VANCOUVER, British Columbia, Aug. 31, 2020 (GLOBE NEWSWIRE) -- Novoheart Holdings Inc. (“Novoheart” or the “Company”) reports financial results for the three and six months ended June 30, 2020. Amounts, unless specified otherwise, are expressed in Canadian dollars and are in accordance with International Financial Reporting Standards (IFRS).
Business Highlights:
- Patent application filed on next-generation “human heart-in-a-jar” bioreactor
- Successful completion of a commercial contract with a top-20 pharmaceutical company
- Assessed the cardiac safety of a proposed COVID-19 treatment
- Soft opening of Novoheart’s newly renovated research lab and office in Hong Kong
- Awarded the outstanding Biomedical Technology Award in the 2020 CAPITAL Outstanding Enterprise Awards
Patent application filed on next-generation “human heart-in-a-jar” bioreactor
In June 2020, the Company filed a US Provisional patent application on a next-generation bioreactor for the “human heart-in-a-jar” with multiple important new features that were not available in previous versions. With the new design, this next-generation bioreactor will provide finer control of mini-heart chamber properties, crucial for human models of cardiac diseases. The additional disease modelling capabilities will attract drug developers given the industry-wide demand for a reliable, human-specific model to test the safety and efficacy of new therapeutic candidates.
Successful completion of a commercial contract with a top-20 pharmaceutical company
In April 2020, Novoheart completed its commercial agreement with a top-20 pharmaceutical company utilizing the company’s human ventricular Cardiac Tissue Strips (hvCTS) to study the effects of blinded drugs on cardiac contractility.
Assessed the cardiac safety of a proposed COVID-19 treatment on cardiac contractility and arrhythmogenicity
Novoheart completed a study in May 2020 using our human engineered cardiac constructs to investigate the effects of hydroxychloroquine and azithromycin on contractility and arrhythmogenicity in human hearts. Our engineered cardiac constructs provided a useful platform for screening cardiac safety and efficacy when developing therapeutics against COVID-19.
Soft opening of Novoheart’s newly renovated research lab and office in Hong Kong
On June 22, 2020, the Company had its soft launch opening of the newly renovated research lab and office in Hong Kong. The site houses the Company’s state-of-the-art research facility with a bigger office and laboratory. The facility will provide much-needed space to accommodate our growth and enables us to hire additional talent to continue to provide industry-leading service to our global clients.
Awarded the outstanding Biomedical Technology Award in the 2020 CAPITAL Outstanding Enterprise Awards
The CAPITAL Outstanding Enterprise Awards are one of the most recognized enterprise awards in Hong Kong, with the aim to acknowledge enterprises which have outstanding performance and achievement during the year. Novoheart was delighted that its revolutionary technologies had earned recognition among the Hong Kong business community.
Financial Results for the three and six months ended June 30, 2020
The Company recorded a net loss after tax of $1,901,944 (loss per share of $0.01) for the three months ended June 30, 2020 compared to a net loss after tax of $2,582,062 (loss per share of $0.03) for the three months ended June 30, 2019. On a year-to-date basis, the Company recorded a net loss of $4,738,984 (loss per share of $0.03) for the six months ended June 30, 2020 compare to a net loss of $3,761,260 (loss per share of $0.04) for the six months ended June 30, 2019.
Revenue and Cost of Sales
For the three months ended June 30, 2020, the Company recorded revenue of $39,662 and cost of sales of $17,683 compared to revenue of $51,821 and cost of sales of $24,620 for the three months ended June 30, 2019. The Company recorded revenue of $49,782 and cost of sales of $21,537 for the six months ended June 30, 2020 compared to revenue of $159,776 and cost of sales of $73,743 for the six months ended June 30, 2019. Starting in March 2020, COVID-19 has a global impact which impacted a number of the Company’s partners. The impact continued to be felt by Novoheart and its partners throughout Q2 2020, causing delays in communication and contract execution.
