VANCOUVER, British Columbia, Aug. 22, 2018 (GLOBE NEWSWIRE) -- Novoheart Holdings Inc. (“Novoheart” or the “Company”) reports financial results for the three and twelve months ended June 30, 2018. Amounts, unless specified otherwise, are expressed in Canadian dollars and are in accordance with International Financial Reporting Standards (IFRS).
Q4 2018 Highlights:
- Completion of Phase I of the commercial agreement with Sumocor to develop novel therapeutics for heart failure
- Became a member of the International Consortium Advancing Cardiac Safety in Drug Development
- Novoheart received $400,000 in research funding from the Innovation and Technology Commission of Hong Kong
- Selected as 2018’s “Best New Technology Solution – Drug Development” by MedTech Breakthrough
- Presentation at the International Society for Stem Cell Research Annual Meeting
- Appointment of New Senior Vice President to lead Commercial Development
Financial Results for 2018
The Company recorded net loss of $12,463,044 (loss per share of $0.17) for the year ended June 30, 2018 compared to a net loss of $2,654,046 (loss per share of $0.51) for the year ended June 30, 2017. The increase in the net loss was due primarily to the completion of the reverse takeover transaction, for which the Company incurred a non-cash loss on completion of reverse takeover of $5,213,597, as well as the Company’s increases in operating expenses compared to the year ended June 30, 2017.
Revenue and Cost of Sales
For the year ended June 30, 2018, the Company recorded revenue of $95,124 and cost of sales of $38,208, achieving a gross margin of 60%. This is the first time the Company recorded revenue, and a corresponding cost of sales. On February 6, 2018, Novoheart entered into a commercial agreement with Sumocor. Pursuant to the agreement, Novoheart will test Sumocor’s candidate therapeutics in three phases on Novoheart’s MyHeart™ Platform of human bioengineered heart constructs, to provide thorough pre-clinical assessment of efficacy and cardiotoxicity in the context of human heart tissues and chambers. Phase I of the drug screening services commenced in March 2018 and was completed in June 2018. Cost of sales of $38,208 included labour costs, material costs, and royalties payable for the intellectual property licenses required to perform the drug screening services.
Operating Expenses
Operating expenses for 2018 was $7,245,780 compared to operating expense of $2,921,126 for 2017. General and administrative costs increased from $1,490,412 in 2017 to $3,775,144 in 2018 mainly due to increases in personnel costs due to the growth of the company, and professional and regulatory fees incurred in relation to the Company’s reverse takeover transaction. Research and development expenses increased from $1,152,576 to $1,478,816 as a result of the expansion of Novoheart’s scientific team and an increase in lab material expenditures for the Company’s machine learning research and the development of the Company’s multi-organoid bioreactor platform. Share-based compensation was issued on completion of Novoheart’s reverse takeover listing on September 27, 2017. There were no such expenses in 2017 as the Company did not issue any share-based compensation prior to its public listing in 2017. During 2018, the Company recorded share-based payments of $1,172,403 including stock options and restricted share units.
Financial Results for the Fourth Quarter of 2018
The Company recorded net loss of $2,943,329 (loss per share of $0.03) for the three months ended June 30, 2018 (“Q4 2018”) compared to a net loss of $671,724 (loss per share of $0.12) for the three months ended June 30, 2017 (“Q4 2017”). The Company recognized $75,776 in revenue and $30,390 in cost of sales in Q4 relating to Phase 1 of the Sumocor agreement achieving a margin of 60%. Phase 1 was completed in June 2018.
Operating expenses for Q4 2018 was $2,802,851 compared to operating expenses of $719,515 for Q4 2017. The increase in operating expenses is primarily related to an increase in general and administrative expenses of $1,211,683 and an increase in share-based compensation expense of $582,466. Personnel cost increased as a result of the increase in headcount resulting from the growth of the Company. There was no share-based compensation expense in Q4 2017 as the Company was not listed until October 2017 and the Company did not issue any share-based compensation until it became publicly traded.
Liquidity and Outstanding Share Capital
As at June 30, 2018, the Company had cash of $1,595,094. As at August 22, 2018, there were 93,462,025 common shares issued and outstanding, and 6,977,098 common shares issuable upon the exercise of outstanding stock options (of which none are exercisable) at an exercise price of C$0.50 per share and the issuance of vested restricted share units. The Company also has 972,037 purchase warrants outstanding with an exercise price of C$0.50, expiring in September 2019.
ABOUT NOVOHEART HOLDINGS INC.
Novoheart is a global stem cell biotechnology company dedicated to human heart engineering with offices and laboratories in the United States, Canada and Hong Kong. Novoheart’s scientific team has pioneered a range of bioengineering technologies collectively known as the MyHeartTM platform, including the world’s first human mini-heart “novoHeartTM” (otherwise known as a “human heart-in-a-jar”) that is fully capable of pumping and ejecting fluid. Novoheart believes that its proprietary platform uniquely positions the Company to enter into commercial partnerships with leading pharmaceuticals and research institutions to deliver pre-clinical cardiotoxicity screening and to develop custom-tailored engineered heart constructs for disease modeling and drug discovery. Novoheart also believes that the MyHeartTM platform is well-positioned for the potential development of cell-based cardiac regenerative therapies with superior safety and efficacy.
Common shares of Novoheart is traded on the TSX Venture Exchange under the symbol “NVH”.
For further information please contact:
Novoheart Holdings Inc.
Suite 1430, 800 West Pender Street
Vancouver, British Columbia
V6C 2V6
Babak Pedram
Investor Relations
+1 416-644-5081
Christian Darbyshire
Media Relations
+1 587-352-5053
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 undertakes 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.
