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ESSA Pharma Inc. – ‘20FR12B’ on 5/28/15

On:  Thursday, 5/28/15, at 9:18pm ET   ·   As of:  5/29/15   ·   Accession #:  1193125-15-204762   ·   File #:  1-37410

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 5/29/15  ESSA Pharma Inc.                  20FR12B                2:1.7M                                   RR Donnelley/FA

Document/Exhibit                   Description                      Pages   Size 

 1: 20FR12B     Registration of Securities of a Foreign Private     HTML   1.11M 
                          Issuer                                                 
 2: EX-15.1     Letter re: Unaudited Interim Financial Information  HTML      6K 

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

OR

For the fiscal year ended                     

OR

For the transition period from                      to                     

OR

Date of event requiring this shell company report                     

Commission file number:                     

ESSA Pharma Inc.

(Exact name of Registrant as specified in its charter)

Not Applicable

(Translation of Registrant’s name into English)

British Columbia, Canada

(Jurisdiction of incorporation or organization)

Suite 720, 999 West Broadway, Vancouver, British Columbia, Canada, V5Z 1K5

(Address of principal executive offices)

David Wood, Chief Financial Officer; Tel- (778)-331-0962; Fax-(604)-738-4080

Suite 720, 999 West Broadway, Vancouver, British Columbia, Canada, V5Z 1K5

(Name, Telephone, E-mail, and/or Facsimile number and Address of Company Contact Person)

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

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: Not applicable

Indicate by check mark whether Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act     Yes    ¨    No  x

If this report is an annual or transition report, indicate by check mark if Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.     Yes    ¨    No  ¨

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Sections 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 (1) has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such period that the registrant was required to submit and post such files).     Yes    ¨    No  ¨

Indicate by check mark whether Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act

Indicate by check mark which basis of accounting the Registrant has used to prepare the financial statements included in this filing:

If “Other” has been check in response to the previous question, by check mark which financial statement item Registrant has elected to follow:    Item 17  ¨    Item 18  ¨

If this is an annual report, indicate by check mark whether Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ¨

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TABLE OF CONTENTS

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GENERAL MATTERS

In this Registration Statement on Form 20-F (“Registration Statement”), all references to the “Company”, “ESSA”, “our”, “us” or “we” refer to ESSA Pharma Inc. and its subsidiary, unless the context clearly requires otherwise. Certain terms used herein are defined in the text and others are included in the glossary of terms. See “Glossary of Terms”.

ESSA uses the Canadian dollar as its reporting currency. All references to “$” or “C$” are to Canadian dollars and references to “US$” are to United States dollars. On May 27, 2015 the noon exchange rate for the conversion of Canadian dollars into U.S. dollars as reported by the Bank of Canada was C$1.00 = US$0.80. See also Item 3 - “Key Information” for more detailed currency and conversion information.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Registration Statement includes certain statements that are “forward-looking statements”. All statements in this Registration Statement, other than statements of historical facts, are forward-looking statements. These statements appear in a number of different places in this Registration Statement and can be identified by words such as “anticipates”, “estimates”, “projects”, “expects”, “intends”, “believes”, “plans”, “will”, “could”, “may”, “projects”, or their negatives or other comparable words. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company’s 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. Examples of such forward-looking statements include, but are not limited to:

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Such statements reflect ESSA’s current views with respect to future events, are subject to risks and uncertainties and are necessarily based upon a number of estimates and assumptions that are inherently subject to significant medical, scientific, business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause ESSA’s actual results, performance or achievements to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements. In making the forward looking statements included in this Registration Statement, the Company has made various material assumptions, including but not limited to (i) the Company’s ability to obtain positive results of clinical trials; (ii) the Company’s ability to obtain required regulatory approvals; (iii) favorable general business and economic conditions; (iv) the Company’s ability to successfully out-license or sell its future products, if any, and in-license and develop new products; (v) the availability of financing on reasonable terms; (vi) the Company’s ability to attract and retain skilled staff; (vii) market competition; (viii) the products and technology offered by the Company’s competitors; and (ix) the Company’s ability to protect patents and proprietary rights.

In evaluating forward-looking statements, current and prospective shareholders should specifically consider various factors, including the risks outlined herein under the heading “Risk Factors” in Item 3 of this Registration Statement. Some of these risks and assumptions include, among others:

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Should one or more of these risks or uncertainties, or a risk that is not currently known to ESSA, materialize, or should assumptions underlying those forward-looking statements prove incorrect, actual results may vary materially from those described herein. These forward-looking statements are made as of the date of this Registration Statement and the Company does not intend, and do not assume any obligation, to update these forward-looking statements, except as required by applicable securities laws. Investors are cautioned that forward-looking statements are not guarantees of future performance and are inherently uncertain. Accordingly, investors are cautioned not to put undue reliance on forward-looking statements.

The Company advises you that these cautionary remarks expressly qualify in their entirety all forward-looking statements attributable to the Company or persons acting on its behalf.

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GLOSSARY OF TERMS

As used in this Registration Statement, the following terms have the respective meaning as specified below:

“2014 Agency Agreement” means the agency agreement between the Company and Haywood Securities Inc. dated as of October 22, 2014;

“2015 Agency Agreement” means the agency agreement between the Company and Bloom Burton & Co. Limited dated as of January 16, 2015;

“2012 Financing” has the meaning given to it under the heading “History and development of the Company—2012” in Item 4 of this Registration Statement;

“2014 Financing” has the meaning given to it under the heading “History and development of the Company—2014” in Item 4 of this Registration Statement;

“2014 Special Warrant Financing” means the issuance on October 22, 2014 and October 23, 2014 of an aggregate of 679,640 2014 Special Warrants by the Company at $2.00 per 2014 Special Warrant, all of which were issued in accordance with the 2014 Special Warrant Indenture and 252,500 of which were issued in accordance with the 2014 Agency Agreement;

“2014 Special Warrant Indenture” means the special warrant indenture between the Company and the Special Warrant Agent dated as of October 22, 2014;

“2015 Special Warrant Financing” has the meaning given to it under the heading “History and development of the Company—2015” in Item 4 of this Registration Statement;

“2015 Special Warrant Indenture” means the special warrant indenture between the Company and the Special Warrant Agent dated as of January 16, 2015;

“2014 Special Warrants” means the 679,640 special warrants of the Company issued on October 22, 2014 and October 23, 2014 at a price of $2.00 per 2014 Special Warrant for gross proceeds of approximately $1,359,280;

“2015 Special Warrants” means the 4,363,634 special warrants of the Company issued on January 16, 2015 at a price of US$2.75 per 2015 Special Warrant for gross proceeds of approximately US$12,000,000;

“AR” means androgen receptor;

“Articles” means the Articles of the Company;

“Astellas” means Astellas Pharma Inc.;

“Audit Committee” means the Company’s audit committee;

“Auditor” means Davidson & Company LLP;

“BC Cancer Agency” means the British Columbia Cancer Agency;

“Bloom Burton” means Bloom Burton & Co. Limited;

“Bloom Burton Warrants” means the 25,000 warrants issued to Bloom Burton Healthcare Structured Lending Fund to purchase 25,000 Common Shares at an exercise price of $2.00 per Common Share and expiring on April 15, 2019;

“Board” means the board of directors of ESSA;

“Broker Warrants” means the aggregate 361,852 warrants of the Company issued to the financing agents in connection with the 2014 Financing, the 2014 Special Warrant Financing and the 2015 Special Warrant Financing;

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“Cardiome” means Cardiome Pharma Corp.;

“CBP” means CREB-binding protein;

“CEO” means Chief Executive Officer;

“CFO” means Chief Financial Officer;

“CFPOA” means the Canadian Corruption of Foreign Public Officials Act;

“cGMP” means current Good Manufacturing Practice;

“CMC” means Chemistry, Manufacturing and Control;

“CMO” means contract manufacturing organizations;

“CMS” means Centers for Medicare & Medicaid Services;

“Common Shares” means the common shares in the capital of the Company;

“Convertible Debenture” has the meaning given to it under the heading “History and development of the Company – 2014” in Item 4 of this Registration Statement;

“CPRIT” means the Cancer Prevention and Research Institute of Texas;

“CPRIT Agreement” refers to the CPRIT Grant Agreement executed by the Chief Executive Officer of CPRIT on July 9, 2014;

“CPRIT Grant” has the meaning given to it under the heading “History and development of the Company – 2014” in Item 4 of this Registration Statement;

“CRO” means Contract Research Organizations;

“CRPC” means castrate-resistant prostate cancer;

“CTA” means Clinical Trial Application, the approval of which is the key step in obtaining Canadian regulatory approval to commence clinical trials in Canada. It is similar to the IND application submitted to the FDA in the United States;

“EMA” means European Medicine Agency;

“ESSA Texas” means ESSA Pharmaceuticals Corp., a corporation existing under the laws of the State of Texas;

“FCPA” means the U.S. Foreign Corrupt Practices Act;

“FDA” means the U.S. Food and Drug Administration;

“GCP” means Good Clinical Practices;

“GLP” means Good Laboratory Practices;

“GMP” means Good Manufacturing Practices;

“Guidelines” means National Policy 58-201 – Corporate Governance Guidelines;

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“HIPAA” means the U.S. Health Insurance Portability and Accountability Act of 1996;

“IFRS” means International Financial Reporting Standards, as issued by the International Accounting Standards Board;

“in vitro” means experimentation in a test tube, or, generally, in a controlled environment outside a living organism;

“in vivo” means experimentation done in or on the living tissue of a whole, living organism as opposed to a partial or dead one;

“IND” means Investigational New Drug;

“IRB” means Institutional Review Boards;

“LBD” means the ligand-binding domain of the androgen receptor;

“LHRH” means Luteinizing hormone releasing hormone;

“License Agreement” means the licensing agreement between the Company and the Licensors dated December 22, 2010, and amended on February 10, 2011 and May 27, 2014, for certain patent rights and technology related to the Licensed IP, as further described under the heading “Patents and Proprietary Rights – License Agreement with UBC and the BC Cancer Agency” in Item 4 of this Registration Statement;

“Licensed IP” has the meaning given to it under the heading “History and development of the Company - Patents and Proprietary Rights – License Agreement with UBC and the BC Cancer Agency” in Item 4 of this Registration Statement;

“Licensors” means UBC and the BC Cancer Agency;

“Liquidity Event” has the meaning given to it in the Articles;

“MMA” means the U.S. Medicare Modernization Act;

“Naeja” means Naeja Pharmaceuticals Inc.;

“NASDAQ” means one of the Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market market tiers of the NASDAQ Stock Market LLC (a U.S. national securities exchange);

“NDA” means New Drug Application;

“NDS” means New Drug Submission;

“NEO” means Named Executive Officer;

“NI 52-110” means National Instrument 52-110 – Audit Committees;

“NI 58-101” means National Instrument 58-101 – Disclosure of Corporate Governance Practices;

“NTD” means amino-terminal domain;

“NYSE” means the NYSE MKT LLC (a U.S. national securities exchange);

“Options” means options to acquire Common Shares;

“Penalty Conversion Ratio” has the meaning given to it under the heading “Outstanding Security Data”;

“Preferred Shares” means the Class A preferred shares in the capital of the Company;

“Project” means ESSA’s development of EPI-506 towards completion of Phase 1/2 clinical proof-of-concept;

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“PSA” means prostate-specific antigen;

“R&D” means research and development;

“Recognized Exchange” means, collectively, the Toronto Stock Exchange, the TSX-V, the NASDAQ Stock Market, the New York Stock Exchange, any other equity market based in North America having listing standards similar to those of the TSX-V as determined by the Board in its sole discretion, acting reasonably or any other equity market as may be approved by holders representing at least 66 and 2/3 % of the issued and outstanding Preferred Shares;

“SCID” means Severe Combined Immunodeficiency;

“SEDAR” means the System for Electronic Document Analysis and Retrieval;

“SEC” means the U.S. Securities and Exchange Commission;

“Special Warrant Agent” means Computershare Trust Company of Canada;

“Stock Option Plan” means the stock option plan of the Company dated May 21, 2015;

“TPD” means the Therapeutic Products Division of Health Canada;

“TSX-V” means the TSX Venture Exchange;

“UBC” means the University of British Columbia;

“U.S.” means the United States of America; and

“U.S. Anti-Kickback Statute” refers to the federal Anti-Kickback Statute, which is a criminal statute that prohibits the exchange of anything of value in an effort to induce or reward the referral of federal health care program business.

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PART I

The directors and senior management of the Company are as follows:

In the first quarter of 2014, the Company retained Bloom Burton & Co. Limited (“Bloom Burton”), a Toronto-based financial advisory firm, to help develop a financing strategy for ESSA. Bloom Burton is located at 65 Front Street East, Suite 300, Toronto, Ontario, Canada M5E 1B5.

The auditor of the Company for the past three fiscal years is Davidson & Company LLP (the “Auditor”) at its offices located at 1200 – 609 Granville Street, P.O. Box 10372, Pacific Centre, Vancouver, British Columbia, Canada V7Y 1G6. Davidson & Company LLP is registered with the Canadian Public Accountability Board and with the United States Public Company Accounting Oversight Board, and is a member of the Institute of Chartered Accountants in of British Columbia.

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Not applicable.

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The following table sets forth selected consolidated financial information for the periods indicated, prepared in accordance with IFRS. In 2013, the Company changed its fiscal year end from December 31 to September 30, commencing with the 2013 fiscal year and to continue each year going forward. This was done to better align the Company’s financial reporting with its operations cycle. The selected consolidated financial information as at and for the nine months ended September 30, 2013 and as at and for the years ended September 30, 2014, December 31, 2012 and December 31, 2011 has been derived from ESSA’s audited financial statements and accompanying notes. The selected consolidated financial information as at and for the six months ended March 31, 2015 and March 31, 2014 has been derived from the unaudited condensed interim consolidated financial statements and accompanying notes thereto. The table below does not include information for the fiscal year ended December 31, 2010 as the financial statements for such fiscal year were unaudited and were prepared in accordance with Canadian generally accepted accounting principles rather than IFRS. Selected consolidated financial information for such fiscal year cannot be provided on a restated basis without unreasonable effort or expense.

The selected consolidated financial information should be read in conjunction with “Management’s Discussion and Analysis” and the audited financial statements and accompanying notes contained elsewhere in this Registration Statement. The selected consolidated financial information set out below may not be indicative of ESSA’s future performance.

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Exchange Rate Information

ESSA uses the Canadian dollar as its reporting currency. The following table sets forth certain information with respect to the U.S./Canadian dollar exchange rate (based on the noon exchange rates for the conversion of Canadian dollars into U.S. dollars as published by the Bank of Canada) for the periods shown:

The table below presents the Company’s unaudited capitalization and indebtedness as of March 31, 2015 in accordance with IFRS. You should read this table in conjunction with Item 3.A., “Selected Financial Data”, Item 5, “Operating and Financial Review and Prospects”, and Item 18, “Financial Statements”, related notes and other financial information contained elsewhere in this Registration Statement.

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Not applicable.

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An investment in ESSA involves a high degree of risk and should be considered highly speculative due to the nature and present early stage of the Company’s business. The following risks are the material risks that the Company faces; however, the risks below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we believe to be immaterial may also adversely affect our business. If any of the following risks occur, our business, financial condition and results of operations could be seriously harmed and you could lose all or part of your investment. Before deciding to invest in any Common Shares, investors should carefully consider the risk factors described below.

Our future success is dependent primarily on the regulatory approval and commercialization of a single product.

The Company does not have any products that have obtained regulatory approval. Currently, our only product candidate is EPI-506, and the Company currently expects to design and execute a Phase 1/2 study starting in 2015 to determine the safety and potential therapeutic benefits of EPI-506 in CRPC patients. As a result, the Company’s near-term prospects, including our ability to finance our operations and generate revenue, are substantially dependent on our ability to obtain regulatory approval for, and, if approved, to successfully commercialize EPI-506 in a timely manner. ESSA cannot commercialize EPI-506 or other future product candidates in the United States without first obtaining regulatory approval for the product from the FDA; similarly, ESSA cannot commercialize EPI-506 or other future product candidates outside of the United States without obtaining regulatory approval from comparable foreign regulatory authorities. The FDA review process typically takes years to complete and approval is never guaranteed.

ESSA may not be able to successfully commercialize EPI-506 or other future product candidates.

Even if EPI-506 or other future product candidates were to successfully obtain approval from the FDA and comparable foreign regulatory authorities, any approval might contain significant limitations related to use restrictions for specified age groups, warnings, precautions or contraindications, may be subject to burdensome post-approval study or risk management requirements, or may be limited to a subset of CRPC patients with limited commercial value. If ESSA is unable to obtain regulatory approval for EPI-506 in one or more jurisdictions, or any approval contains significant limitations, ESSA may not be able to obtain sufficient funding or generate sufficient revenue to continue the development of any other future product candidates that ESSA may discover, in-license, develop or acquire in the future. Also, any regulatory approval of EPI-506 or any future product candidates, once obtained, may be withdrawn. Furthermore, even if ESSA obtains regulatory approval for EPI-506, the commercial success of EPI-506 will depend on a number of factors, including the following:

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Many of these factors are beyond our control. If ESSA, or our potential commercialization collaborators, are unable to successfully commercialize EPI-506, ESSA may not be able to earn sufficient revenues to continue the Company’s business.

If the Company breaches any of the agreements under which the Company licenses rights to our product candidates or technology from third parties, the Company could lose license rights that are important to ESSA’s business. Our current license agreement may not provide an adequate remedy for its breach by the licensor.