Operating Expenses
Operating expenses decreased from $2,611,560 for the three months ended June 30, 2019 to $2,411,107 for the three months ended June 30, 2020. The decrease in operating expenses primarily relates to depreciation expense, share-based compensation expense, general and administration expense, and marketing expense. The decrease was offset by increases in research and development expense, and intellectual and patent expenses.
During the three months ended June 30, 2020, depreciation expense decreased due to the write-off of leasehold improvements capitalized in Phase 3 of Hong Kong Science Park; previously capitalized leasehold improvements were removed in order to convert the space into a GMP facility. Share-based compensation expense decreased because most of the Company’s options were vested and recognized in previous periods. General and administrative expenses decreased mainly due to expenses incurred in the comparative quarter which were not in the current quarter; specifically, bonuses to personnel and professional fees related to the acquisition of Xellera Therapeutics Limited (the “Acquisition”) in June 2019. Marketing expenses decreased primarily due to the termination of the Company’s former Senior Vice President of Commercial Operations.
For the three months ended June 30, 2020 research and development expenses increased primarily due to the expansion of the Company’s scientific team and the Acquisition which was completed in June 2019. Intellectual property and patent expense increased due to filing of new patents as well as licensing agreements signed with Harvard University effective November 2019.
Operating expenses increased from $4,351,365 for the six months ended June 30, 2019 to $5,059,344 for the six months ended June 30, 2020. The increases in operating expenses is primarily related to general and administrative expense, research and development, and intellectual and patent expenses as compared to the six months ended June 30, 2019. The increase was offset by decreases in depreciation expense, share-based compensation expense, and marketing expense.
The increase in general and administrative expense for the six months ended June 30, 2020 is primarily due to increases in occupancy cost as a result of the lab and office expense and build-out of the GMP facility. Research and development expense and intellectual property and patent expense increased during the six months ended June 30, 2020 for the same reasons noted above for the three months ended June 30, 2020.
The primary reasons for decreases in depreciation expense, share-based compensation expense, and marketing expenses for the six months ended June 30, 2020 are the same reasons noted above for the three months ended June 30, 2020.
Liquidity and Outstanding Share Capital
As at June 30, 2020, the Company had cash and cash equivalents of $13,236,527. As at August 31, 2020, there were 188,640,774 common shares issued and outstanding, and 8,272,373 common shares issuable upon the exercise of outstanding stock options at an exercise price range from $0.32 to $0.50 per share.
Departure of Chief Scientific Officer of Xellera Therapeutics Limited
During Q2 2020, Dr. Roger Hajjar resigned as Chief Scientific Officer of Xellera Therapeutics Limited to take up a position with a private equity-owned business focusing on clinical research. Dr. Hajjar as CSO of XT contributed significantly to the directions of clinical translation during the early planning stage, particularly in the space of gene therapy, as the foundation of XT. In the coming months, the focus will be on the build out and regulatory licenses. Any scientific matters will be shared by the cofounders Drs. Godfrey Chan and Ronald Li with inputs from the Scientific Advisory Board co-chairs Drs. Marc Turner and Paul Tam. The Company would like to thank Dr. Hajjar for his contributions during his tenure and wishes him success in the future.
Departure of Chief Research Development Officer of Novoheart
Effective July 31, 2020, Dr. Bernard Fermini, the Company’s Chief Research & Development Officer, tenured his resignation. Dr. Fermini was recruited to assist the Scientific Co-Founders Drs. Kevin Costa and Ronald Li in research and development. His responsibilities have been transitioned to and handled in part by Drs. Costa and Li who are also the Company’s Chief Scientific Officer and Chief Executive Officer, respectively. The Company would like to thank Dr. Fermini for his contributions while serving as Chief Research & Development Officer.
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 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 are traded on the TSX Venture Exchange under the symbol “NVH”.
For further information please contact:
Novoheart Holdings Inc.
Suite 2600, 595 Burrard Street
Vancouver, British Columbia
V7X 1L3
Ronald Li
Chief Executive Officer
(604) 398-3170
info@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 MyHeart™ 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.
