VANCOUVER, British Columbia, Nov. 19, 2019 (GLOBE NEWSWIRE) -- Novoheart Holdings Inc. (“Novoheart” or the “Company”) reports financial results for the three months ended September 30, 2019. Amounts, unless specified otherwise, are expressed in Canadian dollars and are in accordance with International Financial Reporting Standards (IFRS).
Q1 2020 BUSINESS HIGHLIGHTS
- Commencement of Phase II of a commercial agreement with a top-10 Global Pharmaceutical Company (“Global Pharma Partner”) for a high-throughput system to measure the force of engineered human heart tissues
- Publication of two peer-reviewed scientific manuscripts from research contracts with Pfizer Inc. (“Pfizer”)
- Completion of the Sponsored Research Agreement with the Regents of the University of California, Irvine (“UCI”)
- Entered into three additional commercial agreements with various pharma clients and biotech companies.
Commencement of Phase II of a commercial agreement with the Global Pharma Partner for a high-throughput system to measure the force of engineered human heart tissues
In December 2018, the Company signed a contract with the Global Pharma Partner, entering into a multi-phase partnership that requires the Company to design a custom-tailored, high-throughput system with hardware and software for measuring human heart tissues engineered by the Company. Novoheart will have exclusive rights to the generated intellectual property and to market this technology to the broader pharmaceutical, biotech and academic markets, where the Company believes higher throughput assays, with strong capabilities in recapitulating human physiology at the tissue level, are in significant demand. Phase I began in December 2018 and was completed in July 2019. The Global Pharma Partner has recognized a successful outcome of Phase I and the commercial agreement has advanced to Phase II in August 2019.
Publication of two peer-reviewed scientific manuscripts from research contracts with Pfizer
In Q1 2020, Novoheart published results from two research contracts with Pfizer’s Global Safety Pharmacology Unit and Rare Disease Research Unit, demonstrating the capability of Novoheart’s proprietary MyHeartTM Platform in drug discovery and development. The first study, published in the August issue of Clinical Pharmacology and Therapeutics, demonstrates the strong predictive capabilities of Novoheart’s human ventricular cardiac tissue strips (hvCTS) and cardiac organoid chambers (hvCOC, aka “human heart-in-a-jar”) from the MyHeartTM Platform, which together provide a two-tiered screening strategy that can better predict clinical outcomes. In the second study published in Stem Cell Research and Therapy in July 2019, Novoheart developed the world’s first customized, 3D engineered, human heart tissue models of Friedreich’s ataxia (FRDA), a rare neuromuscular degenerative disease that affects over 1 in 50,000 people worldwide and is frequently associated with lethal heart complications. This new disease model captures both electrical and mechanical defects of the heart observed in FRDA patients, thus offering an innovative and powerful human-based platform to develop new therapies for FRDA’s cardiac symptoms, for which no effective treatments are currently available. These peer-reviewed publications from our ongoing collaborations with Pfizer showcase the robustness of our bioengineered heart constructs as next-generation, human-specific drug screening and disease modeling tools.
Completion of the Sponsored Research Agreement with UCI
The Company entered into a Sponsored Research Agreement (“SRA”) with UCI in November 2018, with a focus on developing novel sensors for quantifying contractile properties of engineered human heart tissues in the Company’s MyHeartTM Platform. Pursuant to the SRA, UCI delivered an optimized sensor design as well as fabricated fully functional sensors for incorporation into Novoheart’s next-generation bioreactor designs. These designs aim to deliver enhanced efficiency, accuracy and sensitivity in screening drugs for toxic or beneficial effects on the heart’s pumping strength, thereby helping drug developers to select candidates for clinical development. A successful outcome was reached in September 2019 and the Company is looking into jointly file patent with UCI on this.
Entered into three additional commercial agreements with various pharma clients and biotech companies
Novoheart added two top-20 pharmaceutical company clients in the first quarter. Both new clients have commissioned work in the area of safety assessment. These contracts were commissioned via Scientist.com, the world’s largest marketplace for outsourced scientific services.
On July 1, 2019, Novoheart signed a commercial agreement with Leading Gene-Editing Company, which focuses on developing transformative gene-based medicines for serious human diseases. Pursuant to the multi-phase agreement, Novoheart will perform research on the MyHeartTM Platform human heart tissue disease models.