ESSA is developing our EPI-series drug candidates pursuant to a License Agreement with UBC and the BC Cancer Agency. The Company is subject to a number of risks associated with the Company’s collaboration with UBC and the BC Cancer Agency, including the risk that UBC or the BC Cancer Agency may terminate the license agreement upon the occurrence of certain specified events. ESSA’s license agreement requires, among other things, that the Company make certain payments and use reasonable commercial efforts to meet certain clinical and regulatory milestones. See “Business Overview—Patents and Proprietary Rights” in Item 4 of this Registration Statement. If ESSA fails to comply with any of these obligations or otherwise breaches this or similar agreements, UBC, the BC Cancer Agency or any future licensors may have the right to terminate the license. ESSA could also suffer the consequences of non-compliance or breaches by licensors in connection with ESSA’s license agreements. Such non-compliance or breaches by such third parties could in turn result in ESSA’s breaches or defaults under the Company’s agreements with the Company’s other collaboration partners, and the Company could be found liable for damages or lose certain rights, including rights to develop and/or commercialize a product or product candidate. Loss of our rights to the Licensed IP or any similar license granted to ESSA in the future, or the exclusivity rights provided therein, could harm ESSA’s financial condition and operating results.

The Company may not be able to obtain required regulatory approvals for the Company’s proposed products.

The research, testing, manufacturing, labeling, packaging, storage, approval, sale, marketing, advertising and promotion, pricing, export, import and distribution of drug products developed by ESSA or ESSA’s future collaborative partners, if any, is subject to extensive regulation by federal, provincial, state and local governmental authorities and those regulations differ from country to country. ESSA’s potential product candidates will be principally regulated in the United States by the FDA, in Canada by the TPD, in the European Union by the European Medicines Agency (“EMA”) and the regulators in the individual European Union member countries and by other similar regulatory authorities in Japan and other jurisdictions. Government regulation substantially increases the cost and risk of researching, developing, manufacturing and selling products. Following several widely publicized issues in recent years, the FDA and similar regulatory authorities in other jurisdictions have become increasingly focused on product safety. This development has led to requests for more clinical trial data, for the inclusion of a significantly higher number of patients in clinical trials and for more detailed analysis of trial results. Consequently, the process of obtaining regulatory approvals, particularly from the FDA, has become more costly, time consuming and challenging than in the past. Any product developed by ESSA or ESSA’s future collaborative partners, if any, must receive all relevant regulatory approvals or clearances from the applicable regulatory authorities before it may be marketed and sold in a particular country.

ESSA will not be permitted to market any potential products in the United States, Canada or in other countries where ESSA intends to market our potential product candidates until the potential product receives approval of a NDA from the FDA or similar approval in other countries as restrictions apply. In the United States, the FDA generally requires the completion of pre-clinical testing and clinical trials of each drug to establish its safety and efficacy and extensive pharmaceutical development to ensure its quality before an NDA is approved. This process can take many years and require the expenditure of substantial resources and may include post-marketing studies and surveillance. Regulatory authorities in other jurisdictions impose similar requirements. Of the large number of drugs in development, only a small percentage result in the submission of an NDA to the FDA and even fewer are approved for commercialization. To date, the Company has not submitted an NDA for any of the Company’s potential products to the FDA or comparable applications to other regulatory authorities. If the Company’s development efforts for potential products are not successful for the treatment of CRPC and regulatory approval is not obtained in a timely fashion or at all, the Company’s business will be adversely affected.

The receipt of required regulatory approvals for the Company’s potential products is uncertain and subject to a number of risks, including the following:

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The FDA and other regulators have substantial discretion in the approval process and may refuse to accept any application or may decide that the Company’s data is insufficient for approval and require additional clinical trials, or other studies. In addition, varying interpretations of the data obtained from pre-clinical studies and clinical trials could delay, limit or prevent regulatory approval of the Company’s potential products. ESSA, or ESSA’s future collaborative partner, if any, must obtain and maintain regulatory authorization to conduct clinical trials. ESSA’s pre-clinical research is subject to Good Laboratory Practices (“GLP”) and other requirements and ESSA’s clinical research is subject to good clinical practice and other requirements. Failure to adhere to these requirements could invalidate ESSA’s data. In addition, the relevant regulatory authority or independent review board may modify, suspend or terminate a clinical trial at any time for various reasons, including a belief that the risks to study subjects outweigh the benefits. Further, the process of obtaining regulatory approvals is expensive, often takes many years, if approval is obtained at all, and can vary substantially based upon, among other things, the type, complexity and novelty of the prescription drug candidates involved, the jurisdiction in which regulatory approval is sought and the substantial discretion of the regulatory authorities. If regulatory approval is obtained in one jurisdiction, that does not necessarily mean that ESSA’s potential products will receive regulatory approval in all jurisdictions in which the Company may seek approval, or any regulatory approval obtained may not be as broad as what was obtained in other jurisdictions. However, the failure to obtain approval for our potential products in one or more jurisdictions may negatively impact the Company’s ability to obtain approval in a different jurisdiction. Accordingly, despite our expenditures and investment of time and effort, ESSA may be unable to receive required regulatory approvals for product candidates developed by us. If a significant portion of these development efforts are not successfully completed, required regulatory approvals are not obtained, or any approved products are not commercially successful, ESSA’s business, financial condition and results of operations may be materially harmed.

Administering any of ESSA’s potential product candidates to humans may produce undesirable side effects. These side effects could interrupt, delay or halt clinical trials and could result in the applicable regulatory authorities denying approval of our product candidates for any or all of the targeted indications. If regulatory approval for a product is granted, the approval will be limited to those disease states, conditions, and populations for which the product is demonstrated through clinical trials to be safe and effective, and any approval granted may be too narrow to be commercially viable.

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ESSA relies on proprietary technology, the protection of which can be unpredictable and costly.

The Company’s activities depend, in part, on its ability to (i) obtain and maintain patents, trade secret protection and operate without infringing the intellectual proprietary rights of third parties, (ii) successfully defend these patents (including patents owned by or licensed to the Company) against third-party challenges, and (iii) successfully enforce these patents against third party competitors. There is no assurance that the Company will be granted such patents and/or proprietary technology or that such granted patents and/or proprietary technology will not be circumvented through the adoption of a competitive, though non-infringing, process or product. The patent positions of pharmaceutical companies can be highly uncertain and involve complex legal, scientific and factual questions for which important legal principles remain unresolved. Changes in either the patent laws or in interpretations of patent laws may diminish the value of the Company’s intellectual property. Accordingly, the Company cannot predict the breadth of claims that may be allowable or enforceable in its patents (including patents owned by or licensed to the Company). Failure to protect the Company’s existing and future intellectual property rights could seriously harm its business and prospects and may result in the loss of its ability to exclude others from using the Company’s technology or its own right to use the technologies. If the Company does not adequately ensure the right to use certain technologies, it may have to pay others for the right to use their intellectual property, pay damages for infringement or misappropriation and/or be enjoined from using such intellectual property. The Company’s patents do not guarantee the right to use the technologies if other parties own intellectual property rights that are necessary in order to use such technologies. The Company’s patent position is subject to complex factual and legal issues that may give rise to uncertainty as to the validity, scope and enforceability of a particular patent.

In addition, there is a risk that improved versions of ESSA’s own product developed by third parties will be granted patent protection and compete with our products. For example, any patents ESSA obtains may not be sufficiently broad to prevent others from utilizing our technologies or from developing competing products and technologies. Third parties may attempt to circumvent ESSA’s patents by means of alternative designs and processes or may independently develop similar products, duplicate any of ESSA’s products not under patent protection, or design around the inventions ESSA claims in any of our existing patents, existing patent applications or future patents or patent applications. The actual protection afforded by a patent varies on a product-by-product basis, from country to country and depends upon many factors, including the type of patent, the scope of our coverage, the availability of regulatory related extensions, the availability of legal remedies in a particular country and the validity and enforceability of the patents. It is impossible to anticipate the breadth or degree of protection that patents will afford products developed by us or their underlying technology.

In any case, there can be no assurance that:

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In addition, effective patent, trademark, copyright and trade secret protection may be unavailable, limited or not sought in certain foreign countries. Further, countries we may sell to may not protect our intellectual property to the same extent as the laws of the United States, Canada or Europe, and may lack rules and procedures required for defending ESSA’s patents.

There is a risk that any patents issued relating to ESSA’s products or any patents licensed to ESSA may be successfully challenged or that the practice of our products might infringe the patents of third parties. If the practice of ESSA’s products infringes the patents of third parties, the Company may be required to design around such patents, potentially causing increased costs and delays in product development and introduction or precluding ESSA from developing, manufacturing or selling our planned products. In addition, disputes may arise as to the rights to know-how and inventions among ESSA’s employees and consultants who use intellectual property owned by others for the work performed for the Company. The scope and validity of patents which may be obtained by third parties, the extent to which ESSA may wish or need to obtain patent licenses and the cost and availability of such licenses are currently unknown. If such licenses are obtained, it is likely they would be royalty bearing, which could reduce ESSA’s income. If licenses cannot be obtained on an economical basis, delays in market introduction of our planned products could occur or introduction could be prevented, in some cases causing the expenditure of substantial funds.

In certain instances, ESSA may elect not to seek patent protection but instead rely on the protection of the Company’s technology through confidentiality agreements or trade secrets. There can be no assurance that these agreements will not be breached, that the Company will have adequate remedies for any breach or that such persons or institutions will not assert rights to intellectual property arising out of these relationships. The value of ESSA’s assets could also be reduced to the extent that third parties are able to obtain patent protection with respect to aspects of ESSA’s technology or products or that confidential measures we have in place to protect the Company’s proprietary technology are breached or become unenforceable. However, third parties may independently develop or obtain similar technology and such third parties may be able to market competing products and obtain regulatory approval through a showing of equivalency to one of our products which has obtained regulatory approval, without being required to undertake the same lengthy and expensive clinical studies that ESSA would have already completed. The cost of enforcing the Company’s patent rights or defending rights against infringement charges by other patent holders may be significant and could limit operations.

Litigation may also be necessary to enforce patents issued or licensed to ESSA or to determine the scope and validity of a third party’s proprietary rights. ESSA could incur substantial costs if the Company is required to defend itself in patent suits brought by third parties, if ESSA participates in patent suits brought against or initiated by ESSA’s corporate collaborators or if ESSA initiates such suits. The Company may not have the necessary resources to participate in or defend any such activities or litigation. Even if ESSA did have the resources to vigorously pursue our interests in litigation, because of the complexity of the subject matter, it is impossible to predict whether ESSA would prevail in any such action. Any claims of patent infringement asserted by third parties may:

An adverse outcome in litigation or an interference to determine priority or other proceeding in a court or patent or selling office could subject ESSA to significant liabilities, require disputed rights to be licensed from third parties or require ESSA to cease using certain technology or products, any of which may have a material adverse effect on the Company’s business, financial condition and results of operations.

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Clinical drug development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results and ESSA’s current product candidates may not have favourable results in later trials or in the commercial setting.

Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. The results of pre-clinical studies and early clinical trials may not be predictive of the results of later-stage clinical trials. Pre-clinical tests and Phase 1 and Phase 2 clinical trials are primarily designed to test safety, to study pharmacokinetics and pharmacodynamics and to understand the side effects of product candidates at various doses and schedules. Success in pre-clinical or animal studies and early clinical trials does not ensure that later large scale efficacy trials will be successful nor does it predict final results. Favourable results in early trials may not be repeated in later trials. The Company cannot assure you that TPD/the FDA or other similar government bodies will view the results as the Company does or that any future trials of our proposed products for other indications will achieve positive results. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through pre-clinical studies and initial clinical trials.

A number of companies in the pharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier trials. Any future clinical trial results for ESSA’s proposed products may not be successful. A number of factors could contribute to a lack of favorable safety and efficacy results for our proposed products for other indications. For example, such trials could result in increased variability due to varying site characteristics, such as local standards of care, differences in evaluation period and due to varying patient characteristics including demographic factors and health status. There can be no assurance that the Company’s clinical trials will demonstrate sufficient safety and efficacy for TPD or the FDA to approve ESSA’s potential products for the treatment of CRPC, or any other indication that the Company may consider in any additional NDA/NDS submissions for ESSA’s potential products.

The Company will be required to demonstrate through larger-scale clinical trials that any potential future product is safe and effective for use in a diverse population before ESSA can seek regulatory approvals for its commercial sale. There is typically an extremely high rate of attrition from the failure of product candidates proceeding through clinical and post-approval trials. If ESSA’s potential products fail to demonstrate sufficient safety and efficacy in ongoing or future clinical trials, the Company could experience potentially significant delays in, or be required to abandon development of, ESSA’s product candidates currently under development.

In addition, clinical trials and nonclinical studies performed by research organizations and other independent third parties may yield negative results regarding the effect of ESSA’s potential products on CRPC, either in absolute terms or relative to other products.

The Company has incurred significant losses in every quarter since its inception and anticipates that it will continue to incur significant losses in the future.

ESSA is a development stage pharmaceutical company with a limited operating history. Investment in pharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that any potential product candidate will fail to demonstrate adequate effect or an acceptable safety profile, gain regulatory approval or become commercially viable. ESSA does not have any products approved by regulatory authorities for marketing or commercial sale and have not generated any revenue from product sales, or otherwise, to date, and ESSA continues to incur significant research, development and other expenses related to our ongoing operations. As a result, ESSA is not profitable and has incurred losses in every reporting period since inception in 2009. For the year ended September 30, 2014 and the nine months ended September 30, 2013, ESSA reported a net loss of $1,955,029 and $1,058,060, respectively. As of September 30, 2014, ESSA had an accumulated deficit since inception of $6,129,603.

The Company expects to continue to incur significant expenses and operating losses for the foreseeable future. ESSA anticipates these losses to increase as we continue the R&D of, and seek regulatory approvals for, any of our future product candidates and potentially begin to commercialize any products that may achieve regulatory approval. ESSA may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our financial condition. The size of our future net losses will depend, in part, on the rate of future growth of ESSA’s expenses and ability to generate revenues. The Company’s prior losses and expected future losses have had and will continue to have an adverse effect on the Company’s financial condition.

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Even if the Company is able to commercialize any product candidate, there can be no assurance that the Company will generate significant revenues or ever achieve profitability.

The Company expects to continue to incur substantial losses for the foreseeable future, and these losses may be increasing. The Company is uncertain about when or if it will be able to achieve or sustain profitability. If the Company achieves profitability in the future, it may not be able to sustain profitability in subsequent periods. Failure to become and remain profitable would impair the Company’s ability to sustain operations and adversely affect the price of the Common Shares and its ability to raise capital.

ESSA has a limited operating history, which may make it difficult for you to evaluate the success of ESSA’s business to date and to assess ESSA’s future viability.

The Company’s operations to date have been primarily limited to organizing and staffing ESSA, acquiring the in-licensing of intellectual property, discovering and developing novel small molecule drug candidates and conducting preliminary pre-clinical research. ESSA has not yet obtained regulatory approval for any of the Company’s product candidates. Consequently, evaluating our performance, viability or future success will be more difficult than if ESSA had a longer operating history or approved products on the market.

ESSA will have significant additional future capital needs and there are uncertainties as to the Company’s ability to raise additional funding.

ESSA may require significant additional capital resources to expand our business, in particular the further development of our proposed products. Advancing ESSA’s product candidates or acquisition and development of any new products or product candidates may require considerable resources and additional access to capital. In addition, ESSA’s future cash requirements may vary materially from those now expected. For example, ESSA’s future capital requirements may increase if:

ESSA could potentially seek additional funding through strategic collaborations, alliances and licensing arrangements, through public or private equity or debt financing, or through other transactions. However, if sales are slow to increase or if capital market conditions in general, or with respect to life sciences companies such as ESSA’s, are unfavourable, ESSA’s ability to obtain significant additional funding on acceptable terms, if at all, will be negatively affected.

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If sufficient capital is not available, ESSA may be required to delay our business expansion or our R&D projects, either of which could have a material adverse effect on ESSA’s business, financial condition, prospects or results of operations.

Raising additional capital may cause dilution to ESSA’s existing Shareholders, restrict ESSA’s operations or require ESSA to relinquish rights to technologies or any future product candidates.

Until the Company can generate substantial revenue from product sales, if ever, the Company expects to finance future cash needs through a combination of private and public equity offerings, debt financings, strategic collaborations and alliances and licensing arrangements. Additional financing that the Company may pursue may involve the sale of our Preferred Shares, Common Shares or financial instruments that are exchangeable for, or convertible into, our Preferred Shares and/or Common Shares, which could result in significant dilution to ESSA’s shareholders and the terms may include liquidation or other preferences that adversely affect the rights of existing shareholders. Additional capital may not be available on reasonable terms, if at all. Furthermore, these securities may have rights senior to those of ESSA’s Preferred Shares or Common Shares and could contain covenants that include restrictive covenants limiting ESSA’s ability to take important actions and potentially impair ESSA’s competitiveness, such as limitations on ESSA’s ability to incur additional debt, make capital expenditures, acquire, sell or license intellectual property rights or declare dividends. If we raise additional funds through strategic collaborations and alliances or licensing arrangements with third parties, ESSA may have to relinquish valuable rights to technologies or future product candidates, or grant licenses on terms that are not favorable to ESSA. If the Company is unable to raise additional funds when needed, the Company may be required to delay, limit, reduce or terminate our product development or commercialization efforts or grant rights to develop and market product candidates that ESSA would otherwise prefer to develop and market ourselves.

As an organization, ESSA has never conducted a clinical trial or submitted an NDA/NDS or IND/CTA before and may be unable to do so for our potential products or any other future products ESSA develops.

ESSA is currently at the pre-clinical stage and still needs to conduct all levels of clinical trials. The conduct of Phase 3 clinical trials and the submission of a successful IND/CTA and NDA/NDS is a complicated process. As an organization, ESSA has not conducted a clinical trial before, has limited experience in preparing, submitting and prosecuting regulatory filings and has not submitted an NDA/NDS or IND/CTA before. ESSA also has had limited interactions with the FDA and has not discussed our current clinical trial designs or implementation with the FDA or regulatory authorities in other jurisdictions. Consequently, even if ESSA’s initial clinical trials are successful, the Company may be unable to successfully and efficiently execute and complete necessary clinical trials in a way that leads to NDA/NDS submission and approval of ESSA’s proposed products or any other future product candidate ESSA may develop. The Company may require more time and incur greater costs than competitors and may not succeed in obtaining regulatory approvals of products that the Company develops. Failure to commence or complete, or delays in, ESSA’s planned clinical trials, would prevent ESSA from or delay ESSA in commercializing proposed products or any other future product candidate ESSA develops.