Condensed Consolidated Interim Statements of Financial Position (unaudited)
(Expressed in Canadian dollars)
| June 30, 2020 | December 31, 2019 | ||||||
| ASSETS | |||||||
| Current | |||||||
| Cash and cash equivalents | $ | 13,236,527 | $ | 12,167,583 | |||
| Pledged bank deposit | - | 5,004,000 | |||||
| Accounts and other receivables | 82,236 | 317,819 | |||||
| Prepaid expenses and deposits | 311,392 | 475,638 | |||||
| 13,630,155 | 17,965,040 | ||||||
| Property and equipment, net | 691,083 | 532,589 | |||||
| Right-of-use assets | 6,570,247 | 6,996,852 | |||||
| Intangible assets, net | 199,599 | 231,052 | |||||
| Construction in progress | 774,800 | - | |||||
| Goodwill | 8,806,998 | 8,806,998 | |||||
| $ | 30,672,882 | $ | 34,532,531 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
| Current | |||||||
| Accounts payable and accrued liabilities | $ | 833,339 | $ | 921,672 | |||
| Lease liabilities – current | 1,298,489 | 1,124,678 | |||||
| Contract liabilities | 34,130 | 22,549 | |||||
| Deferred government grants | 58,265 | 8,253 | |||||
| Due to related parties | - | 32,835 | |||||
| 2,224,223 | 2,109,987 | ||||||
| Lease liabilities – non-current | 5,036,241 | 5,555,838 | |||||
| Restoration provision | 476,323 | 451,937 | |||||
| Long-term license payable | - | 24,238 | |||||
| 7,736,787 | 8,142,000 | ||||||
| Shareholders' Equity | |||||||
| Share capital | 52,179,118 | 52,179,118 | |||||
| Contributed surplus | 2,237,675 | 1,888,156 | |||||
| Accumulated other comprehensive income | 1,247,656 | 312,627 | |||||
| Accumulated deficit | (32,728,354 | ) | (27,989,370 | ) | |||
| 22,936,095 | 26,390,531 | ||||||
| $ | 30,672,882 | $ | 34,532,531 | ||||
NOVOHEART HOLDINGS INC.
Condensed Consolidated Interim Statements of Loss and Comprehensive Loss (unaudited)
(Expressed in Canadian dollars, except number of common shares)
| Three months ended | Six months ended | ||||||||||||
| June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | ||||||||||
| Revenue | $ | 39,662 | $ | 51,821 | $ | 49,782 | $ | 159,776 | |||||
| Cost of sales | 17,683 | 24,620 | 21,537 | 73,743 | |||||||||
| 21,979 | 27,201 | 28,245 | 86,033 | ||||||||||
| OPERATING EXPENSES | |||||||||||||
| Research and development | 773,233 | 709,039 | 1,498,650 | 1,241,717 | |||||||||
| Intellectual property and patent | 151,820 | 105,731 | 305,591 | 168,124 | |||||||||
| General and administrative | 1,160,648 | 1,235,148 | 2,445,491 | 1,812,283 | |||||||||
| Marketing | 134,775 | 175,221 | 280,443 | 342,486 | |||||||||
| Share-based compensation | 140,094 | 216,244 | 349,519 | 448,351 | |||||||||
| Depreciation and amortization | 50,537 | 170,177 | 179,650 | 338,404 | |||||||||
| 2,411,107 | 2,611,560 | 5,059,344 | 4,351,365 | ||||||||||
| LOSS FROM OPERATIONS | (2,389,128 | ) | (2,584,359 | ) | (5,031,099 | ) | (4,265,332 | ) | |||||
| Government grants | 351,111 | 79,602 | 405,352 | 543,929 | |||||||||
| Other income | 260,283 | 223 | 335,841 | 410 | |||||||||
| Loss on disposal | (3,149 | ) | - | (188,841 | ) | - | |||||||
| Finance expense | (117,659 | ) | (11,218 | ) | (225,564 | ) | (11,667 | ) | |||||
| Foreign exchange (loss) / gain | (3,402 | ) | (36,772 | ) | (500 | ) | 938 | ||||||
| 487,184 | 31,835 | 326,288 | 533,610 | ||||||||||