(Formerly Novoheart Holdings Limited)
Consolidated Statement of Financial Position
(Expressed in Canadian dollars)
| June 30, 2018 | June 30, 2017 | ||||||
| ASSETS | |||||||
| Current | |||||||
| Cash and cash equivalents | $ | 1,595,094 | $ | 1,319,748 | |||
| Accounts and other receivables | 615,332 | 602,240 | |||||
| Prepaid expenses and deposits | 312,161 | 98,255 | |||||
| Due from related parties | - | 13,874 | |||||
| 2,522,587 | 2,034,117 | ||||||
| Property and equipment, net | 1,245,981 | 214,934 | |||||
| Intangible assets, net | 277,948 | - | |||||
| $ | 4,046,516 | $ | 2,249,051 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
| Current | |||||||
| Accounts payable and accrued liabilities | $ | 1,357,713 | $ | 443,182 | |||
| Due to related parties | 60,684 | 39,554 | |||||
| 1,418,397 | 482,736 | ||||||
| Deferred government grants | 40,648 | 64,013 | |||||
| 75,424 | - | ||||||
| 1,534,469 | 546,749 | ||||||
| Shareholders' Equity | |||||||
| Share capital | 17,426,693 | 5,819,874 | |||||
| Contributed surplus | 1,493,175 | - | |||||
| Accumulated other comprehensive income | 303,261 | 130,466 | |||||
| Accumulated deficit | (16,711,082 | ) | (4,248,038 | ) | |||
| 2,512,047 | 1,702,302 | ||||||
| $ | 4,046,516 | $ | 2,249,051 | ||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
NOVOHEART HOLDINGS INC.
(Formerly Novoheart Holdings Limited)
Consolidated Statements of Loss and Comprehensive Loss
For the years ended June 30, 2018 and 2017
(Expressed in Canadian dollars, except number of common shares)
| 2018 | 2017 | |||||||||
| Revenue | $ | 95,124 | $ | - | ||||||
| Cost of sales | 38,208 | - | ||||||||
| 56,916 | - | |||||||||
| OPERATING EXPENSES | ||||||||||
| Research and development | 1,478,816 | 1,152,576 | ||||||||
| Intellectual property and patent | 420,399 | 205,369 | ||||||||
| General and administrative | 3,775,144 | 1,490,412 | ||||||||
| Share-based compensation | 1,172,403 | - | ||||||||
| Depreciation and amortization | 399,018 | 72,769 | ||||||||
| 7,245,780 | 2,921,126 | |||||||||
| LOSS FROM OPERATIONS | (7,188,864 | ) | (2,921,126 | ) | ||||||
| Government grants | 63,383 | 22,657 | ||||||||
| Other income | 118,303 | 278,155 | ||||||||
| Interest income / (finance expense) | 31,926 | (1,327 | ) | |||||||
| Foreign exchange (loss) / gain | (274,195 | ) | (32,405 | ) | ||||||
| Non-cash loss on completion of reverse takeover | (5,213,597 | ) | - | |||||||
| (5,274,180 | ) | 267,080 | ||||||||
| NET LOSS FOR THE YEAR | $ | (12,463,044 | ) | $ | (2,654,046 | ) | ||||
| OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||||
| Foreign currency translation adjustment | 172,795 | (88,657 | ) | |||||||
| COMPREHENSIVE LOSS FOR THE YEAR | $ | (12,290,249 | ) | $ | (2,742,703 | ) | ||||
| Loss per share – Basic and Diluted | $ | (0.17 | ) | $ | (0.51 | ) | ||||
| Weighted average number of shares outstanding – basic and diluted | 72,616,534 | 5,196,260 | ||||||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
NOVOHEART HOLDINGS INC.
Consolidated Statements of Cash Flow
For the years ended June 30, 2018 and 2017
(Expressed in Canadian dollars)
| 2018 | 2017 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss for the period | $ | (12,463,044 | ) | $ | (2,654,046 | ) | ||
| Items not affecting cash: | ||||||||
| Non-cash loss on completion of reverse takeover | 5,213,597 | - | ||||||
| Share-based compensation | 1,172,043 | - | ||||||
| Depreciation and amortization | 399,378 | 72,769 | ||||||
| (5,678,026 | ) | (2,581,277 | ) | |||||
| Changes in non-cash working capital items: | ||||||||
| Increase in accounts and other receivables | (5,504 | ) | (618,458 | ) | ||||
| Decrease/(increase) in prepaid expenses | (212,245 | ) | 34,424 | |||||
| Increase in accounts payable and accrued liabilities | 793,432 | 145,523 | ||||||
| Increase/(decrease) in due to related parties | 270,812 | (87,723 | ) | |||||
| Increase in other long-term liabilities | 75,474 | - | ||||||
| Decrease in deferred income | (21,763 | ) | (27,295 | ) | ||||
| Decrease in deferred government grants | - | (34,688 | ) | |||||
| 900,206 | (588,217 | ) | ||||||
| Net cash used in operating activities | (4,777,820 | ) | (3,169,494 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Acquisition of equipment and payment of leasehold improvements | (1,374,690 | ) | (55,139 | ) | ||||
| Acquisition intangible assets | (339,630 | ) | - | |||||
| Net cash used in investing activities | (1,714,320 | ) | (55,139 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from share issuance, net | 6,663,982 | 2,067,445 | ||||||
| Cash acquired in RTO | 112,662 | - | ||||||
| Net cash provided by financing activities | 6,776,644 | 2,067,445 | ||||||
| Change in cash during the period | 284,504 | (1,157,188 | ) | |||||
| Effect of exchange rate changes on cash held in a foreign currency | (9,158 | ) | 16,898 | |||||
| Cash and cash equivalents, beginning of period | 1,319,748 | 2,460,038 | ||||||
| Cash and cash equivalents, end of period | 1,595,094 | 1,319,748 | ||||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.