In order to establish the Company’s sales and marketing infrastructure, the Company will need to expand the size of its organization and the Company may experience difficulties in managing this growth.

As the Company’s development and commercialization plans and strategies develop, the Company expects that it will need to expand the size of its employee base for managerial, operational, sales, marketing, financial and other resources. Future growth would impose significant added responsibilities on members of management, including the need to identify, recruit, maintain, motivate and integrate additional employees. In addition, the Company’s management may have to divert a disproportionate amount of its attention away from the Company’s day-to-day activities and devote a substantial amount of time to managing these growth activities. The Company’s future financial performance and its ability to commercialize our potential products and any other future product candidates and its ability to compete effectively will depend, in part, on the Company’s ability to effectively manage any future growth.

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If the Company is not successful in attracting and retaining highly qualified personnel, the Company may not be able to successfully implement its business strategy.

The Company’s ability to compete in the highly competitive pharmaceuticals industry depends in large part upon its ability to attract and retain highly qualified managerial, scientific and medical personnel. Competition affects the Company’s ability to hire and retain highly qualified personnel on acceptable terms. The Company is highly dependent on its management, scientific and medical personnel. The Company’s management team has substantial knowledge in many different aspects of drug development and commercialization. Despite the Company’s efforts to retain valuable employees, members of its management, scientific and medical teams may terminate their employment with the Company on short notice or, potentially, without any notice at all. The loss of the services of any of the Company’s executive officers or other key employees could potentially harm its business, operating results or financial condition. The Company’s success may also depend on its ability to attract, retain and motivate highly skilled junior, mid-level, and senior managers and scientific personnel. Other pharmaceutical companies with which the Company competes for qualified personnel have greater financial and other resources, different risk profiles, and a longer history in the industry than the Company does. They also may provide more diverse opportunities and better chances for career advancement. Some of these characteristics may be more appealing to high-quality candidates than what the Company has to offer. If the Company is unable to continue to attract and retain high-quality personnel, the rate and success at which the Company can develop and commercialize product candidates would be limited.

The directors and officers of ESSA may be subject to conflicts of interest.

Some of the directors and officers are engaged and will continue to be engaged in the search for additional business opportunities on behalf of other corporations and situations may arise where these directors and officers will be in direct competition with the Company. With the exception of Marianne Sadar and Raymond Andersen, none of the directors or officers are subject to any non-competition agreements. See “Directors and Senior Management” in Item 6A. Some of the directors and officers of the Company are or may become directors or officers of the other companies engaged in other business ventures whose operations may, from time to time, be in direct competition with our operations. Conflicts, if any, will be dealt with in accordance with the relevant provisions of the Business Corporations Act (British Columbia).

If ESSA is unable to enroll subjects in clinical trials, ESSA will be unable to complete these trials on a timely basis.

Patient enrollment, a significant factor in the timing of clinical trials, is affected by many factors including the size and nature of the patient population, the proximity of subjects to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, ability to obtain and maintain patient consents, risk that enrolled subjects will drop out before completion, competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages of the drug being studied in relation to other available therapies, including any new drugs that may be approved for the indications ESSA is investigating. Furthermore, ESSA relies on Contract Research Organizations (“CROs”) and clinical trial sites to ensure the proper and timely conduct of the Company’s clinical trials, and while the Company has agreements governing their committed activities, the Company has limited influence over their actual performance.

If ESSA experiences delays in the completion or termination of any clinical trial of our proposed products or any future product candidates, the commercial prospects of product candidates will be harmed, and ESSA’s ability to generate product revenues from any of these product candidates will be delayed. In addition, any delays in completing ESSA’s clinical trials will increase costs, slow down product candidate development and approval process and could shorten any periods during which ESSA may have the exclusive right to commercialize product candidates or allow competitors to bring products to market before ESSA does, and jeopardize ESSA’s ability to commence product sales, which would impair ESSA’s ability to generate revenues and may harm ESSA’s business, results of operations, financial condition and cash flows and future prospects. In addition, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of ESSA’s proposed products or future product candidates.

ESSA may in the future conduct clinical trials for potential products or any future product candidates in sites outside the United States and the FDA may not accept data from trials conducted in such locations.

ESSA may in the future choose to conduct one or more clinical trials outside the United States. Although the FDA may accept data from clinical trials conducted outside the United States, acceptance of this data is subject to certain conditions imposed by the FDA. This same comment applies to other jurisdictions. For example, the clinical trial must be well designed and conducted and performed by qualified investigators in accordance with ethical principles. The study population must also adequately represent the U.S. population, and the data must be applicable to the U.S. population and U.S. medical practice in ways that the FDA deems clinically meaningful. In addition, while these clinical trials are subject to the applicable local laws, FDA acceptance of the data will be dependent upon its determination that the studies also complied with all applicable U.S. laws and regulations. There can be no assurance the FDA will accept data from trials conducted outside of the United States If the FDA chooses to not accept data collected outside the United States, it would likely result in the need for additional trials, which would be costly and time-consuming and delay or permanently halt the development of ESSA’s proposed products or any future product candidates.

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Even if the Company obtains marketing approval for any potential products, the Company will be subject to ongoing obligations and continued regulatory review, which may result in significant additional expense.

Even if the Company obtains Canadian or U.S. regulatory approval proposed products for the treatment of CRPC, which would not occur until the Company successfully completes Phase 3 clinical trials, the FDA or TPD may still impose significant restrictions on its indicated uses or marketing or the conditions of approval, or impose ongoing requirements for potentially costly and time-consuming post-approval studies, including Phase 4 clinical trials or clinical outcome studies and post-market surveillance to monitor the safety and efficacy of ESSA’s potential products. Even if the Company secures Canadian and/or U.S. regulatory approval, the Company would continue to be subject to ongoing regulatory requirements governing manufacturing, labeling, packaging, storage, distribution, safety surveillance, advertising, promotion, recordkeeping and reporting of adverse events and other post-market information. These requirements include registration with the FDA, as well as continued compliance with GCP obligations, for any clinical trials that the Company conducts post approval. In addition, manufacturers of drug products and their facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with current cGMP requirements relating to quality control, quality assurance and corresponding maintenance of records and documents.

With respect to any drug candidates for which ESSA obtains regulatory approval, ESSA will be subject to post-marketing regulatory obligations, including the requirements by the FDA, EMA and similar agencies in other jurisdictions to maintain records regarding product safety and to report to regulatory authorities serious or unexpected adverse events. Compliance with extensive post-marketing record keeping and reporting requirements requires a significant commitment of time and funds, which may limit our ability to successfully commercialize approved products.

In addition, manufacturing of approved drug products must comply with extensive regulations governing cGMP. Manufacturers and their facilities are subject to continual review and periodic inspections. As ESSA will be dependent on third parties for manufacturing, ESSA will have limited ability to ensure that any entity manufacturing products on our behalf is doing so in compliance with applicable cGMP requirements. Failure or delay by any manufacturer of our products to comply with cGMP regulations or to satisfy regulatory inspections could have a material adverse effect on ESSA, including potentially preventing ESSA from being able to supply products for clinical trials or commercial sales. In addition, manufacturers may need to obtain approval from regulatory authorities for product, manufacturing, or labeling changes, which requires time and money to obtain and can cause delays in product availability. ESSA is also required to comply with good distribution practices such as maintenance of storage and shipping conditions, as well as security of products, in order to ensure product quality determined by cGMP is maintained throughout the distribution network. In addition, ESSA is subject to regulations governing the import and export of our products.

Sales and marketing of pharmaceutical products are subject to extensive federal and provincial or state laws governing on-label and off-label advertising, scientific/educational grants, gifts, consulting and pricing and are also subject to consumer protection and unfair competition laws. Compliance with extensive regulatory requirements requires training and monitoring of the sales force, which imposes a substantial cost on ESSA and ESSA’s collaborators. To the extent ESSA products are marketed by collaborators, ESSA’s ability to ensure their compliance with applicable regulations will be limited. In addition, ESSA is subject to regulations governing the design, testing, control, manufacturing, distribution, labeling, quality assurance, packaging, storage, shipping, import and export of ESSA’s products and product candidates.

Failure to comply with applicable legal and regulatory requirements may result in administrative or judicial sanctions.

If the Company or a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, lack of efficacy, problems with the facility where the product is manufactured, or the Company or its manufacturers fail to comply with applicable regulatory requirements, the Company may be subject to the following administrative or judicial sanctions:

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The occurrence of any event or penalty described above may inhibit the Company’s ability to commercialize potential products and generate revenue. Adverse regulatory action, whether pre- or post-approval, can also potentially lead to product liability claims and increase the Company’s product liability exposure.

In the future, the regulatory climate might change due to changes in the FDA and other regulatory authorities’ staffing, policies or regulations and such changes could impose additional post-marketing obligations or restrictions and related costs. While it is impossible to predict future legislative or administrative action, if the Company is not able to maintain regulatory compliance, the Company will not be able to market our drugs and our business could suffer.

Termination or suspension of, or delays in the commencement or completion of, any necessary future studies of ESSA’s potential products for any indications could occur.

The commencement and completion of any potential clinical studies for future products can be delayed for a number of reasons, including delays related to:

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Product development costs for any of our potential products will increase if the Company has delays in testing or approval or if the Company needs to perform more or larger clinical studies than planned. Additionally, changes in regulatory requirements and policies may occur and the Company may need to amend study protocols to reflect these changes. Amendments may require the Company to resubmit its study protocols to the FDA, TPD or similar regulatory authorities or IRBs for re-examination, which may impact the costs, timing or successful completion of that study. Any delays in completing the Company’s future clinical trials will increase its costs, slow down its development and approval process and jeopardize its ability to generate revenues. Any of these occurrences may have a material adverse effect on the Company’s business, financial condition and prospects.

The Company faces intense competition from other biotechnology and pharmaceutical companies and its operating results will suffer if the Company fails to compete effectively.

The biotechnology and pharmaceutical industries are intensely competitive and subject to rapid and significant technological change. The Company’s potential competitors in Canada, the United States and globally include large, well-established pharmaceutical companies, specialty pharmaceutical sales and marketing companies and specialized cancer treatment companies. Many companies, as well as research organizations, currently engage in, or have in the past engaged in, efforts related to the development of products in the same therapeutic areas as ESSA does. Due to the size of the prostate cancer treatment market and the large unmet medical need for products that treat CRPC, a number of the world’s largest pharmaceutical companies are developing, or could potentially develop, products that could compete with the Company’s.

Many of the companies developing competing technologies and products in ESSA’s field have significantly greater financial resources and expertise in discovery, R&D, manufacturing, pre-clinical studies and clinical testing, obtaining regulatory approvals and marketing than ESSA does. Other smaller companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. Academic institutions, government agencies and other public and private research organizations may also conduct research, seek patent protection and establish collaborative arrangements for discovery, research, clinical development and marketing of products similar to ESSA’s. There is a risk that one or more of our competitors may develop more effective or more affordable products than us and that such competitors will commercialize products that will render our product candidates obsolete. ESSA faces competition with respect to product efficacy and safety, ease of use and adaptability to various modes of administration, acceptance by physicians, the timing and scope of regulatory approvals, availability of resources, reimbursement coverage, price and patent positions of

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others. In addition, these companies and institutions also compete with ESSA in recruiting and retaining qualified personnel. If the Company is not able to compete effectively against its current and future competitors, its business will not grow and its financial condition and operations will suffer materially adverse effects.

Failure to obtain regulatory approval in international jurisdictions would prevent any future product candidates from being marketed outside Canada or the United States.

In order to market and sell our potential future products in the European Union and many other jurisdictions, ESSA must obtain separate marketing approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time required to obtain approval may differ substantially from that required to obtain TPD or FDA approval. The regulatory approval process outside of Canada or the United States generally includes all of the risks associated with obtaining TPD or FDA approval. In addition, in many countries outside Canada or the United States, it is required that the product be approved for reimbursement before the product can be approved for sale in that country. Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for ESSA and could delay or prevent the introduction of our potential products in certain countries. ESSA may not obtain approvals from regulatory authorities outside Canada or the United States on a timely basis, if at all. A failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory approval process in others. ESSA may not be able to file for marketing approvals and may not receive necessary approvals to commercialize our potential products in any market. If ESSA is unable to obtain approval of any of our future product candidates by regulatory authorities in the European Union or another jurisdiction, the commercial prospects of that product candidate may be significantly diminished and our business prospects could decline.

Recently enacted and future legislation in the United States may increase the difficulty and cost for the Company to obtain marketing approval of, and commercialize, its potential future products and affect the prices the Company may obtain.

In the United States, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay marketing approval for ESSA’s potential future products, restrict or regulate post-approval activities and affect the Company’s ability to profitably sell potential future products. Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical products. The Company does not know whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals of ESSA’s potential future products, if any, may be. In addition, increased scrutiny by the U.S. Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject the Company to more stringent product labeling and post-marketing testing and other requirements.

In the United States, the Medicare Modernization Act (the “MMA”) changed the way Medicare covers and pays for pharmaceutical products. The legislation expanded Medicare coverage for drug purchases by the elderly and introduced a new reimbursement methodology based on average sales prices for drugs. In addition, this legislation authorized Medicare Part D prescription drug plans to use formularies where they can limit the number of drugs that will be covered in any therapeutic class. As a result of this legislation and the expansion of federal coverage of drug products, the Company expects that there will be additional pressure to contain and reduce costs. These cost reduction initiatives and other provisions of this legislation could decrease the coverage and price that the Company receives for ESSA’s potential products and could seriously harm its business. While the MMA applies only to drug benefits for Medicare beneficiaries, private health insurance companies often follow Medicare coverage policy and payment limitations in setting their own reimbursement rates, and any reduction in reimbursement that results from the MMA may result in a similar reduction in payments from private health insurance companies.

In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act of 2010 or, collectively, the “Health Care Reform Law”, a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms. The Health Care Reform Law revised the definition of “average manufacturer price” for reporting purposes, which could increase the amount of Medicaid drug rebates to states. Further, the new law imposed a significant annual fee

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on companies that manufacture or import branded prescription drug products. Substantial new provisions affecting compliance have also been enacted, which may possibly require the Company to modify its business practices with healthcare practitioners.

ESSA’s business may be materially adversely affected by new legislation, new regulatory requirements and the continuing efforts of governmental and third party payors to contain or reduce the costs of healthcare through various means.

Governments and regulatory authorities in Europe and other markets in which we intend to sell ESSA’s products may propose and adopt new legislation and regulatory requirements relating to pharmaceutical approval criteria and manufacturing requirements. Such legislation or regulatory requirements, or the failure to comply with such, could adversely impact ESSA’s operations and could have a material adverse effect on ESSA’s business, financial condition and results of operations.

In recent years, national, federal, provincial, state, and local officials and legislators have proposed, or are reportedly considering proposing, a variety of price based reforms to the healthcare systems in the European Union, the United States and other countries. Some proposals include measures that would limit or eliminate payments for certain medical procedures and treatments or subject the pricing of pharmaceuticals to government control. Furthermore, in certain foreign markets, the pricing or profitability of healthcare products is subject to government controls and other measures that have been prepared by legislators and government officials. While ESSA cannot predict whether any such legislative or regulatory proposals or reforms will be adopted, the adoption of any such proposals or reforms could adversely affect the commercial viability of the Company’s existing and potential products. Significant changes in the healthcare system in the European Union and other countries may have a substantial impact on the manner in which we conduct our business. Such changes could also have a material adverse effect on ESSA’s business, financial condition and results of operations.

ESSA is subject to risks inherent in foreign operations.

ESSA intends to pursue international market growth opportunities, such that international sales may account for a significant portion of our revenue. ESSA is subject to a number of risks associated with our potential international business operations, sales and marketing activities that may increase liability, costs, lengthen sales cycles and require significant management attention. These risks include:

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There can be no assurance that the policies and procedures ESSA implements to address or mitigate these risks will be successful, that ESSA’s personnel will comply with them or that ESSA will not experience these factors in the future or that they will not have a material adverse effect on our business, results of operations and financial condition.

The Company may face exposure to adverse movements in foreign currency exchange rates.

ESSA’s business may expand internationally and as a result, a significant portion of our revenues, expenses, current assets and current liabilities may be preliminary denominated in U.S. dollars, Euros, and other foreign currencies, while our financial statements are expressed in Canadian dollars. In addition, the CPRIT Grant is payable in U.S. dollars and the formula for determining the funds ESSA must dedicate to the Project in order to receive CPRIT Grant funds each year, as set out in the CPRIT Agreement, is calculated in U.S. dollars. A decrease in the value of such foreign currencies, in particular the U.S. dollar, relative to the Canadian dollar could result in losses in revenues from currency exchange rate fluctuations. To date, ESSA has not hedged against risks associated with foreign exchange rate exposure. ESSA cannot be sure that any hedging techniques ESSA may implement in the future will be successful or that our business, financial condition, and results of operations will not be materially adversely affected by exchange rate fluctuations.

Laws and regulations governing international operations may preclude us from developing, manufacturing and selling certain product candidates outside of the United States and Canada and require ESSA to develop and implement costly compliance programs.

ESSA must comply with numerous laws and regulations in each jurisdiction in which ESSA plans to operate. ESSA must also comply with U.S. laws applicable to the foreign operations of U.S. individuals, such as the Foreign Corrupt Practices Act (“FCPA”), and Canadian laws applicable to the foreign operations of Canadian businesses and individuals, such as the Corruption of Foreign Public Officials Act (“CFPOA”). The creation and implementation of international business practices compliance programs is costly and such programs are difficult to enforce, particularly where reliance on third parties is required.

