(2,123	)
Cash and cash equivalents, beginning of period	$	36,970		$	39,114
Cash and cash equivalents, end of period	$	22,762		$	36,991

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

APTOSE BIOSCIENCES INC.

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

Three months ended March 31, 2023 and 2022

(Tabular amounts in thousands of United States dollars, except as otherwise noted)

Reporting entity:

Aptose Biosciences Inc. (“Aptose,” the “Company,” “we,” “us,” or “our”) is a science-driven clinical stage biotechnology company committed to the development and commercialization of precision medicines addressing unmet clinical needs in oncology, with an initial focus on hematology. The Company's small molecule cancer therapeutics pipeline includes products designed to provide single agent efficacy and to enhance the efficacy of other anti-cancer therapies and regimens without overlapping toxicities. The Company’s executive offices are located in San Diego, California, and our head office is located in Toronto, Canada.

We are advancing targeted agents to treat life-threatening hematologic cancers that, in most cases, are not elective for patients and require immediate treatment. We have two clinical-stage investigational products for hematological malignancies: tuspetinib, an oral, potent myeloid kinase inhibitor, and luxeptinib, an oral, dual lymphoid and myeloid kinase inhibitor.

Since our inception, we have financed our operations and technology acquisitions primarily from equity financing, proceeds from the exercise of warrants and stock options, and interest income on funds held for future investment. Our uses of cash for operating activities have primarily consisted of salaries and wages for our employees, facility and facility-related costs for our offices and laboratories, fees paid in connection with preclinical and clinical studies, licensing fees, drug manufacturing costs, laboratory supplies and materials, and professional fees.

Management recognizes that in order for us to meet our capital requirements, and continue to operate, additional financing will be necessary. We plan to raise additional funds to fund our business operations but there is no assurance that such additional funds will be available for us to finance our operations on acceptable terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern, see Note 2(a). The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Our ability to raise additional funds could be affected by adverse market conditions, the status of our product pipeline, possible delays in enrollment in our trial, and various other factors and we may be unable to raise capital when needed, or on terms favorable to us. If necessary funds are not available, we may have to delay, reduce the scope of, or eliminate some of our development programs, potentially delaying the time to market for any of our product candidates.

We do not expect to generate positive cash flow from operations for the foreseeable future due to the early stage of our clinical trials. It is expected that negative cash flow will continue until such time, if ever, that we receive regulatory approval to commercialize any of our products under development and/or royalty or milestone revenue from any such products exceeds expenses.

Our cash needs for the next twelve months include estimates of the number of patients and rate of enrollment of our clinical trials, the amount of drug product that we will require to support our clinical trials, and our general corporate overhead costs to support our operations, and our reliance on our manufacturers. We have based these estimates on assumptions and plans which may change and which could impact the magnitude and/or timing of operating expenses and our cash runway, See Note 2(a).

The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. As of March 31, 2023, the Company had an accumulated deficit of approximately $478.0 million (December 31, 2022, $464.3 million); cash and cash equivalents and investment balances of approximately $35.7 million (December 31, 2022, $47.0 million); and working capital of approximately $25.5 million (December 31, 2022, $37.2 million).

On July 18, 2022, we received a letter from the Nasdaq Stock Market, LLC (“Nasdaq”) indicating that, for the last 30 consecutive business days, the bid price for our Common Shares had closed below the minimum $1.00 per share required for continued inclusion on the Nasdaq Capital Market under the Nasdaq Listing Rules. Under Nasdaq Listing Rule 5810(c)(3)(A), if during the 180 calendar day period following the date of the notice the closing bid price of our Common Shares is at or above $1.00 for a minimum of 10 consecutive business days, we would regain compliance with the Minimum Bid Price requirement and our Common Shares would continue to be eligible for listing on the Nasdaq Capital Market, absent noncompliance with any other requirement for continued listing.

On January 18, 2023, we qualified for a 180-day extension to July 18, 2023. If we are unable to meet the minimum closing bid price requirement under Nasdaq Listing Rule 5810(c)(3)(A) by then, Nasdaq will provide notice that our securities will be subject to

delisting. In order to regain compliance with such rule, we are considering a reverse stock split of the Company’s outstanding Common Shares at a ratio in the range of 1-for-10 to 1-for-20 (the Reverse Stock Split”). The Reverse Stock Split is conditional upon the approval of the shareholders of the Company at the annual and special meeting of shareholders to be held on May 23, 2023 and upon the approval of the Board of Directors of the Company which, if it determines to proceed with the Reverse Stock Split, will also determine its exact ratio and date.

Significant accounting policies

Basis of presentation - Going concern

These unaudited consolidated condensed financial statements have been prepared in conformity with generally accepted accounting principles in the United States, or GAAP and the rules and regulations of the Securities and Exchange Commission, or SEC, related to quarterly reports filed on Form 10-Q, assuming the Company will continue as a going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. However, substantial doubt about the Company's ability to continue as a going concern exists.

As of March 31, 2023, the Company had an accumulated deficit of approximately $478.0 million (December 31, 2022, $464.3 million); cash and cash equivalents and investment balances of approximately $35.7 million (December 31, 2022, $47.0 million); and working capital of approximately $25.5 million (December 31, 2022, $37.2 million). In order for the Company to meet its capital requirements, and continue to operate, additional financing will be necessary. The Company is evaluating strategies to obtain the required additional funding for future operations. These strategies may include, but are not limited to, obtaining equity financing, debt financing, committed equity facilities or other financing instruments and restructuring of operations to decrease expenses. However, given the impact of the economic downturn on the U.S. and global financial markets, the Company may be unable to access further equity when needed. As such, there can be no assurance that the Company will be able to obtain additional liquidity when needed or under acceptable terms, if at all. The consolidated financial statements do not reflect any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern. Such adjustments may be material.