Financial Results for the First Quarter of 2020
The Company recorded net loss after tax of $1,458,181 (loss per share of $0.01) for the three months ended September 30, 2019 (“Q1 2020”) compared to a net loss of $1,949,801 (loss per share of $0.02) for the three months ended September 30, 2018 (“Q1 2019”). The decrease in the net loss was due to the revenue generated in Q1 2020 and increase in government grants, along with the decrease in share-based compensation expenses and marketing expenses as compared to Q1 2019. The decrease was offset by increases in research and development expenses and general and administrative expenses as compared to Q1 2019.
Revenue and Cost of Sales
For the three months ended September 30, 2019, the Company recorded revenue of $172,812 and cost of sales of $71,963 compared to revenue and cost of sales of $nil for the three months ended September 30, 2018. The increase was due to the increased efforts in pursuing commercial agreements. The revenue balance was comprised of several commercial agreements, including a commercial agreement with the Global Pharma Partner, which made up $147,218 of the revenue balance. Additional revenue will be recognized in the coming quarters as the commercial contracts signed in Q1 2020 are completed. Cost of sales comprised of direct labour costs, direct material costs and royalties.
Operating Expenses
Operating expenses for the three months ended September 30, 2019 amounted to $1,870,749 as compared to $1,975,684 for the three months ended September 30, 2018. The decrease in operating expenses was due to the decrease in share-based compensation expenses and marketing expenses, while offset by increase in research and development expenses and general and administrative expenses. Share-based compensation expenses decreased from $623,323 in Q1 2019 to $157,180 in Q1 2020 as a result of the majority of the restricted share units and options being vested and recognized during the year ended June 30, 2019. Marketing expenses decreased from $240,465 in Q1 2019 to $150,660 in Q1 2020 due to the one-time marketing expense incurred in Q1 2019. Research and development expenses increased from $359,277 in Q1 2019 to $604,052 in Q1 2020 due to the increase in personnel costs as a result of the Acquisition. The increase in general and administrative from $547,204 in Q1 2019 to $698,989 in Q1 2020 was mainly due to the increase in personnel costs and occupancy costs, while offset by a decrease in professional and regulatory fees.
Liquidity and Outstanding Share Capital
As at September 30, 2019, the Company had cash and bank balances of $19,755,643. As at November 19, 2019, there were 188,542,024 common shares issued and outstanding, and 7,091,373 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 275,000 of the issuance of vested restricted share units.
In connection with the acquisition of Xellera Therapeutics Limited that was completed on June 28, 2019, the Company issued pre-paid warrants which automatically convert into common shares upon obtaining clearance from the TSX-V. On October 10, 2019, clearance was obtained and 25,731,785 common shares were issued pursuant to the Warrant Agreement dated June 28, 2019.
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 Street
Vancouver, British Columbia
V7X 1L3
Ronald Li
Chief Executive Officer
Joseph Leung
Chief Financial 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 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. | ||||
| Condensed Consolidated Interim Statement of Financial Position (unaudited) | ||||
| (Expressed in Canadian dollars) | ||||
| September 30, 2019 | June 30, 2019 | |||
| ASSETS | ||||
| Current | ||||
| Cash and bank balances | $ | 19,755,643 | $ | 23,173,717 |
| Accounts and other receivables | 423,007 | 165,979 | ||
| Prepaid expenses and deposits | 286,154 | 421,569 | ||
| 20,464,804 | 23,761,265 | |||
| Property and equipment, net | 670,105 | 803,412 | ||
| Right-of-use asset | 1,479,928 | - | ||
| Intangible assets, net | 164,122 | 187,727 | ||
| Goodwill | 8,806,998 | 8,806,998 | ||
| $ | 31,585,957 | $ | 33,559,402 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
| Current | ||||
| Accounts payable and accrued liabilities | $ | 1,336,636 | $ | 1,646,733 |
| Loans | - | 1,676,000 | ||
| Lease liability – current | 279,067 | - | ||