The CFPOA prohibits Canadian businesses and individuals from giving or offering to give a benefit of any kind to a foreign public official, or any other person for the benefit of the foreign public official, where the ultimate purpose is to obtain or retain a business advantage. Furthermore, a company may be found liable for violations by not only its employees, but also by its third-party agents. Any failure to comply with the CFPOA, as well as applicable laws and regulations in foreign jurisdictions, could result in substantial penalties or restrictions on ESSA’s ability to conduct business in certain foreign jurisdictions, which may have a material adverse impact on ESSA and our share price.

The FCPA prohibits any U.S. individual or business from paying, offering, authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in the United States to comply with certain accounting provisions requiring us to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations. The anti-bribery provisions of the FCPA are enforced primarily by the Department of Justice. The Securities and Exchange Commission (“SEC”) is involved with enforcement of the books and records provisions of the FCPA.

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Compliance with the FCPA is expensive and difficult, particularly in countries in which corruption is a recognized problem. In addition, the FCPA presents particular challenges in the pharmaceutical industry, because, in many countries, hospitals are operated by the government, and doctors and other hospital employees are considered foreign officials. Certain payments to hospitals in connection with clinical studies and other work have been deemed to be improper payments to government officials and have led to FCPA enforcement actions.

Violation of the FCPA can result in significant civil and criminal penalties. Indictment alone under the FCPA can lead to suspension of the right to do business with the U.S. government until the pending claims are resolved. Conviction of a violation of the FCPA can result in long-term disqualification as a government contractor. The termination of a government contract or relationship as a result of our failure to satisfy any of ESSA’s obligations under laws governing international business practices would have a negative impact on ESSA’s operations and harm ESSA’s reputation and ability to procure government contracts. The SEC also may suspend or bar issuers from trading securities on U.S. exchanges for violations of the FCPA’s accounting provisions.

ESSA’s employees or other agents may, without the Company’s knowledge and despite the Company’s efforts, engage in prohibited conduct under our policies and procedures and the CFPOA, FCPA or other anti-bribery laws that we may be subject to for which ESSA may be held responsible. If ESSA’s employees or other agents are found to have engaged in such practices, ESSA could suffer severe penalties and other consequences that may have a material adverse effect on our business, financial condition and results of operations.

Various laws, regulations and executive orders also restrict the use and dissemination outside of the United States, or the sharing with certain non-U.S. nationals, of information classified for national security purposes, as well as certain products and technical data relating to those products. If we expand our presence outside of the United States in the future, we will be required to dedicate additional resources to comply with these laws, and these laws may preclude us from developing, manufacturing, or selling certain products and product candidates outside of the United States, which could limit ESSA’s growth potential and increase development costs.

Third-party coverage and reimbursement and health care cost containment initiatives and treatment guidelines may constrain the Company’s future revenues.

In many of the markets ESSA hopes to sell future products in, sales of healthcare products are dependent in part on the availability of reimbursement to the consumer from third party payors, such as government and private insurance plans. Third party payors are increasingly challenging the effectiveness of, and prices charged for, medical products and services and therefore uncertainty exists as to the reimbursement of existing and newly approved healthcare products. The prices of ESSA’s future products may be subject to direct price controls by law and to drug reimbursement programs with varying price control mechanisms. In addition, as drug costs have increased, there have been more cost containment measures taken by government and third-party private payors, including limitations on both the number of products they list for reimbursements, the conditions under which they will reimburse, and the reimbursement drug prices. Some payors require manufacturers to enter into agreements with them in order for drugs to be reimbursed by the payor, and the agreements may contain cost sharing or other onerous provisions. Also, the current conditions and rules relating to the listing submissions to public and private formulary listings may change or become more onerous in the future. If we fail to achieve the listing of ESSA’s products, it will affect the physicians’ decisions regarding the use of ESSA’s products.

The Company’s ability to successfully market any of our future products will depend in part on the level of reimbursement that government health administration authorities, private health coverage insurers and other organizations provide for the cost of the Company’s potential products and related treatments. Countries in which our potential products may in the future be sold through reimbursement schemes under national health insurance programs frequently require that manufacturers and sellers of pharmaceutical products obtain governmental approval of initial prices and any subsequent price increases. In certain countries, including the United States, government-funded and private medical care plans can exert significant indirect pressure on prices. The Company may not be able to sell any potential products profitably if its prices are not approved or coverage and reimbursement is unavailable or limited in scope.

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If ESSA is not able to convince public payors and hospitals to include ESSA’s potential future products on their approved formulary lists, revenues may not meet expectations and ESSA’s business, results of operations and financial condition may be adversely affected.

Hospitals establish formularies, which are lists of drugs approved for use in the hospital. If a drug is not included on the hospital’s formulary, the ability to promote and sell ESSA’s potential future products may be limited or denied. If ESSA fails to secure and maintain formulary inclusion for potential future products on favorable terms or are significantly delayed in doing so, ESSA may have difficulty achieving market acceptance of potential future products and ESSA’s business, results of operations and financial condition could be materially adversely affected.

The Company has never marketed a drug before, and if the Company is unable to establish an effective sales force and marketing infrastructure, or enter into acceptable third-party sales and marketing or licensing arrangements, the Company may be unable to generate any revenue.

ESSA does not currently have an infrastructure for the sales, marketing and distribution of pharmaceutical drug products and the cost of establishing and maintaining such an infrastructure may exceed the cost-effectiveness of doing so. In order to market any products that may be approved by the FDA and comparable foreign regulatory authorities, ESSA must build our sales, marketing, managerial and other nontechnical capabilities or make arrangements with third parties to perform these services. If ESSA is unable to establish adequate sales, marketing and distribution capabilities, whether independently or with third parties, ESSA may not be able to generate product revenue and may not become profitable. ESSA will be competing with many companies that currently have extensive and well-funded sales and marketing operations. Without an internal commercial organization or the support of a third party to perform sales and marketing functions, ESSA may be unable to compete successfully against these more established companies.

ESSA’s products may, if approved for sale, not achieve or maintain expected levels of market acceptance, which could have a material adverse effect on ESSA’s business, financial condition and results of operations and could cause the market value of our securities to decline.

Even if ESSA is able to obtain regulatory approvals for our product candidates, the success of those products is dependent upon achieving and maintaining market acceptance. New product candidates that appear promising in development may fail to reach the market or may have only limited or no commercial success. Levels of market acceptance for our products could be impacted by several factors, many of which are not within ESSA’s control, including but not limited to:

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In addition, the success of any new product will depend on ESSA’s ability to either successfully build our in-house sales capabilities or to secure new, or to realize the benefits of existing arrangements with third-party marketing or distribution partners. Seeking out, evaluating and negotiating marketing or distribution agreements may involve the commitment of substantial time and effort and may not ultimately result in an agreement. In addition, the third-party marketing or distribution partners may not be as successful in promoting our products as we had anticipated. If we are unable to commercialize new products successfully, whether through a failure to achieve market acceptance, a failure to build ESSA’s own in-house sales capabilities, a failure to secure new marketing partners or to realize the benefits of our arrangements with existing marketing partners, there may be a material adverse effect on ESSA’s business, financial condition and results of operations and it could cause the market value of ESSA’s securities to decline.

In addition, by the time any products are ready to be commercialized, what ESSA believes to be the market for these products may have changed. The Company’s estimates of the number of patients who have received or might have been candidates to use a specific product may not accurately reflect the true market or market prices for such products or the extent to which such products, if successfully developed, will actually be used by patients. ESSA’s failure to successfully introduce and market our products that are under development would have a material adverse effect on our business, financial condition and results of operations.

ESSA is subject to U.S. laws relating to fraud and abuse and patients’ rights.

As a pharmaceutical company, even though ESSA does not and will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payors, federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are and will be applicable to ESSA’s future arrangements with third-party payors and customers who are in a position to purchase, recommend and/or prescribe ESSA’s product candidates for which the Company obtains marketing approval. These broadly applicable fraud and abuse and other healthcare laws and regulations may constrain ESSA’s future business or financial arrangements and relationships with healthcare professionals, principal investigators, consultants, customers, and third-party payors and other entities, including ESSA’s marketing practices, educational programs and pricing policies. Restrictions under applicable federal and state healthcare laws and regulations that may affect ESSA’s ability to operate include, but are not limited to, the following:

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Efforts to ensure that ESSA’s business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that ESSA’s business practices may not comply with current or future statutes, regulations, agency guidance, or case law involving applicable fraud and abuse or other healthcare laws and regulations. If ESSA’s operations are found to be in violation of any of these laws or any other governmental regulations that may apply to ESSA, the Company may be subject to penalties, including without limitation, significant civil, criminal and administrative penalties, damages, fines, disgorgement, exclusion from government funded healthcare programs, such as Medicare and Medicaid, contractual damages, reputational harm, administrative burdens and diminished profits and future earnings, and the curtailment or restructuring of ESSA’s operations. If any physicians or other healthcare providers or entities with whom we expect to do business are found to not be in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs. Moreover, we expect there will continue to be federal and state laws and regulations, proposed and implemented, that could impact ESSA’s operations and business. The extent to which future legislation or regulations, if any, relating to healthcare fraud abuse laws or enforcement, may be enacted or what effect such legislation or regulation would have on ESSA’s business remains uncertain.

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The Company may acquire businesses or products or form strategic alliances in the future and the Company may not realize the benefits of such acquisitions.

The Company may acquire additional businesses or products, form strategic alliances or create joint ventures with third parties that the Company believes will complement or augment its existing business.

If the Company acquires businesses in the future, it may not be able to realize the benefit of acquiring such businesses if the Company is unable to successfully integrate them with its existing operations and company culture. The Company may encounter numerous difficulties in developing, manufacturing and marketing any new products resulting from a strategic alliance or acquisition that delay or prevent the Company from realizing their expected benefits. The potential failure of the due diligence processes to identify significant problems, liabilities or other shortcomings or challenges with respect to intellectual property, product quality, revenue recognition or other accounting practices, taxes, corporate governance and internal controls, regulatory compliance, employee, customer or partner disputes or issues and other legal and financial contingencies could decrease or eliminate the anticipated benefits and synergies of any acquisition and could negatively affect our future business and financial results.

As part of ESSA’s business strategy, we may also continue to acquire additional companies, products or technologies principally related to, or complementary to, ESSA’s current operations. Any such acquisitions will be accompanied by certain risks including but not limited to:

ESSA may not be able to successfully overcome these risks and other problems associated with acquisitions and this may adversely affect ESSA’s business, financial condition or results of operations.

ESSA’s employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could cause significant liability for ESSA and harm ESSA’s reputation.

ESSA is exposed to the risk of employee fraud or other misconduct, including intentional failures to comply with FDA regulations or similar regulations of comparable foreign regulatory authorities, provide accurate information to the FDA or comparable foreign regulatory authorities, comply with manufacturing standards ESSA has established, comply with federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable foreign regulatory authorities, report financial information or data accurately or disclose unauthorized activities to ESSA. Employee misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. If any such actions are instituted against ESSA and ESSA is not successful in defending itself or asserting ESSA’s rights, those actions could have a significant impact on ESSA’s business, results of operations, financial condition and cash flows from future prospects, including the imposition of significant fines or other sanctions.

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If product liability lawsuits are brought against the Company, it may incur substantial liabilities and may be required to cease the sale, marketing and distribution of its products.

The Company could face a potential risk of product liability as a result of its potential sales, marketing and distribution activities relating to any future commercialization of any future product. For example, the Company may be sued if any product it develops allegedly causes injury or is found to be otherwise unsuitable during product testing, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability and a breach of warranties. Claims could also be asserted under U.S. state or Canadian provincial or other foreign consumer protection legislation. If the Company cannot successfully defend itself against product liability claims, it may incur substantial liabilities or be required to cease the sale, marketing and distribution of its products. Even successful defense against product liability claims would require significant financial and management resources. Regardless of the merits or eventual outcome, liability claims may result in:

The Company currently maintains insurance that it believes has sufficient coverage to protect against the liability risks discussed above and the Company believes this coverage is consistent with industry norms for companies at a similar stage of development. However, if the Company is unable to obtain and retain sufficient product liability insurance in the future at an acceptable cost to protect against potential product liability claims, the commercialization of products it develops could be hindered or prevented.

The Company’s business and operations would suffer in the event of computer system failures.

Despite the implementation of security measures, ESSA’s internal computer systems and those of other third parties on which we rely are vulnerable to damage from computer viruses, unauthorized access, natural disasters, fire, terrorism, war and telecommunication and electrical failures. If such an event were to occur and cause interruptions in ESSA’s operations, it could result in a material disruption of ESSA’s drug development programs. To the extent that any disruption or security breach results in a loss of or damage to ESSA’s data or applications, or inappropriate disclosure of confidential or proprietary information, ESSA could incur liability and the further development of ESSA’s future product candidates could be delayed.

If ESSA fails to comply with environmental, health and safety laws and regulations, ESSA could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of ESSA’s business.

ESSA is subject to numerous environmental, health and safety laws and regulations in Canada and in the United States, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. ESSA’s operations involve the use of hazardous and flammable materials, including chemicals and biological materials. ESSA’s operations also produce hazardous waste products. The Company generally contracts with third parties for the disposal of these materials and wastes. ESSA cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, ESSA could be held liable for any resulting damages, and any liability could exceed our resources. ESSA also could incur significant costs associated with civil or criminal fines and penalties.

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Although ESSA maintains workers’ compensation insurance to cover for costs and expenses ESSA may incur due to injuries to employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. ESSA does not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with ESSA’s storage or disposal of biological or hazardous materials.

In addition, ESSA may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair ESSA’s research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.

Business disruptions could seriously harm ESSA’s future revenues and financial condition and increase costs and expenses.

ESSA’s operations could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics and other natural or manmade disasters or business interruptions, for which ESSA is predominantly self-insured. ESSA does not carry insurance for all categories of risk that ESSA’s business may encounter. The occurrence of any of these business disruptions could seriously harm ESSA’s operations and financial condition and increase costs and expenses. Further, any significant uninsured liability may require ESSA to pay substantial amounts, which would adversely affect ESSA’s business, results of operations, financial condition and cash flows from future prospects.

ESSA has no experience manufacturing ESSA’s product candidates on a large clinical or commercial scale and have no manufacturing facility. As a result, ESSA may in the future be dependent on third-party manufacturers for the manufacture of our potential product candidates as well as on third parties for ESSA’s supply chain, and if ESSA experiences problems with any future third parties, the manufacturing of ESSA’s product candidates or products could be delayed.

ESSA does not own or operate facilities for the manufacture of future potential product candidates. ESSA currently has no plans to build internal clinical or commercial scale manufacturing capabilities. As a result, ESSA potentially may rely on third party CMOs, in the future, for the chemical manufacture of active pharmaceutical ingredients for ESSA’s potential products. Also, ESSA may potentially rely on another CMO for the production of the final product formulation. To meet ESSA’s projected potential needs for clinical supplies to support ESSA’s activities through regulatory approval and commercial manufacturing, the CMOs with whom we may potentially work will need to increase the scale of production. ESSA may need to identify additional CMOs for continued production of supply for product candidates in the event the current potential CMOs ESSA chooses to utilize are unable to scale production, or if ESSA otherwise experiences any problems with them. Although alternative third-party suppliers with the necessary manufacturing and regulatory expertise and facilities exist, it could be expensive and take a significant amount of time to arrange for alternative suppliers. ESSA may encounter technical difficulties or delays in the transfer of any future potential product manufacturing on a commercial scale to additional third-party manufacturers. ESSA may be unable to enter into agreements for commercial supply with third party manufacturers, or may be unable to do so on acceptable terms. If ESSA is unable to arrange for alternative third-party manufacturing sources or to do so on commercially reasonable terms or in a timely manner, ESSA may not be able to complete development of our potential product candidates, market or distribute them.

Reliance on third-party manufacturers entails risks to which ESSA would not be subject if ESSA manufactured product candidates or products ourselves, including reliance on the third party for regulatory compliance and quality assurance, the possibility of breach of the manufacturing agreement by the third party because of factors beyond ESSA’s control, including a failure to synthesize and manufacture product candidates or any products ESSA may eventually commercialize in accordance with ESSA’s specifications and the possibility of termination or nonrenewal of the agreement by the third party, based on its own business priorities, at a time that is costly or damaging to ESSA. In addition, the FDA and other regulatory authorities require that ESSA’s product candidates and any

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products that ESSA may eventually commercialize be manufactured according to GMP and similar foreign standards. Any failure by our third-party manufacturers to comply with GMP or failure to scale up manufacturing processes, including any failure to deliver sufficient quantities of product candidates in a timely manner, could lead to a delay in, or failure to obtain, regulatory approval of any of ESSA’s potential product candidates and could cause ESSA to incur higher costs and prevent ESSA from commercializing product candidates successfully. In addition, such failure could be the basis for the FDA to issue a warning letter, withdraw approvals for product candidates previously granted to ESSA, or take other regulatory or legal action, including recall or seizure of outside supplies of the product candidate, total or partial suspension of production, suspension of ongoing clinical trials, refusal to approve pending applications or supplemental applications, detention or product, refusal to permit the import or export of products, injunction, or imposing civil and criminal penalties.

Any significant disruption in ESSA’s supplier relationships could harm the Company’s business. Any significant delay in the supply of a product candidate or its key materials for a potential ongoing clinical study could considerably delay completion of ESSA’s potential clinical trials, product testing and regulatory approval of ESSA’s potential product candidates. If ESSA’s manufacturers or ESSA is unable to purchase these key materials after regulatory approval has been obtained for ESSA’s product candidates, the commercial launch of ESSA’s product candidates would be delayed or there would be a shortage in supply, which would impair ESSA’s ability to generate revenues from the sale of our product candidates. It may take several years to establish an alternative source of supply for ESSA’s product candidates and to have any such new source approved by the FDA.

ESSA may be subject to claims by third parties asserting that ESSA, or ESSA’s employees have misappropriated their intellectual property, or claiming ownership of what we regard as ESSA’s own intellectual property.

