VANCOUVER, British Columbia, May 19, 2020 (GLOBE NEWSWIRE) — Novoheart Holdings Inc. (“Novoheart” or the “Company”) reports financial results for the three months ended March 31, 2020. Amounts, unless specified otherwise, are expressed in Canadian dollars and are in accordance with International Financial Reporting Standards (IFRS).
“Since the outbreak of COVID-19, the well-being of our employees, partners and the communities we operate in has been our primary focus. Where possible, our labs and offices remain open and operational with appropriate measures in place to protect the health and safety of our employees. As we face uncertain times, I am proud of how the Novoheart team has remained agile and started preparing early for the potential impacts to our business,” said Dr. Ronald Li, Chief Executive Officer of Novoheart. “Novoheart will continue to monitor the situation closely and optimize our business during this unprecedented time.”
Business Highlights:
- Ranked among the TSV Venture Exchange’s (“TSX-V”) top 50 best performing companies
- Entered into a commercial agreement with a multinational company (“Multinational Company”) to study the effects of cigarette smoke (“CS”) extract and modified risk tobacco product (“MRTP”) extract on cardiac contractility
- Successful outcome of the initial commercial agreement with an international leading gene-editing company (“Leading Gene-Editing Company”) led to a second commercial agreement
Ranked among the TSX-V’s top 50 best performing companies
On February 20, 2020, the Company announced that it has been named a 2020 Venture 50 Company, ranked among the TSX-V’s top 50 best performing companies.
The ranking comprised of ten companies from each of the five key industry sectors. Novoheart was one of the ten best performers within the Clean Technology and Life Sciences sector. Ranking was based on three equally weighted criteria: market capitalization growth, share price appreciation and trading volume.
Entered into a commercial agreement with a Multinational Company to study the effects of CS extract and MRTP extract on cardiac contractility
In March 2020, Novoheart signed a commercial agreement with a Multinational Company, to study the effects of CS extract and MRTP extract found in electronic cigarettes or e-vapor products used as alternative to cigarettes for smokers who are unable or unwilling to quit. Pursuant to the agreement, Novoheart will perform research using the MyHeart™ Platform of engineered human cardiac tissue models. This study will contribute to a better understanding of the effects of CS and MRTP effects on the heart as well as serve as a pilot study to evaluate the feasibility of using in vitro assays as a means to align with the principles of 3Rs (Replacement, Reduction and Refinement) for performing animal-free research.
Successful outcome of the initial commercial agreement with a Leading Gene-Editing Company led to a second commercial agreement
Working with a Leading Gene-Editing Company, Novoheart proposed a novel experimental approach to allow differentiating the properties of engineered human ventricular Cardiac Tissue Strips (“hvCTSs”) fabricated with cell lines derived from healthy donors, from those fabricated with cell lines derived from patients afflicted with a rare genetic disease that affects the heart. The approach is expected to lead to the development of a cardiac disease model that is a better predictor of clinical outcome for these patients. Using this approach, Novoheart successfully identified and differentiated hvCTS derived from healthy donors from those derived from patients with the rare genetic disease. Moreover, the study was performed blinded such that the state of the donor material (healthy vs diseased) was unknown to Novoheart, highlighting the potential importance of using this novel approach in the future development of treatments for this rare disease. Building on the initial success, a second agreement was signed in April 2020 with the goal of further refining and optimizing the experimental conditions in an effort to prepare for a new set of studies. Notably, these studies include recording contractions from patient-derived engineered cardiac tissue strips that have been treated using a unique technology that enables altering their genetic material in an effort to correct and treat their disease.
Financial Results for the three months ended March 31, 2020
The Company recorded a net loss after tax of $2,833,246 (loss per share of $0.02) for the three months ended March 31, 2020 compared to a net loss after tax of $1,179,198 (loss per share of $0.01) for the three months ended March 31, 2019.
Revenue and Cost of Sales
For the three months ended March 31, 2020, the Company recorded revenue of $10,120 and cost of sales of $3,854 compared to revenue of $107,955 and cost of sales of $49,123 for the three months ended March 31, 2019. The decrease in revenue was mainly due to delays in signing and executing commercial agreements directly or indirectly related to COVID-19. Although the Company has implemented business continuity measures to mitigate the impact of COVID-19 on our operations, the global economic slowdown has impacted a number of our partners (including shutdown of some of their offices), which resulted in significant project delays.