| Contract liabilities | 15,552 | 35,902 | ||
| Due to related parties | 12,972 | 44,202 | ||
| 1,644,227 | 3,402,837 | |||
| Lease liability – non-current | 782,389 | - | ||
| Restoration provision | 122,351 | - | ||
| Deferred government grants | 14,019 | 19,529 | ||
| Long-term license payable | 39,269 | 38,967 | ||
| 2,602,255 | 3,461,333 | |||
| Shareholders' Equity | ||||
| Share capital | 52,149,493 | 52,149,493 | ||
| Contributed surplus | 1,726,410 | 1,942,532 | ||
| Accumulated other comprehensive income | 560,280 | 373,646 | ||
| Accumulated deficit | (25,452,481) | (24,367,602) | ||
| 28,983,702 | 30,098,069 | |||
| $ | 31,585,957 | $ | 33,559,402 | |
| NOVOHEART HOLDINGS INC. | |||||||
| Condensed Consolidated Interim Statements of Loss and Comprehensive Loss (unaudited) | |||||||
| (Expressed in Canadian dollars, except number of common shares) | |||||||
| For the three months ended | September 30, 2019 | September 30, 2018 | |||||
| Revenue | $ | 172,812 | $ | - | |||
| Cost of sales | 71,963 | - | |||||
| 100,849 | - | ||||||
| OPERATING EXPENSES | |||||||
| Research and development | 604,052 | 359,277 | |||||
| Intellectual property and patent | 90,782 | 41,569 | |||||
| General and administrative | 698,989 | 547,204 | |||||
| Marketing | 150,660 | 240,465 | |||||
| Share-based compensation | 157,180 | 623,323 | |||||
| Depreciation and amortization | 169,086 | 163,846 | |||||
| 1,870,749 | 1,975,684 | ||||||
| LOSS FROM OPERATIONS | (1,769,900) | (1,975,684) | |||||
| Government grants | 323,846 | 23,869 | |||||
| Other income / (loss) | 101,224 | (344) | |||||
| (Finance expense) / interest income | (14,118) | 1,697 | |||||
| Foreign exchange (loss) / gain | (14,712) | 661 | |||||
| 396,240 | 25,883 | ||||||
| NET LOSS FOR THE PERIOD BEFORE TAX | $ | (1,373,660) | $ | (1,949,801) | |||
| Tax expense | 84,521 | - | |||||
| NET LOSS FOR THE PERIOD AFTER TAX | $ | (1,458,181) | $ | (1,949,801) | |||
| OTHER COMPREHENSIVE INCOME | |||||||
| Foreign currency translation adjustment | 186,634 | 27,727 | |||||
| COMPREHENSIVE LOSS FOR THE PERIOD | $ | (1,271,547) | $ | (1,922,074) | |||
| Loss per share – Basic and Diluted | $ | (0.01) | $ | (0.02) | |||
| Weighted average number of shares outstanding – basic and diluted | 188,542,025 | 93,462,025 | |||||
| NOVOHEART HOLDINGS INC. | |||||
| Condensed Consolidated Interim Statements of Cash Flow (unaudited) | |||||
| (Expressed in Canadian dollars) | |||||
| For the three months ended | September 30, 2019 | September 30, 2018 | |||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||
| Net loss for the period after tax | $ | (1,458,181) | $ | (1,949,801) | |
| Adjustments for: | |||||
| Share-based compensation | 157,180 | 623,323 | |||
| Amortization of right-of-use asset | 96,805 | - | |||
| Lease liability interest | 6,362 | - | |||
| Depreciation and amortization | 169,086 | 163,846 | |||
| (1,028,748 ) | (1,162,632) | ||||
| Changes in non-cash working capital items: | |||||
| (Increase) / decrease in accounts and other receivables | (255,395) | 87,385 | |||
| (Increase) / decrease in prepaid expenses and deposits and right-of-use asset | (168,238) | 55,640 | |||
| Decrease in accounts payable and accrued liabilities | (319,385) | (17,603) | |||
| Decrease in due to related parties | (31,538) | (25,885) | |||
| Decrease in deferred government grants | (5,654) | (5,583) | |||
| Decrease in contract liabilities | (20,629) | - | |||
| (800,839) | 93,954 | ||||
| Net cash used in operating activities | (1,829,587) | (1,068,678) | |||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||
| Acquisition of equipment | (4,713) | (12,792) | |||
| Payment for the right-of-use asset | (6,938) | ||||
| Prepayment for equipment | - | (18,438) | |||
| Net cash used in investing activities | (11,651) | (31,230) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||
| Repayment of loan | (1,686,670) | - | |||
| Payment of lease liability | (87,142) | - | |||
| Net cash used in financing activities | (1,773,812) | - | |||
| Changes in cash and cash equivalents during the period | (3,615,050) | (1,099,908) | |||
| Effect of exchange rate changes on cash held in a foreign currency | 157,976 | 8,304 | |||
| Cash and cash equivalents, beginning of period | 18,145,717 | 1,595,094 | |||
| Cash and cash equivalents, end of period | $ | 14,688,643 | $ | 503,490 | |