Certain of ESSA’s employees, including senior management, were previously employed, or continue to be employed, at universities or other public institutions, or at other biotechnology or pharmaceutical companies, including ESSA’s competitors or potential competitors. Some of these employees, executed proprietary rights, nondisclosure and noncompetition agreements, in connection with such previous employment. ESSA may be subject to claims that ESSA, or these employees, have used or disclosed confidential information or intellectual property, including trade secrets or other proprietary information, of any such employee’s former employer. If ESSA fails in prosecuting or defending any such claims, in addition to paying monetary damages, ESSA may lose valuable intellectual property rights or personnel or sustain damages. Such intellectual property rights could be awarded to a third party, and ESSA could be required to obtain a license from such third party to commercialize ESSA’s technology or products. Such a license may not be available on commercially reasonable terms or at all. Even if ESSA is successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.

Compulsory licensing and/or generic competition may affect the Company’s business in certain countries.

In a number of countries, governmental authorities and other groups have suggested that companies which manufacture medical products (e.g., pharmaceuticals) should make products available at a low cost. In some cases, governmental authorities have held that where a pharmaceutical company does not do so, its patents might not be enforceable to prevent generic competition. Alternatively, some governmental authorities could require that ESSA grant compulsory licenses to allow competitors to manufacture and sell their own versions of ESSA’s products, thereby reducing ESSA’s sales or the sales of ESSA’s licensee(s). In all of these situations, the results of future operations in these countries if any, could be adversely affected.

ESSA’s business depends heavily on the use of information technologies.

Several key areas of ESSA’s business depend on the use of information technologies. Despite ESSA’s best efforts to prevent such behaviour, third parties may nonetheless attempt to hack into ESSA’s systems and obtain data relating to ESSA’s pre-clinical studies or proprietary information on potential products. If ESSA fails to maintain or protect ESSA’s information systems and data integrity effectively, ESSA could lose, have difficulty attracting customers, have difficulty preventing, detecting, and controlling fraud, have regulatory sanctions or penalties imposed, have increases in operating expenses, incur expenses or lose revenues as a result of a data privacy breach, or suffer other adverse consequences. While ESSA has invested in the protection of data and information technology, there can be no assurance that ESSA’s efforts, or those of our third-party collaborators, if any, to implement adequate security and quality measures for data processing would be sufficient to protect against data deterioration or loss in the event of a system malfunction, or to prevent data from being stolen or corrupted in the event of a security breach. Any such loss or breach could have a material adverse effect on ESSA’s business, operating results and financial condition.

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The Common Shares may be subject to share price volatility.

A number of factors could influence the volatility in the trading price of the Common Shares, including changes in the economy or in the financial markets, industry related developments, and the impact of changes in ESSA’s operations. ESSA’s quarterly revenues and profits, if any, may vary because of expenses ESSA incurs related to future research, changes in the combination of ESSA’s therapeutic drugs or fluctuations in the demand for ESSA’s products. Each of these factors could lead to increased volatility in the market price of the Common Shares. In addition, variations in earnings estimates by securities analysts and the market prices of the securities of ESSA’s competitors may also lead to fluctuations in the trading price of the Common Shares.

The Company has never declared dividends and may not do so in the future.

ESSA has not declared or paid any cash dividends on Common Shares to date. The payment of dividends in the future will be dependent on ESSA’s earnings and financial condition and on such other factors as ESSA’s Board considers appropriate. Unless and until we pay dividends, shareholders may not receive a return on their shares. There is no present intention by the Board to pay dividends on the Common Shares.

The Company remains subject to the restrictions and conditions of the CPRIT Agreement. Failure to comply with the CPRIT Agreement may adversely affect ESSA’s financial condition and results of operations.

The Company relies on the CPRIT Grant to fund its ongoing operations. The CPRIT Grant is subject to the Company’s compliance with the scope of work outlined in the CPRIT Agreement and demonstration of its progress towards achievement of the milestones set forth in the CPRIT Agreement. See “ Summary Corporate History and Intercorporate Relationships – 2014” in Item 4 of this Registration Statement. If the Company fails to comply with the terms of the CPRIT Agreement, it may not receive the remaining tranches of the CPRIT Grant or it may be required to reimburse some or the entire CPRIT Grant. Further, the CPRIT Grant may only be applied to a limited number of allowable expenses. Failure to obtain the remaining tranches of the CPRIT Grant or being required to reimburse all or a portion of the CPRIT Grant may cause a halt or delay in ESSA’s ongoing operations, which may adversely affect the Company’s financial condition and results of operations.

If the Company fails to comply with the terms of the CPRIT Agreement, CPRIT will have the option to pursue the transfer and assignment of the Company’s rights, title and interest in the intellectual property rights and technologies developed as a result of the CPRIT Grant. Failure to maintain ownership over the Company’s intellectual property and technologies may adversely affect the Company’s financial condition and results of operations.

If ESSA is unable to implement and maintain effective internal controls over financial reporting in the future, ESSA may not be able to report financial results accurately or prevent fraud. In that case, investors may lose confidence in the accuracy and completeness of ESSA’s financial reports and the market price of ESSA’s common shares may be negatively affected.

Maintaining effective internal control over financial reporting is necessary for ESSA to produce reliable financial reports and is important in helping to prevent financial fraud. If ESSA is unable to maintain adequate internal controls, ESSA’s business and operating results could be harmed. ESSA is not currently required to comply with Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), or National Instrument 52-109—Certification of Disclosure in Issuers’ Annual and Interim Filings of the Canadian Securities Administrators (“NI 52-109”). As a result, ESSA is not currently required to make an assessment of the effectiveness of our internal controls, or to deliver a report that assesses the effectiveness of ESSA’s internal control over financial reporting. ESSA has begun to evaluate how to document and test internal control procedures to satisfy the requirements of Section 404 of Sarbanes-Oxley and the related rules of the SEC and NI 52-109, which require, among other things, ESSA’s management to assess annually the effectiveness of ESSA’s internal control over financial reporting. During the course of this documentation and testing, ESSA may identify weaknesses or deficiencies that ESSA may be unable to remedy before the requisite deadline for those reports.

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Preparing ESSA’s consolidated financial statements involves a number of complex manual and automated processes which are dependent on individual data input or review and require significant management judgment. One or more of these elements may result in errors that may not be detected and could result in a material misstatement of ESSA’s consolidated financial statements. Additionally, Section 404 will eventually require ESSA’s auditors to deliver an attestation report on the effectiveness of ESSA’s internal controls over financial reporting.

The process of designing and implementing effective internal controls and procedures, and expanding ESSA’s internal accounting capabilities, is a continuous effort that requires ESSA to anticipate and react to changes in ESSA’s business and the economic and regulatory environments and expend significant resources to establish and maintain a system of internal controls that is adequate to satisfy ESSA’s reporting obligations as a public company. The standards that must be met for management to assess the internal control over financial reporting as effective are complex, and require significant documentation, testing and possible remediation to meet the detailed standards. ESSA cannot be certain at this time whether the Company will be able to successfully complete the continuing implementation of controls and procedures or the certification and attestation requirements of Section 404 and NI 52-109.

If a material misstatement occurs in the future, ESSA may fail to meet our future reporting obligations, ESSA may need to restate our financial results and the price of our Common Shares may decline. Any failure of ESSA’s internal controls could also adversely affect the results of the periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of ESSA’s internal control over financial reporting that will be required when Section 404 of Sarbanes-Oxley or NI 52-109 become fully applicable to ESSA. Effective internal controls are necessary for ESSA to produce reliable financial reports and are important to helping prevent financial fraud. If ESSA cannot provide reliable financial reports or prevent fraud, ESSA’s business and results of operations could be harmed, investors could lose confidence in ESSA’s reported financial information, and the trading price of ESSA’s Common Shares could drop significantly.

ESSA will incur significantly increased costs and devote substantial management time as a result of operating as a U.S. public company.

As a U.S. public company, ESSA will incur significant legal, accounting and other expenses that ESSA did not incur as a private company or as a Canadian public company. For example, ESSA will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and will be required to comply with the applicable requirements of Sarbanes-Oxley and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules and regulations subsequently implemented by the SEC and the including the establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. ESSA expects that compliance with these requirements will increase our legal and financial compliance costs and will make some activities more time consuming and costly. In addition, ESSA expects that management and other personnel will need to divert attention from operational and other business matters to devote substantial time to these public company requirements. In particular, ESSA expects to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of Sarbanes-Oxley, which involve annual assessments of a company’s internal controls over financial reporting. ESSA will need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge and may need to establish an internal audit function. ESSA cannot predict or estimate the amount of additional costs ESSA may incur as a result of becoming a U.S. public company or the timing of such costs.

ESSA is a “foreign private issuer” and has disclosure obligations that are different from those of U.S. domestic reporting companies. As a foreign private issuer, ESSA is subject to different U.S. securities laws and rules than a domestic U.S. issuer, which may limit the information publicly available to our shareholders.

ESSA is a “foreign private issuer,” as such term is defined in Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”), and is not subject to the same requirements that are imposed upon U.S. domestic issuers by the SEC. Under the Exchange Act, ESSA will be subject to reporting obligations that, in certain respects, are less detailed and less frequent than those of U.S. domestic reporting companies. ESSA will be required to file or furnish to the SEC the continuous disclosure documents that ESSA is required to file in Canada under Canadian securities laws. For example, ESSA will not be required to issue quarterly reports, proxy statements that comply with the requirements applicable to U.S. domestic reporting companies, or individual executive compensation information that is as detailed as that required of U.S. domestic reporting companies. ESSA will also have four months after the

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end of each fiscal year to file ESSA’s annual reports with the SEC and will not be required to file current reports as frequently or promptly as U.S. domestic reporting companies. Furthermore, ESSA’s officers, directors and principal shareholders are exempt from the insider reporting and short-swing profit recovery requirements in Section 16 of the Exchange Act. Accordingly, ESSA’s shareholders may not know on as timely a basis when ESSA’s officers, directors and principal shareholders purchase or sell their common shares, as the reporting deadlines under the corresponding Canadian insider reporting requirements are longer. As a foreign private issuer, ESSA is also exempt from the requirements of Regulation FD (Fair Disclosure) which, generally, are meant to ensure that select groups of investors are not privy to specific information about an issuer before other investors. As a result of such varied reporting obligations, shareholders should not expect to receive the same information at the same time as information provided by U.S. domestic companies.

In addition, as a foreign private issuer, ESSA has the option to follow certain Canadian corporate governance practices rather than those of, except to the extent that such laws would be contrary to U.S. securities laws, and provided that ESSA disclose the requirements ESSA is not following and describe the Canadian practices ESSA follows instead. As a result, ESSA’s shareholders may not have the same protections afforded to shareholders of companies that are subject to all domestic U.S. corporate governance requirements.

ESSA may lose foreign private issuer status in the future, which could result in significant additional costs and expenses to the Company.

ESSA may in the future lose foreign private issuer status if a majority of ESSA’s common shares are held in the United States and ESSA fails to meet the additional requirements necessary to avoid loss of foreign private issuer status, such as if: (i) a majority of ESSA’s directors or executive officers are U.S. citizens or residents; (ii) a majority of ESSA’s assets are located in the United States; or (iii) ESSA’s business is administered principally in the United States. The regulatory and compliance costs to ESSA under U.S. securities laws as a U.S. domestic issuer will be significantly more than the costs incurred as a Canadian foreign private issuer. If ESSA is not a foreign private issuer, ESSA would be required to file periodic and current reports and registration statements on U.S. domestic issuer forms with the SEC, which are generally more detailed and extensive than the forms available to a foreign private issuer.

In addition, ESSA may lose the ability to rely upon exemptions from corporate governance requirements that are available to foreign private issuers. Further, if ESSA engages in capital raising activities after losing foreign private issuer status, there is a higher likelihood that investors may require ESSA to file resale registration statements with the SEC as a condition to any such financing.

There is a risk that the Company is or could become a “passive foreign investment company” which would likely result in materially adverse U.S. federal income tax consequences for U.S. investors.

The Company believes that it may have been classified as a PFIC for the taxable year ending September 30, 2014, and the Company believes it may be classified as a PFIC for the current taxable year and in future taxable years. However, the determination as to whether the Company is a PFIC for any taxable year is based on the application of complex U.S. federal income tax rules that are subject to differing interpretations. If the Company is a PFIC for any taxable year during which a U.S. Holder (as defined under “Taxation—U.S. Federal Income Tax Considerations”) holds the Common Shares, it would likely result in adverse U.S. federal income tax consequences for such U.S. Holder. U.S. Holders should carefully read “Taxation—U.S. Federal Income Tax Considerations—Passive Foreign Investment Company Rules” for more information and consult their own tax advisors regarding the likelihood and consequences of the Company being treated as a PFIC for U.S. federal income tax purposes, including the advisability of making a “qualified electing fund” election (including a protective election), which may mitigate certain possible adverse U.S. federal income tax consequences but may result in an inclusion in gross income without receipt of such income.

Risk Related to ESSA Not Becoming Listed on NASDAQ before the U.S. Listing Date

Although the Company has applied to list the Common Shares on the NASDAQ, a listing on the NASDAQ may not be obtained before the U.S. Listing Date and the Company may become subject to certain penalty provisions in the 2015 Special Warrants. Each 2015 Special Warrant is exercisable for, without payment of any additional consideration, one Common Share at any time by the holder thereof and all of the 2015 Special Warrants will be deemed to be exercised on the earlier of: (i) October 16, 2015 and (ii) the U.S. Listing Date. Should the U.S. Listing Date not occur on or prior to October 16, 2015, instead of one Common Share, each 2015 Special Warrant shall entitle the holder thereof to receive 1.5 Common Shares upon exercise or deemed exercise thereof.

The Company’s status as an Emerging Growth Company.

ESSA is an “emerging growth company,” as defined in Section 2(a)(19) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, the Company is eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. The Company has not made a decision whether to take advantage of any or all of these exemptions.

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In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards, and delay compliance with new or revised accounting standards until those standards are applicable to private companies. The Company has not made a decision whether to take advantage of the extended transition period for complying with new or revised accounting standards.

Although ESSA is still evaluating its options under the JOBS Act, the Company may take advantage of some or all of the reduced regulatory and reporting requirements that will be available to it so long as the Company qualifies as an “emerging growth company” and thus the level of information provided may be different than that of other U.S. public companies. If the Company does take advantage of any of these exemptions, some investors may find the Company’s securities less attractive, which could result in a less active trading market for ESSA’s Common Shares, and ESSA’s share price may be more volatile as a result.

The Company could be an emerging growth company until the last day of the first fiscal year following the fifth anniversary of its first common equity offering, although circumstances could cause the Company to lose that status earlier if annual revenues exceed $1.0 billion, if the Company issues more than $1.0 billion in non-convertible debt in any three-year period or if the Company becomes a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act. The Company will not take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. This election is irrevocable.

It may be difficult for United States investors to effect services of process or enforcement of actions against the Company or certain of its directors and officers under U.S. federal securities laws.

The Company is incorporated under the laws of the Province of British Columbia, Canada. A majority of its directors and officers reside in Canada. Because all or a substantial portion of the assets of the Company and these persons are located outside the United States, it will be difficult for United States investors to effect service of process in the United States upon the Company or the directors or officers of the Company, or to realize in the United States upon judgments of United States courts predicated upon civil liabilities under the U.S. Exchange Act or other United States laws. There is substantial doubt as to whether an original action could be brought successfully in Canada against any of such persons or the Company predicated solely upon such civil liabilities and whether a judgment of a United States court predicated solely upon such civil liabilities would be enforceable in Canada by a Canadian court.

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The Company was incorporated under the name “ESSA Pharma Inc.” pursuant to the Business Corporations Act (British Columbia) on January 6, 2009. The Company’s articles (the “Articles”) were amended on December 16, 2010 to attach certain special rights and restrictions to the Common Shares, on April 22, 2014 to authorize the creation of a new class of preferred shares in the capital of the Company, issuable in one or more series, and again on July 28, 2014 to create the class A preferred shares in the capital of the Company (the “Preferred Shares”) and to attach certain special rights and restrictions to the Preferred Shares.

The Company’s registered and records office is located at Suite 2600, 595 Burrard Street, Vancouver, British Columbia, Canada V7X 1L3. The head office is located at Suite 720 - 999 West Broadway, Vancouver, British Columbia, Canada V5Z 1K5.

The Company applied to list its Common Shares on the TSX-V in September 2014. On December 22, 2014, the Company received conditional approval for its Common Shares to be listed on the TSX-V. As of January 27, 2015, the Company began trading stock under the symbol “EPI”. The Company also intends to apply to list its Common Shares on the NASDAQ. Such a listing is dependent upon this Registration Statement being declared effective as well as the Company meeting all the necessary listing requirements of the NASDAQ.

Intercorporate Relationships

The Company has one wholly-owned subsidiary, ESSA Pharmaceuticals Corp. (“ESSA Texas”), existing under the laws of the State of Texas.

Overview

ESSA is a development-stage pharmaceutical company focused on the development of small molecule drugs for the treatment of castrate-resistant prostate cancer (“CRPC”). The Company is developing drugs which selectively block the amino-terminal domain (“NTD”) of the androgen receptor (“AR”), potentially overcoming the known AR-dependent mechanisms of CRPC and providing CRPC patients with the potential for increased progression-free and overall survival.

In 1999, Dr. Marianne Sadar, a Distinguished Scientist at the British Columbia Cancer Agency (the “BC Cancer Agency”), elucidated a unique drug target on the AR: the NTD. In 2003, Dr. Sadar and Dr. Raymond Andersen, a Professor at the University of British Columbia (“UBC”) known for his natural product libraries and medicinal chemistry experience and expertise, began a collaboration focused on discovery of small-molecule inhibitors of the AR NTD. By mid-2008, they together discovered a family of compounds that selectively inhibit the NTD target on the AR and demonstrated the efficacy of those molecules in recognized laboratory models of prostate cancer. These compounds are potential drugs for treatment of CRPC.