Operating Expenses
Operating expenses for the three months ended March 31, 2020 (“Q1 2020”) was $2,648,237 compared to $1,740,805 for the three months ended March 31, 2019 (“Q1 2019”). The increase in operating expenses was due to the increases in general and administrative expenses, research and development expenses, and intellectual and patent expenses as compared to Q1 2019. The increase was offset by the decrease of share-based compensation expenses and depreciation expenses. The increase in general and administrative expenses is primarily due to increases in occupancy costs as a result of the lab and office expansion and build-out of the GMP facility, increase in personnel costs resulting from the increase in compensation, as well as the increase in professional and regulatory fees due to the change in year-end and investor relation activities compared to Q1 2019. Research and development expenses increased primarily due to the expansion of the Company’s scientific team and the acquisition of Xellera Therapeutics Limited which was completed in June 2019.
Liquidity and Outstanding Share Capital
As at March 31, 2020, the Company had cash and cash equivalents of $16,119,530. As at May 19, 2020, there were 188,640,774 common shares issued and outstanding, and 8,611,123 common shares issuable upon the exercise of outstanding stock options at an exercise price range from $0.32 to $0.50 per share and the issuance of 120,000 vested restricted share units.
Results of Annual General Meeting
Novoheart is pleased to announce the results of its annual general meeting of shareholders held on April 29, 2020. Shareholders elected eight directors to the Company’s board, being Dr. Ronald Li, Dr. Camie Chan, Victor Chang, Ricky Chiu, Allen Ma, Dr. Katherine Ngan, Roger Ngan and James Topham.
The shareholders also approved all other matters proposed, including the appointment of BDO Limited as auditors of the Company for the ensuing year, the re-approval of the Company’s stock option plan and the approval of the Company’s amended restricted share unit plan ( the “amended RSU Plan”), pursuant to which 5,659,223 shares are reserved for issuance. In combination, all share compensation arrangements of the Company, including the amended RSU Plan, will not exceed 10% of the issued and outstanding Common Shares. The amended RSU Plan has been accepted by the TSX-V.
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 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.
Condensed Consolidated Interim Statements of Financial Position (unaudited)
(Expressed in Canadian dollars)
| March 31, 2020 | December 31, 2019 | |||||
| ASSETS | ||||||
| Current | ||||||
| Cash and cash equivalents | $ | 16,119,530 | $ | 12,167,583 | ||
| Pledged bank deposit | – | 5,004,000 | ||||
| Accounts and other receivables | 296,107 | 317,819 | ||||
| Prepaid expenses and deposits | 530,951 | 475,638 | ||||
| 16,946,588 | 17,965,040 | |||||
| Property and equipment, net | 294,864 | 532,589 | ||||
| Right-of-use assets | 7,257,869 | 6,996,852 | ||||
| Intangible assets, net | 225,147 | 231,052 | ||||
| Construction in progress | 223,972 | – | ||||
| Goodwill | 8,806,998 | 8,806,998 | ||||
| $ | 33,755,438 | $ | 34,532,531 | |||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
| Current | ||||||
| Accounts payable and accrued liabilities | $ | 808,099 | $ | 921,672 | ||
| Lease liabilities – current | 1,290,058 | 1,124,678 | ||||
| Contract liabilities | 54,889 | 22,549 | ||||
| Deferred government grants | 3,168 | 8,253 | ||||
| Due to related parties | – | 32,835 | ||||
| 2,156,214 | 2,109,987 | |||||
| Lease liabilities – non-current | 5,756,446 | 5,555,838 | ||||
| Restoration provision | 495,831 | 451,937 | ||||
| Long-term license payable | 26,592 | 24,238 | ||||
| 8,435,083 | 8,142,000 | |||||
| Shareholders’ Equity | ||||||
| Share capital | 52,179,118 | 52,179,118 | ||||