Basis of consolidation:

These condensed consolidated interim financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions, balances, revenue, and expenses are eliminated on consolidation.

Significant accounting policies, estimates and judgments:

During the three months ended March 31, 2023, there have been no changes to our significant accounting policies as described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on March 23, 2023.

The preparation of the condensed consolidated interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting period. Actual outcomes could differ from those estimates. The condensed consolidated interim financial statements include estimates, which, by their nature, are uncertain.

The impacts of such estimates are pervasive throughout the condensed consolidated interim financial statements and may require accounting adjustments based on future occurrences.

The estimates and underlying assumptions are reviewed on a regular basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected.

Recent Accounting Pronouncements

We have adopted no new accounting pronouncements during the three months ended March 31, 2023. There were various accounting standards and interpretations issued recently, none of which are expected to have a material impact on our financial position, operations or cash flows.

Foreign currency:

The functional and presentation currency of the Company is the US dollar.

Concentration of risk:

The Company is subject to credit risk from the Company’s cash and cash equivalents and investments. The carrying amount of the financial assets represents the maximum credit exposure. The Company manages credit risk associated with its cash and cash equivalents and investments by maintaining minimum standards of R1‑low or A‑low investments and the Company invests only in highly rated corporations and treasury bills, which are capable of prompt liquidation.

Cash and cash equivalents:

Cash and cash equivalents as of March 31, 2023, consist of cash of $1.132 million (December 31, 2022 ‑ $596 thousand), deposits in high interest savings accounts, money market funds and accounts and other term deposits with maturities of less than 90 days totaling of $21.630 million (December 31, 2022 ‑ $36.374 million).

Prepaid expenses:


	March 31,		December 31,
	2023		2022
Prepaid research and development expenses	$	1,208	$	1,271
Prepaid insurance		684		893
Other prepaid expenses		155		139
Total	$	2,047	$	2,303

Right-of-use assets:


	March 31,			December 31,
	2023			2022
Right-of-use assets, beginning of period	$	3,100		$	1,860
Additions to right-of-use assets		24			1,240
Right-of-use assets, end of period		3,124			3,100
Accumulated amortization		(1,906	)		(1,803	)
Right-of use assets, NBV	$	1,218		$	1,297

Investments:

Investments consisted of the following as of March 31, 2023 and December 31, 2022:


	March 31, 2023
	Cost		Unrealized gain/(loss)		Market value
United States Treasury Bills	$	9,984	$	1	$	9,985
Commercial Notes		2,972		1	$	2,973
Total	$	12,956	$	2	$	12,958


	December 31, 2022
	Cost		Unrealized gain/(loss)			Market value
United States Treasury Bills	$	9,991	$	(2	)	$	9,989
Total	$	9,991	$	(2	)	$	9,989

Fair value measurements and financial instruments:

The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value.

Level 1 ‑ inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 ‑ inputs are quoted prices in markets that are not active, quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data or other means; and

Level 3 ‑ inputs are unobservable (supported by little or no market activity).

The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs.

The following table presents the fair value of Company's assets that are measured at fair value on a recurring basis for the periods presented:


	March 31, 2023		Level 1		Level 2		Level 3
Assets
Money Market funds	$	14,126	$	—	$	14,126	$	—
High interest savings account		1,537		—		1,537		—
United States Treasury Bills, classified as cash equivalents		5,967		—		5,967		—
United States Treasury Bills, classified as short-term investments		9,985		—		9,985		—
Commercial Note		2,973		—		2,973		—
Total	$	34,588	$	—	$	34,588	$	—


	December 31, 2022		Level 1		Level 2		Level 3
Assets
Money Market accounts	$	165	$	—	$	165	$	—
Money Market funds		22,343		—		22,343		—
High interest savings accounts		13,866		—		13,866		—
United States Treasury Bills		9,989		—		9,989		—
Total	$	46,363	$	—	$	46,363	$	—

Accrued liabilities:

Accrued liabilities as of March 31, 2023 and December 31, 2022 consisted of the following:


	March 31,		December 31,
	2023		2022
Accrued personnel related costs	$	1,180	$	2,302
Accrued research and development expenses		5,005		3,122
Other accrued expenses		409		233
Total	$	6,594	$	5,657

Lease liability

Aptose leases office space in San Diego, California and Toronto, Canada. The lease for the San Diego office space was scheduled to expire on March 31, 2023. On November 4, 2022, this lease was extended through May 31, 2026 (the "Third Amendment"). Management has determined that the Third Amendment represents a lease modification, as defined by ASC 842, Leases, does not meet the requirements for accounting as a separate contract and continues to meet the definition of an operating lease. Accordingly, the Company has accounted for the Third Amendment prospectively, via remeasurements, on the Modification Date, to the lease liability and corresponding right-of-use asset. Aptose previously leased lab space in San Diego, which we exited prior to the expiration of the lease on February 28, 2023. The costs incurred in exiting this laboratory space were not material. We lease office space in Toronto, Ontario, Canada, with this lease previously scheduled to expire on June 30, 2023. This lease was extended for one year on February 23, 2023, with this extension expiring on June 30, 2024. The Company has not included any extension periods in calculating its right-to-use assets and lease liabilities. The Company also enters into leases for small office equipment.