Drs. Sadar and Andersen incorporated ESSA in January 2009. In 2010, Bob Rieder and Dr. Richard Glickman, both former CEOs of NASDAQ-traded biopharmaceutical companies, completed the founding team at ESSA. Mr. Rieder was appointed CEO of the Company and Dr. Glickman was appointed Chairman of the board of directors of the Company (the “Board”).

ESSA began substantive operations in 2010 with the licensing of intellectual property related to the research of Drs. Sadar and Andersen from the BC Cancer Agency and UBC (see “Patents and Proprietary Rights - License Agreement with UBC and the BC Cancer Agency” in Item 4 of this Registration Statement), and completion of a seed round financing. The 2010 seed financing raised a total of $1,350,000 at a price of $0.50 per Common Share from qualified investors on a private placement basis.

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2011

In 2011, the Company invested $674,000 in research activities which were necessary for the selection of a variant of ESSA’s lead compound, EPI-001, that would be suitable to take forward into clinical development. Since many such EPI-001 variants had been identified that were effective in blocking the growth of human prostate cancer xenografts, this process took significant time. A “xenograft” is an experiment in which tissue from one species of animal is grafted into another species. In the context of ESSA’s prostate cancer program, this involves grafting human prostate cancer tumor cell lines sub-cutaneously into mice, and measuring the growth rate of the resulting engrafted human tumor. A team of consultants was assembled who possessed the expertise and experience required to assist the Company in this endeavour. The key objective in this search was to identify a compound with higher potency than EPI-002, the best stereoisomer of the lead compound. The term “stereoisomer” means a molecule that is a mirror-image of another molecule that has identical chemical composition. For ESSA’s development program, EPI-506 is one of four stereoisomers, each of which has identical chemical composition, but different spatial structure, from the other three stereoisomers. By late 2011, ESSA had identified a compound named EPI-0011, which was highly potent and appeared suitable for further development.

2012

Between April and July 2012, ESSA undertook a second financing (the “2012 Financing”) from qualified investors on a private placement basis in order to finance the development of EPI-0011 to the IND phase. The 2012 Financing raised an aggregate of $2,390,000 at a price of $0.80 per Common Share. Subject to certain exempt issuances, the subscription agreements entered into between the Company and investors in connection with the 2012 Financing included anti-dilution rights in the event the Company issues additional equity securities of the Company or securities convertible into equity securities of the Company at an issue price (or conversion, exchange or exercise price, as applicable) that is less than $0.80. These anti-dilution rights expire on the earlier of (i) the three year anniversary of the date the Common Shares were issued to each such investor; (ii) the date the Company completes an initial public offering; (iii) the date the Company completes the sale of all or substantially all of its assets; and (iv) the date on which any person, acquires, directly or indirectly, any voting security of the Company and, immediately after such acquisition, directly or indirectly owns, or exercises control and direction over, voting securities representing more than 50% of the total voting power of all of the then outstanding voting securities of the Company.

During 2012, ESSA continued the pre-clinical development of EPI-0011. That effort was initially focused on identifying the best stereoisomer of EPI-0011 and then developing the selected stereoisomer, called EPI-00113. This development effort was initially directed toward establishing the dose of EPI-00113 required for efficacy and exploring the pharmacokinetics and toxicology of the compound. Unanticipated toxicity was observed in canines at doses that were very close to the expected therapeutic dose. On the basis of that finding, development work on EPI-00113 was halted. Subsequent investigation suggested that this toxicity was not characteristic of all members of this class of compounds, but was caused by a fluorine-containing metabolite of EPI-00113. Therefore, ESSA immediately began testing compounds which lacked any fluorine atom.

Also in 2012, ESSA applied to the Cancer Prevention and Research Institute of Texas (“CPRIT”) for a US$12,000,000 grant (the “CPRIT Grant”) to help fund the clinical development of ESSA’s program. In late 2012, ESSA was informed that CPRIT staff had recommended approval of the CPRIT Grant.

2013

Early in 2013, ESSA learned that the CPRIT program had been temporarily suspended by the Texas State Legislature due to an irregularity in carrying out CPRIT’s mandate. The irregularity was entirely unconnected to ESSA’s application. ESSA continued its efforts during this time to identify and test a more-potent variant of its lead compound. This led to testing of a compound named EPI-506, a pro-drug of EPI-002. In vitro testing of EPI-506 showed that it was approximately two-fold more potent than EPI-002. In vivo experiments in established models of CRPC suggested an even higher increase in potency of EPI-506 over EPI-002 by oral dosing.

2014

In early 2014, in vivo experiments showed that EPI-506 had efficacy on human prostate cancer xenografts at low oral doses in the 33 mg/kg range in mice. Toxicology studies showed that it was well tolerated in both mice and canines at doses at least three-fold higher than the therapeutic dose. On the basis of that data as well as other relevant data, the Company decided to commence a work program focused on receiving regulatory approval to commence human clinical testing of EPI-506 in CRPC patients. During the first quarter of 2014, ESSA was informed that the CPRIT Advisory Committee had approved the CPRIT Grant and on July 9, 2014, the Chief Executive Officer of CPRIT executed the CPRIT Agreement.

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Pursuant to the terms of the CPRIT Agreement, CPRIT agreed to disburse to the Company up to US$12,000,000 to be used in connection with ESSA’s development of EPI-506 towards completion of Phase 1/2 clinical proof-of-concept (in this section, the “Project”), to be advanced upon request by the Company. If the Company does not request, or CPRIT’s oversight committee does not authorize, advancement of funds for some or the entire CPRIT Grant proceeds, disbursement of CPRIT Grant proceeds for services performed and allowable expenses and costs incurred in connection with the Project will be on a reimbursement basis. Each year, the Company must confirm to CPRIT that it has funds dedicated to the Project equal to one half of the amount of the CPRIT Grant funds disbursed each fiscal year during the term of the CPRIT Agreement.

The CPRIT Grant is subject to the Company’s compliance with the scope of work outlined in the CPRIT Agreement and demonstration of its progress towards achievement of the milestones set forth in the CPRIT Agreement. On July 31, 2014, the Company received US$2,791,333 from CPRIT, representing the first tranche of the aggregate US$12,000,000 CPRIT Grant, and recorded this amount as deferred revenue. This amount will be recognized as revenue as eligible expenses are approved by CPRIT based on quarterly filings. The Company must dedicate US$1,395,667 of Company funds unrelated to the CPRIT Grant to be used in connection with the Company’s development program (being one half of the amount of the first tranche of the CPRIT Grant). To obtain an advance of the next tranche of the CPRIT Grant in the amount of US$3,786,667, the Company must successfully file an IND application with the FDA in 2015 (for more information on the IND application process, see “Regulatory Environment” in Item 4 of this Registration Statement) and dedicate US$1,893,333 of Company funds unrelated to the CPRIT Grant to be used in connection with the Company’s development program (being one half of the amount of the second tranche of the CPRIT Grant). This application will summarize all pre-clinical work completed in connection with EPI-506. The Company filed an IND application with the FDA on March 31, 2015. On April 30, 2015, subsequent to filing the application, the Company received notification from the FDA in the US that the Company’s IND application has been placed on clinical hold pending receipt by the FDA of additional chemistry and pharmaceutical data related to the stability of the drug substance and drug product and a Certificate of Analysis on drug product. The Company is working towards providing the FDA with the requested data and does not expect the clinical hold to cause any significant delay to the Company’s business plan. The Company anticipates filing a CTA with the TPD in the future. As the CTA will be reviewed by the TPD, the Company cannot guarantee that the application will be accepted. CPRIT’s advance of the third and final tranche of the CPRIT Grant, amounting to US$5,422,000, is conditional on the Company identifying the highest non-toxic dose of EPI-506 in humans to use in the next stage of clinical testing by the end of the second quarter of 2016 and dedicating US$2,711,000 of Company funds unrelated to the CPRIT Grant to be used in connection with the Company’s development program. The final milestone expected to be achieved by the Company using the advance of the third tranche of the CPRIT Grant is the completion of the Phase 2 efficacy portion of the Company’s proposed Phase 1/2 clinical study by the end of the second quarter of 2017 (see “ESSA’s Products and Programs – Development Program” in Item 4 of this Registration Statement).

In addition, the Company must conduct the Project within the State of Texas with Texas-based employees, contractors and/or collaborators unless otherwise allowed under the CPRIT Agreement and must use good faith efforts to purchase goods and services from suppliers in Texas to the extent reasonably possible, with a goal of achieving more than 50% of such purchases from suppliers in Texas, as well as reasonable efforts to purchase from certain under-utilized businesses enumerated by CPRIT. As of the date of this Registration Statement, the Company has complied with these obligations by incorporating a subsidiary under the laws of the State of Texas, opening an office in Houston, Texas and basing the Company’s Chief Medical Officer and Executive Vice-President of Research and Development in the Company’s Houston office. In addition, the Company has contracted South West Research Institute, an independent applied research and development facility located in San Antonio, Texas to conduct Good Laboratory Practices (“GLP”) scale-up manufacturing of EPI-506.

The Company must use commercially reasonable efforts to complete the goals of the Project in accordance with the timeline agreed to with CPRIT and must provide quarterly financial reporting to CPRIT to document all costs and allowable expenses paid with CPRIT Grant proceeds. As of the date of this Registration Statement, ESSA is current with its CPRIT filings. The Company must use reasonable efforts to direct that any new or expanded pre-clinical testing, clinical trials, commercialization or manufacturing relating to activities funded by CPRIT take place in Texas. In addition, the Company must use commercially reasonably efforts to commercialize the results of the Project.

The Company and its collaborators, as defined in the CPRIT Agreement attached as Exhibit 4.1 to this Registration Statement, retain ownership of all intellectual property created in connection with work undertaken using CPRIT Grant funds. However, CPRIT has a non-exclusive royalty-free worldwide license to exploit results of the Project for or on behalf of CPRIT and other agencies of the State of Texas for noncommercial purposes only.

ESSA must also pay to CPRIT 4% royalties on gross revenues of sales of commercial products developed from the results of the Project up to a maximum of 200% of the CPRIT Grant funds awarded to ESSA and 2% royalties on such revenues thereafter. After termination of the CPRIT Agreement, ESSA may pay a one-time buyout fee in lieu of the aforementioned royalty payments.

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The CPRIT Agreement terminates on December 31, 2016 unless terminated earlier (i) by mutual agreement of the parties, (ii) by ESSA for convenience on 30 days’ notice or (iii) by CPRIT if a key milestone is not met by ESSA, for certain material defaults of the CPRIT Agreement by ESSA or if allocated funds should become legally unavailable to CPRIT for use in the CPRIT Agreement and CPRIT is unable to obtain additional funding. If ESSA terminates the CPRIT Agreement for convenience or CPRIT terminates the CPRIT Agreement as a result of certain material defaults under the CPRIT Agreement by ESSA, or if ESSA relocates its principal business outside of Texas during the term of the CPRIT Agreement or within three years after the final payment of CPRIT Grant funds, ESSA must repay some or all CPRIT Grant funds, to the extent such default resulted in the CPRIT Grant being expended not in accordance with the CPRIT Agreement. In addition, if ESSA opts out of the CPRIT Agreement or if the CPRIT Agreement is terminated by CPRIT because of ESSA’s default, CPRIT may require that ESSA transfer and assign to CPRIT all of its rights, title and interest in all intellectual property rights and technologies developed as a result of the CPRIT Grant. If, at the time the CPRIT Agreement terminates, a portion of the funds awarded have not been used by the Company for permissible services, expenses or costs relating to the Project and the Company has not received approval for an extension of the term of the CPRIT Agreement (which may not exceed six months), the Company must return such unused funds to CPRIT.

The CPRIT Agreement cannot be assigned by the Company without CPRIT’s consent. The Company has agreed to indemnify CPRIT and the State of Texas from and against any and all claims, demands, costs, expenses, liabilities, causes of action and damages in any way related or in connection with ESSA’s receipt or use of the CPRIT Grant funds. The funds available to the Company pursuant to the CPRIT Agreement are contingent upon funding being available from CPRIT for the term of the CPRIT Agreement. The Company does not have any right of action against CPRIT in the event that CPRIT is unable to perform its obligations under the CPRIT Agreement as a result of the suspension, termination, withdrawal, or failure of funding to CPRIT or lack of sufficient funding of CPRIT for the CPRIT Agreement. If the CPRIT Agreement is not funded, both ESSA and CPRIT will be relieved of their obligations under the CPRIT Agreement.

In the fiscal year ended September 30, 2014, ESSA received an initial advance of US$2,793,533 from the CPRIT Grant. The CPRIT Grant is detailed in the accompanying financial statements for the fiscal year ended September 30, 2014.

Also during the first quarter of 2014, the Company retained Bloom Burton, a Toronto-based financial advisory firm, to help develop a financing strategy for ESSA.

In April 2014, ESSA issued a convertible secured debenture to Bloom Burton Healthcare Structured Lending Fund in the amount of $1,000,000 bearing interest at a rate of 12% per annum (the “Convertible Debenture”). Pursuant to its conversion terms, the Convertible Debenture, including all accrued interest thereon, was automatically converted into 517,500 Preferred Shares upon the closing of the first tranche of the 2014 Financing (as defined below).

Also during the second quarter of 2014, in connection with certain obligations under the CPRIT Grant, the Company established a wholly-owned subsidiary, ESSA Texas, under the laws of the State of Texas.

On July 29, 2014, ESSA completed a brokered private placement offering of 1,185,400 preferred shares in the capital of ESSA (the “Preferred Shares”) at a price of $2.00 per Preferred Share for aggregate gross proceeds of $2,370,800 (the “2014 Financing”). The 2014 Financing was completed with a syndicate of agents led by Bloom Burton, as lead agent, and which included Mackie Research Capital Corporation and Richardson GMP Limited. Pursuant to its conversion terms, the Convertible Debenture, including all accrued interest thereon, was automatically converted into 517,500 Preferred Shares upon the closing of the 2014 Financing.

On October 22, 2014 and October 23, 2014, the Company carried out the 2014 Special Warrant Financing for gross proceeds of $1,359,280. The Special Warrants issued in connection with the 2014 Special Warrant Financing were exercised into Preferred Shares on December 15, 2014.

In September 2014, the Company submitted its initial application to list the Common Shares on the TSX-V. On December 9, 2014, the Company became a reporting issuer in Alberta, British Columbia and Ontario. On December 22, 2014, the Company received conditional approval for its common shares to be listed on the TSX-V. As of January 27, 2015, the Company began trading stock under the symbol “EPI”. The Company also intends to apply to list its Common Shares on the NASDAQ. Such a listing is dependent upon this Registration Statement being declared effective as well as the Company meeting all the necessary listing requirements of the NASDAQ.

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In the fourth quarter of 2014, ESSA completed a portion of the work required in order to file an IND application with the FDA in the US and a CTA in Canada.

2015

In January 2015, the Company issued the 2015 Special Warrants at a price of US$2.75 per 2015 Special Warrant for gross proceeds of approximately US$12,000,000 (the “2015 Special Warrant Financing”). Each 2015 Special Warrant is exercisable for, without payment of any additional consideration, one Common Share at any time by the holder thereof and all of the 2015 Special Warrants will be deemed to be exercised on the earlier of: (i) October 16, 2015 and (ii) the date on which the Common Shares first begin to trade on either (i) the NASDAQ or (ii) the NYSE securities trading platform of the New York Stock Exchange (the “U.S. Listing Date”). Should the U.S. Listing Date not occur on or prior to October 16, 2015, instead of one Common Share, each 2015 Special Warrant shall entitle the holder thereof to receive 1.5 Common Shares upon exercise or deemed exercise thereof.

In connection with the 2015 Special Warrant Financing, Bloom Burton and Roth Capital Partners, LLC, as agents, and selling group members, received total cash commissions equal to approximately US$706,800 and 257,018 Broker Warrants. Each such broker warrant is exercisable to purchase one Common Share until January 16, 2017 at a price of US$2.75 per broker warrant.

The IND application was filed with the FDA on March 31, 2015. On April 30, 2015, the Company received notification from the FDA that the Company’s IND application has been placed on clinical hold pending receipt by the FDA of additional chemistry and pharmaceutical data related to the stability of the drug substance and drug product and a certificate of analysis on drug product. The Company is working towards providing the FDA with the requested data and does not expect the clinical hold to cause any significant delay to the Company’s business plan.

Introduction

ESSA is a development-stage pharmaceutical company focused on the development of small molecule drugs for the treatment of CRPC. The Company is developing drugs which selectively block the NTD of the AR, potentially overcoming the known AR-dependent mechanisms of CRPC and providing CRPC patients with the potential for increased progression-free and overall survival.

Overview of Recurrent Prostate Cancer

Androgen and the Androgen Receptor

Adenocarcinoma of the prostate represents approximately 95% of all prostate cancers and is dependent on androgen for survival and proliferation. This dependency of prostate cells on androgen forms the basis for androgen deprivation therapy (surgical or pharmaceutical castration) as the gold standard for systemic therapy for recurrent prostate cancer. In adult males, the testes produce the majority of androgens with minor amounts contributed from the adrenal glands and other tissues.

The AR is a ligand-activated transcription factor that mediates the biological effects of androgen. Without a functional full-length AR, the addition of androgen has no biological effects. The AR has distinct functional domains that include a C-terminal ligand-binding domain, DNA-binding domain, the N-terminal domain and a hinge region. All current FDA-approved therapies that target the AR are directly or indirectly focused on its C-terminal ligand-binding domain. Androgens such as testosterone and dihydrotestosterone bind to the ligand-binding domain of the AR which result in changes in conformation and post-translational modifications, nuclear translocation and ultimately binding to the regulatory regions of DNA of target genes called androgen response elements. Thus, AR regulates the transcription of genes involved in prostate tissue growth and survival.

