Novoheart Holdings Inc.
(“
Novoheart” or the
“
Company”) reports financial
results for the three and six months ended December 31, 2019.
Amounts, unless specified otherwise, are expressed in Canadian
dollars and are in accordance with International Financial
Reporting Standards (IFRS).
Ronald Li, CEO of Novoheart, commented, “During
the past quarter, we have been pleased to announce a number of
major milestones that recognize consistent advances in our
technology and also demonstrate the depth of our integration with
multiple leading organizations at the forefront of drug discovery
and development.
Two Pfizer-coauthored studies demonstrated the
advanced capabilities of the MyHeart platform for drug screening as
well as disease modelling, a collaboration with AstraZeneca will
see Novoheart co-develop the world’s first Human Heart-in-a-jar
Model of heart failure, an exclusive licensing agreement with
Harvard University will lead the co-development of a
next-generation heart model with significantly enhanced predictive
accuracy, capacity and versatility and the award of a multi-million
dollar R&D grant by the Innovation & Technology Commission
(ITC) in recognition of the consistent advances in the Company's
technology.
We are in a period of significant growth and
commercial expansion and expect this strong momentum to continue
throughout 2020 further driving both market confidence and industry
confidence.”
Business
Highlights:
- Co-developing first of its kind human heart-in-a-jar model of
heart failure with AstraZeneca
- Exclusively licensed technology from Harvard University to
develop next-generation human heart-in-a-jar
- Completion of Phase II of a commercial agreement with a top-10
Global Pharmaceutical Company (“Global Pharma
Partner”) to develop high throughput drug
screening
- Awarded $1.67 million in research funding
Co-developing first of its kind
human heart-in-a-jar model of heart failure with
AstraZeneca
In November 2019, the Company announced a
collaboration with global biopharmaceutical company AstraZeneca, to
develop the world’s first human-specific in vitro, functional model
of heart failure with preserved ejection fraction (HFpEF),
accounting for approximately 50% of heart failure.
In collaboration with the Cardiovascular, Renal
and Metabolism therapy area of AstraZeneca, the Company aims to
provide a unique assay for understanding the mechanisms of HFpEF,
identification of new therapeutic targets, and assessment of novel
therapeutics for treating HFpEF patients. Novoheart will
exclusively own the intellectual property rights to the newly
developed HFpEF hvCOC model.
Exclusively licensed technology
from Harvard University to develop next-generation human
heart-in-a-jar
In November 2019, the Company entered into an
exclusive licensing agreement with Harvard University’s Office of
Technology Development.
The agreement enables Novoheart to combine
MyHeartTM Platform with Harvard’s pioneering tissue-engineered
scale model of the cardiac ventricle and bioreactor technology. The
combination of these two technologies will elevate Novoheart’s
cardiac disease modeling capabilities to an unprecedented level in
the field, allowing for greatly improved translation of an in vitro
model to predict clinical outcome with a higher accuracy. We
anticipate that incorporating Harvard’s technology will broaden our
commercial applications and offerings for facilitated drug
discovery and development.
Completion of Phase II of a commercial agreement
with the Global Pharma Partner to develop high-throughput drug
screening as a potential recurrent revenue-generating
avenue
In December 2019, Novoheart completed Phase II
of a commercial agreement with the Global Pharma Partner. Upon
completion of Phase II, the Company recognized $198,078 of revenue
for the six months ended December 31, 2019. The Company has
received approximately $400,000 from the Global Pharma for Phase I
and Phase II of the commercial agreements, The contract
deliverables will expand the Company’s testing capabilities of its
platform, by designing and developing a new versatile
high-throughput microplate which will allow the screening of
hundreds of drugs using engineered human ventricular Cardiac Tissue
Strips (hvCTS). Termed the hvCTS-96, the disposable microplate will
be compatible with robotic plate handling systems for automated
high-throughput screening.