| Contributed surplus | 2,097,581 | 1,888,156 | ||||
| Accumulated other comprehensive income | 1,866,272 | 312,627 | ||||
| Accumulated deficit | (30,822,616 | ) | (27,989,370 | ) | ||
| 25,320,355 | 26,390,531 | |||||
| $ | 33,755,438 | $ | 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)
| For the three months ended | March 31, 2020 | March 31, 2019 | ||||
| Revenue | $ | 10,120 | $ | 107,955 | ||
| Cost of sales | 3,854 | 49,123 | ||||
| 6,266 | 58,832 | |||||
| OPERATING EXPENSES | ||||||
| Research and development | 725,417 | 533,678 | ||||
| Intellectual property and patent | 153,771 | 62,393 | ||||
| General and administrative | 1,284,843 | 577,135 | ||||
| Marketing | 145,668 | 167,265 | ||||
| Share-based compensation | 209,425 | 232,107 | ||||
| Depreciation and amortization | 129,113 | 168,227 | ||||
| 2,648,237 | 1,740,805 | |||||
| LOSS FROM OPERATIONS | (2,641,971 | ) | (1,681,973 | ) | ||
| Government grants | 54,241 | 464,327 | ||||
| Other income | 75,558 | 187 | ||||
| Loss on disposal | (185,692 | ) | – | |||
| Finance expense | (107,905 | ) | (449 | ) | ||
| Foreign exchange gain | 2,902 | 38,710 | ||||
| (160,896 | ) | 502,775 | ||||
| NET LOSS FOR THE PERIOD BEFORE TAX | $ | (2,802,867 | ) | $ | (1,179,198 | ) |
| Tax expense | 30,379 | – | ||||
| NET LOSS FOR THE PERIOD | $ | (2,833,246 | ) | $ | (1,179,198 | ) |
| OTHER COMPREHENSIVE INCOME/(LOSS) | ||||||
| Foreign currency translation adjustment | 1,553,645 | (36,436 | ) | |||
| COMPREHENSIVE LOSS FOR THE PERIOD | $ | (1,279,601 | ) | $ | (1,215,634 | ) |
| Loss per share – Basic and Diluted | $ | (0.02 | ) | $ | (0.01 | ) |
| Weighted average number of shares outstanding – basic and diluted | 188,640,774 | 94,581,937 | ||||
NOVOHEART HOLDINGS INC.
Condensed Consolidated Interim Statements of Cash Flows (unaudited)
(Expressed in Canadian dollars)
| For the three months ended | March 31, 2020 | March 31, 2019 | ||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||
| Net loss for the period after tax | $ | (2,833,246 | ) | $ | (1,179,198 | ) |
| Items not affecting cash: | ||||||
| Share-based compensation | 209,425 | 232,107 | ||||
| Lease liabilities interests | 107,905 | – | ||||
| Amortization of right-of-use assets | 395,587 | – | ||||
| Depreciation and amortization | 129,113 | 168,227 | ||||
| Loss on disposal | 185,692 | – | ||||
| (1,805,524 | ) | (778,864 | ) | |||
| Changes in non-cash working capital items: | ||||||
| Decrease / (increase) in accounts and other receivables | 49,591 | (14,801 | ) | |||
| Increase in prepaid expenses and deposits | (19,358 | ) | (26,749 | ) | ||
| Decrease in accounts payable and accrued liabilities | (113,864 | ) | (400,545 | ) | ||
| Decrease in due to related parties | (34,043 | ) | (10,147 | ) | ||
| Decrease in deferred government grants | (5,564 | ) | (5,678 | ) | ||
| Increase in contract liabilities | 28,497 | 529,076 | ||||
| (94,741 | ) | 71,156 | ||||
| Net cash used in operating activities | (1,900,265 | ) | (707,708 | ) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||
| Acquisition of equipment | (14,432 | ) | (2,534 | ) | ||
| Acquisition of construction in progress | (211,692 | ) | – | |||
| Decrease in pledged bank deposit | 5,004,000 | – | ||||
| Net cash generated from / (used in) investing activities | 4,777,876 | (2,534 | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||
| Proceeds from loans | – | 847,000 | ||||
| Payment of lease liabilities and interests | (375,237 | ) | – | |||
| Net cash (used in) / generated from financing activities | (375,237 | ) | 847,000 | |||
| Changes in cash and cash equivalents during the period | 2,502,374 | 136,758 | ||||
| Effect of exchange rate changes on cash held in a foreign currency | 1,449,573 | (50,780 | ) | |||
| Cash and cash equivalents, beginning of period | 12,167,583 | 666,494 | ||||
| Cash and cash equivalents, end of period | $ | 16,119,530 | $ | 752,472 |