Castration-Resistant Prostate Cancer

Approximately one-third of all prostate cancer patients who have been treated for local disease will subsequently have biochemical failure: rising serum levels of prostate-specific antigen (“PSA”) which is an indication of recurrent disease. Patients with advanced disease tend to go on to androgen ablation therapy (surgical or pharmacological castration). Pharmacological castration using analogues of luteinizing hormone releasing hormone (“LHRH”) or surgical castration are effective and comprise the current gold standard of treatment.

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Drugs which competitively bind in the ligand-binding pocket of the ligand-binding domain of the AR prevent both the binding of androgen and interaction of the AR with co-regulatory proteins, and therefore also prevent AR transcription activity. Such drugs (called “Antiandrogens”) are effective in inhibiting the growth of prostate cancer tumors. Current antiandrogens used for prostate cancer include bicalutamide, flutamide, nilutamide, cyproterone acetate, enzalutamide, and the investigational drugs ARN-509, TOK-001 (Galeterone) and ODM-201.

When the disease becomes resistant to initial androgen ablation therapy, second line hormonal treatments can be used depending on several factors that include the biology of the tumor, and evidence of metastases, whether or not the patient is experiencing symptoms and if the disease comprises small cell carcinoma. However, castrate levels of androgen are typically maintained (i.e. patient remains on LHRH analogues) while other therapies are added to the patient’s regime. The majority of asymptomatic patients with rising PSA and evidence of metastasis will go on to receive second-line hormonal therapies that include abiraterone acetate, corticosteroids and/or enzalutamide. For symptomatic CRPC patients, docetaxel or radium-233 for bone metastases are generally the treatments of choice. Prostate small cell carcinoma can be treated with chemotherapies such as docetaxel as those carcinomas usually do not respond to AR targeted therapies.

Abiraterone acetate plus prednisone has been approved by FDA and in many countries globally for metastatic CRPC. In the key clinical study supporting initial approval for post-chemotherapy CRPC, abiraterone acetate plus prednisone demonstrated a statistically significant improvement in overall survival of 4.6 months in patients with metastatic CRPC who have failed one or two prior chemotherapy regimens. Abiraterone acetate plus prednisone has also been approved in the pre-chemotherapy setting. In the key supporting clinical study, the co-primary endpoint showed a statistically significant increase in median radiographic progression-free survival with abiraterone plus prednisone versus prednisone alone of 16.5 months versus 8.2 months, whereas improvement in median overall survival only showed a trend towards statistical significance. Treatment with abiraterone requires the concomitant usage of prednisone to ameliorate symptoms of mineralocorticoid excess, including fluid overload, hypertension and hypokalemia; abiraterone plus prednisone must be used with caution in those with a significant cardiovascular history, including congestive heart failure. These effects, as well as treatment-associated elevations in liver enzymes, necessitate monitoring for blood pressure, serum potassium, fluid retention, aspartate aminotransferase (AST), alanine transaminase (ALT) and bilirubin levels. Furthermore, the pharmacokinetics of abiraterone acetate demonstrate a large food effect, with exposure increasing up to ten-fold in the presence of food. For safe administration, food must not be eaten two hours before the drug is taken and for one hour afterwards.

Enzalutamide has also been recently approved by the FDA as a treatment for patients with metastatic CRPC. In the initial pivotal clinical trial supporting FDA approval in the post-chemotherapy CRPC population (AFFIRM study), the median overall survival was 18.4 months in the enzalutamide group versus 13.6 months in the placebo group. The label extension to metastatic CRPC is supported by data from the PREVAIL study in chemo-naive CRPC, which demonstrated a statistically significant 29% reduction in the risk of death over placebo, despite enrolling patients with visceral disease, a population with a poorer prognosis that has historically been excluded from this trial setting. This survival benefit was achieved without the requirement for concomitant prednisone. The safety profile of enzalutamide is considered favorable despite a high incidence of hypertension and the risk for seizure.

The immunotherapy sipuleucel-T has been shown to increase the median survival time of CRPC patients by four months. Sipuleucel-T is generally considered a treatment option in advanced patients who are either asymptomatic or minimally symptomatic and with a good performance status (ECOG 0-1). Sipuleucel-T is not indicated for patients with hepatic metastases or less than six month life expectancy. Sipuleucel-T has no effect on serum PSA and does not affect the time to disease progression.

Radium-223 has been shown to extend survival in CRPC patients with symptomatic bone metastases and no known visceral metastatic disease. Limitations include the incidence of bone marrow suppression, primarily thrombocytopenia, and the need for this injectable radiopharmaceutical to be administered by trained personnel at select centers able to handle this product. In addition, the administration of radium-233 is associated with potential risks for other persons (e.g. medical staff, care givers and members of the patient’s family) from radiation or contamination from body fluids such as spills of urine, feces, and vomit. Therefore, radiation protection precautions must be taken in accordance with national and local regulations.

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It is generally believed that, in the majority of patients, castration-resistant disease continues to be driven by a transcriptionally-active AR in spite of maintaining castrate levels of androgen. Evidence to support the concept that CRPC remains dependent upon AR signaling includes: 1) many of the same genes that are increased by androgens become elevated in CRPC, such as PSA; 2) detection of nuclear localization of the AR in CRPC tissues supports that the AR may continue to be transcriptionally active in the absence of testicular androgens; 3) increased expression of the AR in tissues from CRPC; and 4) most importantly, survival advantages with enzalutamide and abiraterone (block synthesis of androgens) in CRPC patients.

AR-related mechanisms of CRPC

The mechanisms for the development of CRPC have been intensely studied, in part because the emergence of CRPC is almost universal in recurrent prostate cancer treatment. The mechanisms described below represent the current state of knowledge in this regard.

1 - Mutations Causing AR Activation by Antiandrogens

Some patients receiving antiandrogens will develop antiandrogen withdrawal syndrome. This syndrome is characterized by a rising PSA and worsening symptoms while the patient is taking antiandrogens, followed by a decline in PSA or improvement when the patient is taken off antiandrogens. Prostate cancer cells obtained from patients with antiandrogen withdrawal syndrome may have gain-of-function mutations in the ligand-binding domain of the AR. Thus, current antiandrogens used to block the ligand-binding domain of the AR may become activators of the mutated AR and as a result, have the opposite effect from what they were intended to do.

2 - Amplification or Over-Expression of AR

Several studies have shown that androgen deprivation results in over-expression of the AR, thus giving any residual androgen more opportunities to bind and thereby activate the AR.

3 - Residual Androgens Activate AR

While in mature men, the majority of androgen is produced by the testes, androgen is produced by a number of other tissues including the adrenal glands and in some prostate cancer tumors. As well, a variety of different pathways can produce androgen. As blood levels of androgen are reduced through use of current androgen-suppressing drugs or surgical castration, androgen production by alternate pathways may become an important way in which ARs become activated. Recently, it has been shown that prostate cancer tumor tissue can synthesize androgen, leading potentially to concentrations of intra-tumoral androgen that are sufficient to activate the AR.

4 - Over-expression of AR Coactivators

The AR requires interaction with an abundance of other proteins such as bridging factors and coactivators. CREB-binding protein (“CBP”) is a bridging factor that interacts with the NTD of the AR and is thought to be essential for AR transcriptional activity. CBP levels are increased in CRPC, which may lead to cancer growth driven by AR activity.

5 - Ligand-independent Activation by Cytokines or Kinases

There is evidence that cytokines and kinases can activate the NTD of the AR. It is possible that under castrate levels of androgen, that cross-talk between the AR and signal transduction pathways circumvent the need for androgen for the activation of the AR for the growth and survival of CRPC.

6 - Constitutively Active Splice Variants that Lack the Ligand-Binding Domain

CRPC may involve the expression of constitutively active splice-variants of the AR that lack the full ligand-binding domain. These AR splice variants are always activated; they have a truncated ligand-binding domain and thus do not require androgen to be transcriptionally active. Antiandrogens such as enzalutamide would have no effect on these AR splice variants because antiandrogens bind to the ligand-binding domain which is not present in these variants.

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ESSA’s Products and Programs

ESSA’s EPI-Series Drugs

ESSA has licensed a family of drugs which should prevent AR transcriptional activity mediated by any of the mechanisms cited above. ESSA’s lead compound was EPI-001. It is a mixture of 4 stereoisomers, each of which has the same chemical constitution, but different spatial orientation of its constituent atoms. While all the stereoisomers are active against the AR NTD, the most effective stereoisomer of EPI-001 is EPI-002 and substantial experimentation with EPI-002 has been completed and published. The clinical candidate compound that ESSA is developing (EPI-506) is a pro-drug of EPI-002. That means that EPI-506 metabolizes to EPI-002 once it is dosed orally. Together, the Company refers to EPI-001, EPI-002, EPI-506, and other active analogues of EPI-001 as the “EPI-series drugs”.

EPI-001 inhibited AR activity induced by androgen and, in the absence of androgen under serum-free conditions (no cholesterol precursors that are required for de novo synthesis of androgens), by forskolin, which stimulates PKA activity or by IL-6. EPI-001 also inhibited both constitutively active AR devoid of a ligand-binding domain and transactivation of the NTD induced by forskolin or IL-6. Together, these data imply that the mechanism of action of EPI-001 involves a critical aspect of AR transcriptional activity that is not dependent on the presence of the ligand-binding domain. EPI-series drugs specifically inhibit the transcriptional activities of both V7 and V567es AR splice variants that lack a ligand-binding domain, and whose expression is correlated to CRPC and poor survival.

EPI-series drugs bind directly to the AF-1 region in the NTD of AR, and have been shown to prevent the interaction of the AF-1 region in the NTD with CBP and RAP74. Consistent with EPI binding to the AF-1 region in the AR N-terminal domain, which is essential for activity, this series of compounds prevent AR activation by other currently known means of activating the AR, as demonstrated by in vitro experiments. The data arising from these experiments has been published in peer-reviewed journals. By directly inhibiting the NTD of the AR, ESSA’s EPI-series drugs may improve survival for patients with recurrent prostate cancer.

Current blockers of the AR transcriptional activity have focused on preventing binding of androgen to the LBD. This works initially for most patients, but eventually adaptations enable the AR to become transcriptionally active in spite of reduced blood levels of androgen and blocking androgen from binding to the LBD, as discussed above. By directly blocking the NTD, ESSA’s drug candidate has the potential to overcome these biological adaptations. As a result, ESSA expects its drug candidate to succeed in patients whose disease is still dependent on AR even if they are resistant to current prostate cancer hormone therapies that target the AR ligand-binding domain.

The NTD of AR is flexible with a high degree of intrinsic disorder making it difficult or potentially impossible to be used for structure-based drug design. To ESSA’s knowledge, no crystal structure has been resolved that could facilitate development of drugs which interact with this domain. For this and possibly other reasons, ESSA is not currently aware of any reported success by other drug development companies in finding drugs that bind to this drug target.

Consistent with inhibiting AR activity, EPI-series drugs have been show to block AR-dependent proliferation of human prostate cancer cells that express AR and have no effect on the proliferation of cells that do not express functional AR or do not rely on the AR for growth and survival. Consistent with EPI-series drugs blocking the androgen-AR axis, intravenous injection of EPI significantly reduced the weight of benign prostates from non-castrated mature mice compared with control-treated animals. EPI-001 also blocked the growth of human prostate cancer xenografts in the presence of androgen (non-castrated mature male mice) and most importantly in CRPC xenografts. Male mice bearing LNCaP xenografts treated with EPI-001 by intravenous injection had tumors that were less than half the size of tumors in controls after only two weeks of treatment. The LNCaP xenograft is an accepted laboratory model of CRPC in which human prostate cancer cells are implanted subcutaneously or orthotopically into male Severe Combined Immunodeficiency (“SCID”) or Nude mice. The LNCaP xenograft is derived from a human prostate cancer cell line that expresses AR and progresses to CRPC with castration of the host. The LNCaP xenograft was the principal animal model used to justify clinical development of enzalutamide as well as other drugs which are currently approved or in clinical trials.

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The data below shows the response of subcutaneous LNCaP xenografts to EPI-001 and control delivered intratumorally (dosing every 5 days, open symbols) and intravenously (dosing every second day, filled symbols). Consistent with EPI-001 having specificity for AR, EPI-001 had no effect on PC3 human prostate cancer xenografts that are insensitive to androgen and do not express functional AR.

Figure 1 – Efficacy of EPI-001 in Recognized Prostate Cancer Disease Model

ESSA has licensed two families of drugs which selectively block the activity of the NTD of the AR (see “Patent and Proprietary Rights – License Agreement with UBC and the BC Cancer Agency” in Item 4 of this Registration Statement). Both were discovered from extracts derived from marine sponges, but there are important differences between the two molecules. For many reasons, ESSA has focused on the EPI-series. The variants in this family are easily synthesized, and over one hundred members of the EPI family have now been made and tested.

ESSA’s Development Program

Cancer therapeutics can typically be developed using relatively short-term pre-clinical experiments, shorter clinical studies with fewer patients than non-oncological indications, and less resources and less time compared to experimental therapies in many other therapeutic areas. ESSA intends to initially focus its development efforts on obtaining regulatory approval to treat CRPC patients.

Pre-clinical Development

ESSA is focused on developing EPI-506 as its clinical development candidate. EPI-506 has been shown by ESSA to be more potent than most other EPI-series drugs by oral dosing and has the appropriate pharmacological properties to be developed. The invivo efficacy of EPI compounds has been demonstrated using a variety of human prostate cancer xenograft models.

The Company’s initial work to support the CRPC indication has consisted of efficacy studies, bioanalytical development and pharmacokinetic studies in four species, as well as non-GLP toxicology studies in four species. To date, EPI-506 appears to be well-tolerated after daily oral administration. Formulation development work and bioanalytical development for pre-clinical studies have been conducted at BRI Biopharmaceutical Research Inc. in Vancouver, Canada.

To formally assess any potential safety issues related to EPI-506 the Company has conducted various dose-ranging non-GLP and IND enabling 28-day GLP toxicity studies in rodents and non-rodents, dose-ranging studies that lead to 28-day GLP toxicology studies. In addition, in vitro mutagenesis assay(s) and hERG potassium channel testing are expected to be performed. Consistent with the development of other oncology therapies at this early stage, no reproductive toxicology studies are required, given the patient population to be treated. The toxicology studies are expected to incorporate toxicokinetics in order to correlate potential toxic effects with EPI-506 exposure. In vitro metabolism data using hepatocytes has been generated. A radiolabeled form of EPI-506 will be used for further metabolism and distribution work in vivo.

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The Company expects to address FDA-mandated Chemistry, Manufacturing and Control (“CMC”) requirements by using a combination of in-house expertise and contractual arrangements. The Company has engaged Naeja Pharmaceutical Inc. (“Naeja”) in Edmonton, Alberta to produce non-Good Manufacturing Practice (“GMP”) material for its IND-enabling toxicology studies. Chemical processes developed at Naeja, and in the laboratory of ESSA co-founder Dr. Raymond Andersen at UBC, are being transferred to the Southwest Research Institute in San Antonio, Texas for GMP manufacture of EPI-506 for early clinical trials. Formulation of the final drug product for clinical trials is expected to be performed by a fill/finish company experienced in gel capsule development.

Clinical Development

Phase 1/2 Clinical Trial Design for treating CRPC patients

The Company, along with its key advisors (most of whom are physicians who are currently treating CRPC patients), expects to execute a Phase 1/2 study to determine the safety, tolerability, maximum-tolerated-dose, pharmacokinetics and potential therapeutic benefits of EPI-506 in CRPC patients. The Phase 1/2 portion of the study is expected to enroll up to 30 patients with CRPC. Following single-dose evaluation, patients are expected to then receive daily dosing for 28 days to assess safety for dose escalation. Further patients will continue to study drugs for 12 weeks or longer to assess efficacy. The primary function of this part of the study will be to assess safety and pharmacokinetics of EPI-506. It is also possible that some patients will respond to treatment. Such a response to treatment would be measured by decreased PSA levels and/or a reduction in metastatic lesions. ESSA expects to conduct this Phase 1 portion of the study at five to six sites in Canada and the U.S and expects it to be completed in approximately mid-2016 depending on the enrollment rate and number of dose escalation steps.

The Phase 2 portion is initially expected to enroll up to 120 CRPC patients. Additional patient cohorts may be added to address relevant questions on patients’ tumor response and molecular profile (e.g. splice variant status). This study is currently expected to focus on CRPC patients with rising PSA who have failed one of enzalutamide or abiraterone acetate. The main outcomes to be measured are expected to be:

The Company expects to collect circulating tumor cells so that the status of AR splice variant and other relevant biological markers related to AR signalling can be determined. We expect to conduct this study in 25-30 sites in Canada and the U.S.

Phase 3 studies

In order to obtain regulatory approval, the Company will be required to carry out at least one Phase 3 study. At this time, the Company expects that these patients will be the same population of CRPC patients that were enrolled in the Phase 1/2 study. However, it may be that the results of the Phase 1/2 study suggest a different patient population. In the Phase 3 studies, the key end-point will be overall survival relative to patients receiving the current standard-of-care. The Company expects to conduct the study at many sites around the world.

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Development Timeline

It is currently anticipated that ESSA will accomplish the development of EPI-506 to completion of Phase 1/2 clinical proof-of-concept according to the following timeline:

Expected Development Timeline for EPI-506

Phase 1/2 Clinical Study Completed in Q2, 2017

There can be no guarantee that the Company will complete each stage of development in accordance with the timelines set out above, or at all. See “Risk Factors” in Item 3 of this Registration Statement.