| NET LOSS FOR THE PERIOD BEFORE TAX | (1,901,944 | ) | (2,552,524 | ) | (4,704,811 | ) | (3,731,722 | ) | |||||
| Tax expense | 3,794 | 29,538 | 34,173 | 29,538 | |||||||||
| NET LOSS FOR THE PERIOD | (1,905,738 | ) | (2,582,062 | ) | (4,738,984 | ) | (3,761,260 | ) | |||||
| OTHER COMPREHENSIVE (LOSS) INCOME | |||||||||||||
| Foreign currency translation adjustment | (618,616 | ) | 66,393 | 935,029 | 29,957 | ||||||||
| COMPREHENSIVE LOSS FOR THE PERIOD | $ | (2,524,354 | ) | $ | (2,515,669 | ) | $ | (3,803,955 | ) | $ | (3,731,303 | ) | |
| Loss per share – Basic and Diluted | $ | (0.01 | ) | $ | (0.03 | ) | $ | (0.03 | ) | $ | (0.04 | ) | |
| Weighted average number of shares outstanding – basic and diluted | $ | 188,640,774 | 97,438,816 | 188,640,774 | 96,014,445 | ||||||||
NOVOHEART HOLDINGS INC.
Condensed Consolidated Interim Statements of Cash Flows (unaudited)
(Expressed in Canadian dollars)
| For the six months ended | June 30, 2020 | June 30, 2019 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
| Net loss for the period after taxes | $ | (4,738,984 | ) | $ | (3,761,260 | ) | |
| Items not affecting cash: | |||||||
| Share-based compensation | 349,519 | 448,351 | |||||
| Lease liabilities interests | 225,564 | - | |||||
| Amortization of right-of-use assets | 804,591 | - | |||||
| Depreciation and amortization | 179,650 | 338,404 | |||||
| Loss on disposal | 188,841 | - | |||||
| Reduction on lease liabilities due to rent concessions | (214,113 | ) | - | ||||
| (3,204,932 | ) | (2,974,505 | ) | ||||
| Changes in non-cash working capital items: | |||||||
| Decrease in accounts and other receivables | 252,814 | 357,126 | |||||
| Decrease / (increase) in prepaid expenses and deposits | 182,733 | (184,845 | ) | ||||
| (Decrease) / increase in accounts payable and accrued liabilities | (120,878 | ) | 411,158 | ||||
| Decrease in due to related parties | (34,614 | ) | (2,231 | ) | |||
| Decrease in other long-term liabilities | (25,560 | ) | (39,256 | ) | |||
| Increase / (decrease) in deferred government grants | 49,595 | (11,398 | ) | ||||
| Increase in contract liabilities | 7,917 | 475,590 | |||||
| 312,007 | 1,006,144 | ||||||
| Net cash used in operating activities | (2,892,925 | ) | (1,968,361 | ) | |||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
| Acquisition of equipment | (454,376 | ) | (47,270 | ) | |||
| Acquisition of construction in progress | (775,240 | ) | - | ||||
| Cash acquired from acquisition of subsidiary | - | 22,692,695 | |||||
| Decrease / (increase) in pledged bank deposit | 5,004,000 | (5,028,000 | ) | ||||
| Net cash generated from investing activities | 3,774,384 | 17,617,425 | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
| Proceeds from loans | - | 1,688,417 | |||||
| Payment of lease liabilities and interests | (718,100 | ) | - | ||||
| Net cash (used in) / generated from financing activities | (718,100 | ) | 1,688,417 | ||||
| Changes in cash and cash equivalents during the period | 163,359 | 17,337,481 | |||||
| Effect of exchange rate changes on cash held in a foreign currency | 905,585 | 141,742 | |||||
| Cash and cash equivalents, beginning of period | 12,167,583 | 666,494 | |||||
| Cash and cash equivalents, end of period | 13,236,527 | 18,145,717 | |||||