The hvCTS-96 will increase the breadth and depth
of the MyHeartTM Platform by offering a range of complementary but
distinctive novel technologies to clients as tools for testing the
efficacy and safety of drugs by predicting human responses. The
patent-pending, custom-designed microplates are to be sold on an
ongoing basis as a screening and research tool to the contracted
pharma partner, as well as being marketed and sold to other global
organizations in the business of drug screening and development.
Novoheart retains ownership of all intellectual property rights
relating to the new microplate design. The microplate market is
estimated at CAD$980M (USD$750M).1
1 Research and Markets, Global Microplates Market Size,
Market Share, Application Analysis, Regional Outlook, Growth
Trends, Key Players, Competitive Strategies and Forecasts, 2018 To
2026
Awarded $1.67 million in
research funding from the Innovation and Technology Commission of
Hong Kong SAR Government
In December 2019, Novoheart has received a
further grant from the Innovation and Technology Commission of Hong
Kong SAR Government (the “ITC”). Combined with a cash rebate scheme
and funding for hiring research and development talent, the Company
is expecting to receive a total of over $1.67 million in grant
awards from the ITC over the next two years. This is the third
major research and development matching grant that the ITC has
awarded Novoheart, making the total awarded grant to over $3.7
million.
The new ITC grant will support the development
of the automated next generation of human heart assays, with
further enhanced throughput, accuracy and sensitivity in screening
drugs for toxic or therapeutic effects on the heart. The platform
is designed to help drug developers increase their confidence in
the selection and investment of candidate drugs that are most
likely to succeed in clinical trials.
Change of fiscal
year-end
To better align its financial reporting with the
calendar year and that of its industry peers, during the six months
ended December 31, 2019, the Company changed its fiscal year-end to
December 31, from June 30. The Company’s transition year is the six
months ended December 31, 2019, and the comparative period is the
twelve months ended June 30, 2019. The variation in the duration of
the comparative must be considered in evaluating the financial
information noted below.
Financial Results for the six months ended
December 31, 2019
The Company recorded a net loss after tax of
$3,995,070 (loss per share of $0.02) for the six months ended
December 31, 2019 compared to a net loss of $7,656,520 (loss per
share of $0.08) for the year ended June 30, 2019.
Revenue and Cost of Sales
For the six months ended December 31, 2019, the
Company recorded revenue of $266,747 and cost of sales of $93,138
compared to revenue of $165,031 and cost of sales of $75,487 for
the year ended June 30, 2019. The increase in revenue was mainly
due the completion of Phase II with the Global Pharma Partner (see
“Business Highlights”, above). Services for Phase II commenced in
August 2019 and was completed in December 2019. Cost of sales
mainly comprised of labour and material costs.
Operating Expenses
Operating expenses for the six months December
31, 2019 was $4,511,814 compared to $8,327,059 for the year ended
June 30, 2019. The most significant contributing factors to the
increase was a result of the acquisition of Xellera Therapeutics
Limited, increases in research and development expenses and general
and administrative expense. The increase was offset by the decrease
of share-based compensation expenses, marketing expenses and
intellectual property expenses.
Financial Results for the Three
Months Ended December 31, 2019
The Company recorded a net loss after tax of
$2,539,336 (loss per share of $0.02) in the three months ended
December 31, 2019 compared to $1,932,758 (loss per share of $0.03)
in the three months ended December 31, 2018. The increase in the
net loss was due primarily to an increase in research and
development expenses, general and administrative expenses in the
area of occupancy costs, while being offset by the increase in
revenue.
Operating expenses for the three months ended
December 31, 2019 was $2,643,509 as compared to $1,999,010 for the
three months ended December 31, 2018. The increase was primarily
related to increases in research and development expense and
general and administrative expenses while partially offset by the
decrease in share-based compensation expenses. Research and
development expenses increased as the Company enters into more
commercial agreements and partnership research and development
projects. The increase in general and administrative expenses was a
result of the expansion of the lab and office, as well as the
build-out of the GMP facility. Share-based compensation expenses
decreased due to some of the restricted share units and options
being fully vested.
Liquidity and Outstanding Share
Capital
As at December 31, 2019, the Company had cash
and cash equivalents of $12,167,583 and pledged bank deposits of
$5,004,000. As at March 11, 2020, there were 188,640,774 common
shares issued and outstanding, and 8,798,373 of common shares
issuable upon the exercise of outstanding stock options at an
exercise price range of $0.32 to $0.50 per share and 176,251 of the
issuance of vested restricted share units.
ABOUT NOVOHEART HOLDINGS
INC.
Novoheart is a global stem cell biotechnology
company that pioneers an array of next-generation human heart
tissue prototypes. It is the first company in the world to have
engineered miniature living human heart pumps that can
revolutionize drug discovery, helping to save time and money for
developing new therapeutics. Also known as 'human heart-in-a-jar',
Novoheart’s bio-artificial human heart constructs are created using
state-of-the-art and proprietary stem cell and bioengineering
approaches and are utilized by drug developers for accurate
preclinical testing as to the effectiveness and safety of new
drugs, maximizing the successes in drug discovery while minimizing
costs and harm caused to patients. With the recent acquisition of
Xellera Therapeutics Limited for manufacturing Good Manufacturing
Product (GMP)-grade clinical materials, Novoheart is now developing
gene- and cell-based therapies as well as other next-generation
therapeutics for cardiac repair or regeneration.
Common shares of Novoheart is traded on the TSX
Venture Exchange under the symbol “NVH”.
For further information please
contact:
Novoheart Holdings Inc.Suite 2600, 595 Burrard StreetVancouver,
British ColumbiaV7X 1L3
Ronald LiChief Executive Officer
(604) 398-3170info@novoheart.com
Cautionary Note Regarding
Forward-Looking Statements
Information set forth in this news release may
involve forward-looking statements under applicable securities
laws. Forward-looking statements are statements that relate to
future, not past, events. In this context, forward-looking
statements often address expected future business and financial
performance, and often contain words such as "anticipate",
"believe", "plan", "estimate", "expect", and "intend", statements
that an action or event "may", "might", "could", "should", or
"will" be taken or occur, or other similar expressions. All
statements, other than statements of historical fact, included
herein including, without limitation; statements about the
Company’s future plans, its goals and expectations, and the
potential applications its MyHeartTM platform are forward-looking
statements. By their nature, forward-looking statements involve
known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements, or other
future events, to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the
risks identified in the management discussion and analysis section
of Novoheart Holdings Inc.’s interim and most recent annual
financial statement or other reports and filings with the TSX
Venture Exchange and applicable Canadian securities regulators.
Forward-looking statements are made based on management's beliefs,
estimates and opinions on the date that statements are made and the
respective companies undertake no obligation to update
forward-looking statements if these beliefs, estimates and opinions
or other circumstances should change, except as required by
applicable securities laws. Investors are cautioned against
attributing undue certainty to forward-looking statements.
NOVOHEART HOLDINGS
INC.Consolidated Statements of Financial Position
(Expressed in Canadian dollars)
|
|
December 31, 2019 |
|
June 30, 2019 |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
Cash and cash equivalents |
$ |
12,167,583 |
|
$ |
18,145,717 |
|
Pledged bank deposit |
|
5,004,000 |
|
|
5,028,000 |
|
Accounts and other receivables |
|
317,819 |
|
|
165,979 |
|
Prepaid expenses and deposits |
|
475,638 |
|
|
421,569 |
|
|
|
17,965,040 |
|
|
23,761,265 |
|
|
|
|
|
|
Property and
equipment, net |
|
532,589 |
|
|
803,412 |
|
Right-of-use
assets |
|
6,996,852 |
|
|
- |
|
Intangible
assets, net |
|
231,052 |
|
|
187,727 |
|
Goodwill |
|
8,806,998 |
|
|
8,806,998 |
|
|
|
|
|
|
|
$ |
34,532,531 |
|
$ |
33,559,402 |
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
Accounts payable and accrued liabilities |
$ |
921,672 |
|
$ |
1,646,733 |
|
Loans |
|
- |
|
|
1,676,000 |
|
Lease liabilities – current |
|
1,124,678 |
|
|
- |
|
Contract liabilities |
|
22,549 |
|
|
35,902 |
|
Deferred government grants |
|
8,253 |
|
|
- |
|
Due to related parties |
|
32,835 |
|
|
44,202 |
|
|
|
2,109,987 |
|
|
3,402,837 |
|
|
|
|
|
|
Lease
liabilities – non-current |
|
5,555,838 |
|
|
- |
|
Restoration
provision |
|
451,937 |
|
|
- |
|
Deferred
government grants |
|
- |
|
|
19,529 |
|
Long-term license payable |
|
24,238 |
|
|
38,967 |
|
|
|
|
|
|
|
|
8,142,000 |
|
|
3,461,333 |
|
|
|
|
|
|
Shareholders'
Equity |
|
|
|
|
Share capital |
|
52,179,118 |
|
|
52,149,493 |
|
Contributed surplus |
|
1,888,156 |
|
|
1,942,532 |
|
Accumulated other
comprehensive income |
|
312,627 |
|
|
373,646 |
|
Accumulated deficit |
|
(27,989,370) |
|
|
(24,367,602) |
|
|
|
26,390,531 |
|
|
30,098,069 |
|
|
|
|
|
|
|
$ |
34,532,531 |
|
$ |
33,559,402 |
|
NOVOHEART HOLDINGS
INC.Consolidated Statements of Loss and
Comprehensive Loss For the six months ended December 31, 2019 and
year ended June 30, 2019(Expressed in Canadian dollars, except
number of common shares)
|
|
Six months ended December 31,
2019 |
|
Year ended June 30, 2019 |
|
|
|
|
|
Revenue |
$ |
266,747 |
|
$ |
165,031 |
|
Cost of
sales |
|
93,138 |
|
|
75,487 |
|
|
|
173,609 |
|
|
89,544 |
|
|
|
|
|
|
OPERATING
EXPENSES |
|
|
|
|
Research and development |
|
1,446,188 |
|
|
2,177,271 |
|
Intellectual property and patent |
|
60,986 |
|
|
236,933 |
|
General and administrative |
|
1,995,765 |
|
|
3,093,687 |
|
Marketing |
|
320,879 |
|
|
782,379 |
|
Share-based compensation |
|
348,551 |
|
|
1,367,157 |
|
Depreciation and amortization |
|
339,445 |
|
|
669,632 |
|
|
|
4,511,814 |
|
|
8,327,059 |
|
LOSS FROM OPERATIONS |
|
(4,338,205) |
|
|
(8,237,515) |
|
|
|
|
|
|
Government grants |
|
369,931 |
|
|
617,267 |
|
Other income |
|
179,379 |
|
|
66 |
|
Finance expense |
|
(88,962) |
|
|
(9,869) |
|
Foreign exchange (loss) /
gain |
|
(14,887) |
|
|
3,069 |
|
|
|
445,461 |
|
|
610,533 |
|
|
|
|
|
|
NET LOSS FOR THE
PERIOD/YEARBEFORE
TAX |
$ |
(3,892,744) |
|
$ |
(7,626,982) |
|
|
|
|
|
|
Tax expense |
|
102,326 |
|
|
29,538 |
|
|
|
|
|
|
NET LOSS FOR
THE PERIOD/YEARAFTER
TAX |
$ |
(3,995,070) |
|
$ |
(7,656,520) |
|
|
|
|
|
|
OTHER
COMPREHENSIVE INCOME |
|
|
|
|
Foreign currency translation adjustment |
|
(61,019) |
|
|
70,385 |
|
|
|
|
|
|
COMPREHENSIVE LOSS FOR
THEPERIOD/YEAR |
$ |
(4,056,089) |
|
$ |
(7,586,135) |
|
|
|
|
|
|
Loss per share
– Basic and Diluted |
$ |
(0.02) |
|
$ |
(0.08) |
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding – basic and
diluted |
|
188,555,443 |
|
|
94,727,746 |
|
|
|
|
|
|
NOVOHEART HOLDINGS
INC.Consolidated Statements of Cash Flow For the
six months ended December 31, 2019 and year ended June 30,
2019(Expressed in Canadian dollars)
|
|
|
Six months ended December 31,
2019 |
Year ended June 30, 2019 |
|
|
|
CASH FLOWS
FROM OPERATING ACTIVITIES |
|
|
Net loss for the period/year after tax |
$ |
(3,995,070) |
|
$ |
(7,656,520) |
|
Items not affecting cash: |
|
|
Share-based compensation |
|
348,551 |
|
|
1,367,157 |
|
Lease liabilities interests |
|
81,208 |
|
|
- |
|
Amortization of right-of-use assets |
|
417,198 |
|
|
- |
|
Depreciation and amortization |
|
339,445 |
|
|
669,632 |
|
|
|
(2,808,668) |
|
|
(5,619,731) |
|
Changes in non-cash working capital items: |
|
|
(Increase) / decrease in accounts and other receivables |
|
(154,335) |
|
|
469,525 |
|
Increase in prepaid expenses and deposits |
|
(237,146) |
|
|
(120,841) |
|
(Decrease) / increase in accounts payable and accrued
liabilities |
|
(725,200) |
|
|
257,552 |
|
Decrease in due to related parties |
|
(11,262) |
|
|
(33,268) |
|
Decrease in other long-term liabilities |
|
(14,706) |
|
|
(39,256) |
|
Decrease in deferred government grants |
|
(11,308) |
|
|
(22,639) |
|
(Decrease) / increase in contract liabilities |
|
(13,330) |
|
|
2,231,110 |
|
|
|
(1,167,287) |
|
|
2,742,183 |
|
Net cash used in operating activities |
|
(3,975,955) |
|
|
(2,877,548) |
|
|
|
|
CASH FLOWS
FROM INVESTING ACTIVITIES |
|
|
Cash acquired from acquisition of a subsidiary |
|
- |
|
|
22,692,695 |
|
Acquisition of equipment and payment of leasehold improvements |
|
(16,147) |
|
|
(81,611) |
|
Payment for the right-of-use assets |
|
(431,451) |
|
|
- |
|
Lease incentive received |
|
606,594 |
|
|
- |
|
Increase in pledged bank deposit |
|
- |
|
|
(5,028,000) |
|
Acquisition of intangible assets |
|
(98,038) |
|
|
- |
|
|
|
|
Net cash generated from investing activities |
|
60,958 |
|
|
17,583,084 |
|
|
|
|
CASH FLOWS
FROM FINANCING ACTIVITIES |
|
|
(Repayment of) / proceeds from loans |
|
(1,686,670) |
|
|
1,688,417 |
|
Payment of lease liabilities and interests |
|
(355,031) |
|
|
- |
|
|
|
|
Net cash (used in) / generated from financing activities |
|
(2,041,701) |
|
|
1,688,417 |
|
|
|
|
NOVOHEART HOLDINGS
INC.Consolidated Statements of Cash Flow For the
six months ended December 31, 2019 and year ended June 30,
2019(Expressed in Canadian dollars)
|
|
Six months ended December 31,
2019 |
Year ended June 30, 2019 |
|
|
|
|
Changes in cash and cash equivalents during the
period/year |
|
(5,956,698) |
|
|
16,393,953 |
|
|
|
|
Effect of exchange rate
changes on cash held in a foreign currency |
|
(21,436) |
|
|
156,670 |
Cash
and cash equivalents, beginning of period/year |
|
18,145,717 |
|
|
1,595,094 |
|
|
|
|
Cash and cash equivalents, end of
period/year |
|
12,167,583 |
|
$ |
18,145,717 |
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