Market Opportunity

Given the demonstrated mechanism-of-action of the Company’s drug candidates, much of the spectrum of prostate cancer patients may ultimately be treatable with its drug candidate, potentially including patients with their initial diagnosis of the condition. However, ESSA’s initial market focus is toward patients who have failed current hormone therapies, including abiraterone and enzalutamide. According to the American Cancer Society’s “Prostate Cancer – January 2014” report (the “Decision Resources Report”), in 2012, there were 209,000 prevalent cases of such CRPC patients, and that prevalence is expected to increase to approximately 235,000 in 2022. ESSA expects that its new AR NTD blockers could be useful in many of those patients. The Company intends to first focus on CRPC, for the following reasons:

In the CRPC population, the Company expects to focus initially on second, third and fourth-line patients. There are currently about 80,000 such patients in the major market countries. At an estimated selling price of approximately $100,000 per year (similar to current leading-edge therapies), that population represents a market worth approximately $8 billion per year. These patients currently have a small number of treatment options (or none, for fourth-line patients). It is the Company’s expectation that most patients will choose an effective hormone therapy treatment preferentially to cytotoxic (docetaxol), immunotherapy (sipuleucel-T) or radioactive (radium-233) alternatives. Ultimately, the Company’s expected market share will depend on the efficacy demonstrated in the selected patient populations.

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Competition

The competition in the prostate cancer market is very high, with several pharmaceutical therapies already approved and many new molecules being tested for their effect in this patient population. Currently approved or developmental therapies include:

In this market, ESSA believes its competitive position is strong because its drugs, if successful, will focus mechanistically on the approach to prostate cancer that has been shown to make the biggest difference to the survival of recurrent prostate cancer patients: blocking AR activation. Since EPI compounds have been shown to directly block the AR N-terminus domain, they have the potential to overcome the AR-dependent resistance pathways (discussed above) that may develop as a result of treatment with current hormone-related CRPC therapies that target the AR ligand-binding domain. If successful, the Company believes this could represent a significant step forward in the treatment of prostate cancer. To ESSA’s knowledge, no other antagonist to the AR N-terminal domain is currently undergoing clinical trials for prostate cancer or any other indication.

Patents and Proprietary Rights

License Agreement with UBC and the BC Cancer Agency

The Licensed IP is embodied in patents and know-how relating to compounds that modulate AR activity created through research work done at the BC Cancer Agency and UBC (the “Licensors”) under the direction of Drs. Marianne Sadar and Raymond Andersen, respectively.

ESSA has the worldwide, exclusive right to develop products based on the Licensed IP pursuant to a licensing agreement among the Company and the Licensors dated as of December 22, 2010, and amended on February 10, 2011 and on May 27, 2014 for certain patent rights and technology related to the Licensed IP (the “License Agreement”). ESSA must pay a minimum annual royalty of $40,000 in the 2014 calendar year, increasing to $65,000 in each of 2015 and 2016 and $85,000 in 2017 and for each year thereafter.

The License Agreement will terminate automatically upon the Company’s insolvency or may be terminated by either party for certain material breaches by the other party, including the failure of the Company and its sublicensees to spend a total of at least $5,000,000, in cash or in kind, in connection with the commercialization of products relating directly to the Licensed IP by December 22, 2015. The Company has already spent more than $5,000,000 in connection with the commercialization of products relating directly to the Licensed IP. The terms of the License Agreement required ESSA to issue to the Licensors, in lieu of payment of an initial license fee, 1,000,034 Common Shares. If the Company develops products covered by the Licensed IP in the future, it will be required to pay certain development and regulatory milestone payments up to an aggregate of $2.4 million for the first drug product developed under the license and up to an aggregate of $510,000 for each subsequent product. The Company must also pay the Licensors low single-digit royalties based on aggregate worldwide net sales of products covered by the Licensed IP and a percentage of sublicensing revenue in the low teens. The Company is also required to reimburse costs incurred by the Licensors related to the prosecution and maintenance of patents embodying the Licensed IP. The License Agreement will expire on the later of 20 years after the date of the License Agreement or the expiry of the last issued patent covering the Licensed IP.

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ESSA’s Intellectual Property Strategy

Both ESSA and the broader pharmaceutical industry attach significant importance to patents for the protection of new technologies, products and processes. Accordingly, the success of the Company depends, in part, on its ability to obtain patents or rights thereto, to protect its commercial secrets and carry on its activities without infringing the rights of third parties. See “Risk Factors” in Item 3 of this Registration Statement. Where appropriate, and consistent with management’s objectives, patents are pursued once concepts have been validated through appropriate laboratory work. To that end, patents will continue to be sought in relation to those components or concepts that management of the Company perceives to be important.

The Company uses a tiered patent strategy to protect its intellectual property. The top tier of patents contains claims that provide the greatest competitive advantage to the Company. These are the composition of matter patents, which claim the Company’s lead compounds such as EPI-506. The next tier relates to another aspect of the Company’s proposed products, such as methods of using the compounds for a variety of indications. The next tier provides further additive protection around the compounds, such as formulations encompassing the compounds. In this way, the Company seeks to take a core technology and provide layers of protection around it. In general, the Company’s strategic approach is to build a portfolio which provides broad protection of our technology, as well as specific claims to the Company’s most valuable compounds and may also increase the patent life for the Company’s key technologies. At this point in time, the Company has secured top tier composition of matter patents via licensing as discussed in the section immediately below.

Key Patent Applications

The Company has licensed patents and patent applications with respect to its technology from the Licensors, jointly. According to the Company’s intellectual property strategy discussed above, the Company considers these patents to be top tier composition of matter patents. The Company has the right to acquire ownership of these patents and patent applications upon specified payment to the Licensors, and providing that payments required under the License Agreement continue to be made. The specific active patent applications to which ESSA has licensed rights are listed below, along with notes relating to the countries in which the patent applications have been filed and the expected expiration dates of such patent applications:

Licensed Pending Applications

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Licensed Patent Applications Granted

Regulatory Environment

The production and manufacture of ESSA’s drug candidate and its R&D activities are subject to regulation for safety, efficacy, quality and ethics by various governmental authorities around the world. In Canada, these activities are regulated by the Food and Drugs Act and the rules and regulations thereunder, which are enforced by the TPD. In the United States, drugs and biological products are subject to regulation by the FDA. Drug approval laws require licensing of manufacturing facilities, carefully controlled research and testing of products, government review and approval of experimental results prior to giving approval to sell drug products. Regulators also typically require that rigorous and specific standards such as GMP, GLP and GCP are followed in the manufacture, testing and clinical development respectively of any drug product. See “Risk Factors” in Item 3 of this Registration Statement.

The principal steps required for drug approval in both Canada and the United States are as follows:

Pre-Clinical Toxicology Studies

Non-clinical studies are conducted in vitro and in animals to evaluate pharmacokinetics, metabolism and possible toxic effects to provide evidence of the safety of the drug candidate prior to its administration to humans in clinical studies and throughout development. The Company recently completed GLP pre-clinical toxicology studies as required for the IND.

Initiation of Human Testing

The process of conducting clinical trials with a new drug cannot begin until the Company has submitted to the appropriate regulatory authorities an application to do so and the required number of days have lapsed without objection from the regulatory authority. (In certain jurisdictions, a no objection letter or approval may be required before the clinical trial can proceed.) In the US, this application is called an IND application, and in Canada, a CTA. Two key factors influencing the rate of progression of clinical trials are the rate at which patients can be enrolled to participate in the research program and whether effective treatments are currently available for the disease that the drug is intended to treat. Patient enrollment is largely dependent upon the incidence and severity of the disease, the treatments available and the potential side effects of the drug to be tested and any restrictions for enrollment that may be imposed by regulatory agencies. An IND/CTA application must be filed and accepted by the TPD or FDA, as applicable, before each phase of human clinical trials may begin. The IND/CTA application must contain specified information including the results of the pre-clinical or clinical tests completed at the time of the IND/CTA application.

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Phase 1 Clinical Trials

Phase 1 clinical trials for cancer therapeutics are typically conducted on a small number of patients to evaluate safety, dose limiting toxicities, tolerability, pharmacokinetics and to determine the dose for Phase 2 clinical trials in humans. ESSA expects to test the Company’s drug in approximately 30 CRPC patients in this phase of the Company’s development activities.

Phase 2 Clinical Trials

Phase 2 clinical trials typically involve a larger patient population than Phase 1 clinical trials and are conducted to evaluate the efficacy of a drug candidate in patients having the disease or medical condition for which the drug is being developed. This phase also provides additional safety data and serves to identify possible common short-term side effects and risks. As discussed above, ESSA expects to dose up to 150 patients in the Company’s Phase 2 study, potentially adding patient cohorts depending on the advice of its clinical advisors. ESSA intends to focus on PSA response, radiographic progression and progression-free survival as the key outcomes.

Phase 3 Clinical Trials

Phase 3 clinical trials typically involve testing an experimental drug on a much larger population of patients suffering from the targeted condition or disease – in ESSA’s case, CRPC. These studies involve testing the experimental drug in an expanded patient population (several hundred to several thousand patients) at geographically dispersed test sites (multi-centre trials) to establish clinical safety and effectiveness. These trials also generate information from which the overall risk-benefit relationship relating to the drug can be determined. As discussed above, ESSA expects to focus on survival measurements as the key outcome from this stage of the Company’s clinical development.

In most cases FDA requires two adequate and well controlled Phase 3 clinical trials to demonstrate the efficacy of the drug. A single Phase 3 trial with other confirmatory evidence may be sufficient in rare instances where the study is a large multicenter trial demonstrating internal consistency and a statistically very persuasive finding of a clinically meaningful effect on mortality, irreversible morbidity or prevention of a disease with a potentially serious outcome and confirmation of the result in a second trial would be practically or ethically impossible.

New Drug Application

Upon successful completion of Phase 3 clinical trials, the company sponsoring a new drug then assembles all the pre-clinical and clinical data and other testing relating to the product’s pharmacology, chemistry, manufacture, and controls, and submits it to the TPD or the FDA, as applicable, as part of a New Drug Submission (“NDS”), in Canada, or a NDA in the United States. The NDS or NDA is then reviewed by the applicable regulatory body for approval to market the drug.

Before approving an NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP. Additionally, the FDA will inspect the facility or the facilities at which the drug is manufactured. FDA will not approve the product unless compliance with current good manufacturing practice, or GMP—a quality system regulating manufacturing—is satisfactory and the NDA contains data that provide substantial evidence that the drug is safe and effective in the indication studied.

The cost of preparing and submitting an NDA is substantial. The submission of most NDAs is additionally subject to a substantial application user fee, currently exceeding $2,169,000 and the manufacturer and/or sponsor under an approved new drug application are also subject to annual product and establishment user fees, currently exceeding $104,000 per product and $554,000 per establishment. These fees are typically increased annually.

In contrast, a NDS costs roughly $322,056 per submission. A NDS will also be subject to Drug Establishment Licensing fees, which currently exceed $16,000 per established facility.

The Company has one wholly-owned subsidiary, ESSA Texas, existing under the laws of the State of Texas.

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ESSA’s operating plan does not include building infrastructure in the form of an in-house laboratory, capital equipment, headcount, or administrative burden.

The Company operates from its head office located in Vancouver, Canada. Operations related to the EPI-506 development program are based in Houston, Texas. In Canada, ESSA rents 200 square feet of office space in a serviced executive office facility at 999 West Broadway, Vancouver, British Columbia. This Canadian office space costs the Company $2,600 per month and is rented on a month to month basis. In the United States, ESSA rents 2,577 square feet of office space under a five year lease at 7505 South Main Street, Houston, Texas. This United States office space costs US$6,657.25 per month.

Not applicable.

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The following discussion and analysis of the financial condition and results of operations of ESSA should be read in conjunction with the audited financial statements as at and for the fiscal year ended September 30, 2014, as at and for the nine months ended September 30, 2013, and as at and for the fiscal year ended December 31, 2012, together with the notes thereto, and with the unaudited condensed interim consolidated financial statements for the six months ended March 31, 2015 and 2014, together with the notes thereto included elsewhere in this Registration Statement. The financial information contained in this Registration Statement is derived from the financial statements, which were prepared in accordance with IFRS.

Overview

ESSA is a development stage company and does not currently generate revenue. In 2014, the Company had sufficient funds from the money raised from a previous financing and from tax credit refunds to meet the operating plan for the majority of the year. These funds were supplemented by the Convertible Debenture the 2014 Financing and the first advance of the CPRIT Grant. The Company recognized the need to raise funds in 2014 to fund the ongoing program and meet the financial commitment that would allow the funds from the CPRIT Grant to be released and through 2014 worked on completing a private placement offering that ultimately led to the 2014 Financing, the 2014 Special Warrant Financing and 2015 Special Warrant Financing. See “Summary Corporate History and Intercorporate Relationships” in Item 4 of this Registration Statement.

The Company balance sheet at March 31, 2015 consisted of cash in the amount of $13,238,618 (September 30, 2014 - $4,146,938), receivables related to GST/HST tax credit refunds of $111,392 (September 30, 2014 - $72,295) and prepaid insurance and services in the amount of $70,064 (September 30, 2014 - $69,946). Liabilities consisted of trade payables in the amount of $1,486,553 (September 30, 2014 - $658,305).

The Company began its most recent fiscal year with a cash balance of $4,146,938 at October 1, 2014. This funded the Company operations in the year to December 31, 2014. The Company completed the 2014 Special Warrant Financing for gross proceeds of $1,359,280 and received net proceeds of $1,218,325 subsequent to December 31, 2014. The Company also completed the issuance and sale of the 2015 Special Warrants for gross proceeds of approximately US$12,000,000. The Company ended the period with cash of $13,238,618 as at March 31, 2015.

ESSA’s operating plan does not include building infrastructure in the form of an in-house laboratory. The use of external contract research groups and consultants is the preferred mode of operating to meet our corporate objectives. Thus far, the Company has been successful in achieving its scientific objectives by following this strategy.

ESSA’s financial strategy to date has been to raise sufficient funds through private placements from private investors in order to fund specific programs within a focused budget. As the program development costs increase and the Company begins to incur manufacturing and clinical study costs, ESSA may need to raise additional capital. See “Risk Factors” in Item 3 of this Registration Statement.

Results of Operations

The fiscal year end of the Company was changed in 2013 with the consent of the Canada Revenue Agency (“CRA”) from December 31 to September 30 to better fit the Company’s operating pattern. The following table sets forth the Company’s consolidated statement of financial position and consolidated statement of loss and comprehensive loss as at and for the six months ended March 31, 2015 and as at and for the fiscal year ended September 30, 2014, as at and for the nine months ended September 30, 2013, and as at and for the fiscal year ended December 31, 2012:

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Results of Operations for the Six Months Ended March 31, 2015 and the Six Months Ended March 31, 2014

There was no revenue in any of the interim periods as reported. The Company incurred a comprehensive loss of $6,158,938 for the six months ended March 31, 2015 compared to a comprehensive loss of $398,809 for the six months ended March 31, 2014. Variations in ESSA’s expenses and net loss for the periods resulted primarily from the following factors:

Research and Development Expenditures

Expenses increased in all categories of R&D. R&D expense included the following major expenses by nature:

The overall R&D expense for the six months ended March 31, 2015 was $3,842,487 compared to $179,004 for the six months ended March 31, 2014. The expense for 2015 was higher as compared to 2014 due to increased overall activity following several significant financings in the latter part of fiscal 2014 that permitted a more robust research program compared to the prior period when the Company was focusing on achieving the CPRIT grant and financing objectives. Analytical studies, formulation and testing costs were $1,688,486 in the period ending March 31, 2015 compared to $108,274 in the period ending March 31, 2014. This increase is related to the increase in spending on contracted lab facilities to conduct testing and experimentation on the Company’s drug candidates. Legal patent and license fees increased to $311,321 for the six months ended March 31, 2015 (2014 - $140,685) as the Company has submitted a number of patent applications for which the Company owns the rights. Consulting costs increased to $644,058 for the six months ended March 31, 2015 (2014 - $83,574) as the Company has engaged professionals in Texas to conduct specific R&D services for the Company in addition to regular payments made to the Company’s Chief Scientific Officer and Chief Technical Officer. The fees to both the Chief Scientific Officer and Chief Technical Officer increased from $60,000 per year to $120,000 per year following the successful completion of $5,000,000 in equity financings. Salaries and benefits of $802,070 for the six months ended March 31, 2015 (2014 - $Nil) related to the Company’s Chief Medical Officer, Executive VP of Research and additional research support staff added to formal payroll in September 2014.

Share-based payments expense of $521,382 (2014 - $60,976) relates to the value assigned to stock options granted to key management and consultants of the Company. The expense is recognized in relation to the grant and vest of these equity instruments as measured by the Black-Scholes pricing model.

General and Administration Expenditures

General and administrative expenses include the following major expenses by nature:

General and administration expenses increased to $1,182,357 from $211,074 in the six months ended March 31, 2014. Significant components of the expense in 2015 included (i) $997,149 (2014 - $42,257) in professional fees for legal and accounting services in conjunction with corporate activities including the Company’s financing activities, listing on the TSX-V and the NASDAQ, (ii) a salaries and benefits expense of $616,020 (2014 - $Nil) related to the establishment of the CEO and CFO as full time employees of the Company, and (iii) a gain on foreign exchange of $1,229,303 (2014 – a loss of $5,323) due to the spread between the Canadian and U.S. dollars, which the Company is exposed to as a result of its ongoing activities in Texas and the CPRIT grant being denominated in U.S. dollars.

Share-Based Payments

Share-based payments expense of $307,270 (2014 - $Nil) relates to the value assigned to stock options granted to key management and consultants of the Company. The expense is recognized in relation to the grant and vest of these equity instruments and allocated to research and development, general and administration and financing expenditures relative to the activity of the underlying optionee.

Results of Operations for the Fiscal Year Ended September 30, 2014 and the Nine Months ended September 30, 2013

There was no revenue in any of the fiscal years as reported. Other income consisted of interest income on cash deposits. The Company incurred a comprehensive loss of $1,955,029 for the year ended September 30, 2014 compared to a comprehensive loss of $1,058,060 for the nine months ended September 30, 2013. In addition to variations resulting from the change to the Company’s fiscal year end, which affects the comparability of the periods presented, variations in ESSA’s expenses and net income (loss) for the periods resulted primarily from the following factors:

Research and Development Expenditures

Expenses increased in all categories of R&D. R&D expense included the following major expenses by nature: