Dr. Ronald Li reports
NOVOHEART HOLDINGS INC. REPORTS THIRD QUARTER 2018 FINANCIAL RESULTS
Novoheart Holdings Inc. has filed its financial results for the three and nine months ended March 31, 2018. Amounts, unless specified otherwise, are expressed in Canadian dollars and are in accordance with international financial reporting standards (IFRS).
"We are very pleased with how we have started off 2018, with several exciting developments taking place as we continue to expand our commercialization strategy," said Dr. Ronald Li, chief executive officer of Novoheart. "Our contract with Sumocor as well as the completion of our second contract with our global pharmaceutical partner are tremendous milestones for us as we continue to validate the use of our heart-in-a-jar technology to the scientific community. With the results of the latter being published, we are seeing significantly growing interests from commercial organizations to incorporate our technology into their disease modelling and drug screening processes."
Recent business highlights:
Published landmark, peer-reviewed study recognizing the effectiveness of the world's first and only human heart in a jar;
- Filed patent on creating first human cardiac models for neurological diseases associated with fatal cardiac conditions affecting more than one in 20,000 people worldwide;
- Opened new state-of-the-art facilities at the Hong Kong Science Park.
Financial results for the third quarter of 2018
The company recorded net loss of $1,586,471 (loss per share of two cents) for the three months ended March 31, 2018, compared with a net loss of $766,094 (loss per share of 15 cents) for the three months ended March 31, 2017. On a year-to-date basis, the company recorded a net loss of $9,519,714 (loss per share of 14 cents) for the nine months ended March 31, 2018, compared with a net loss of $1,982,323 (loss per share of 38 cents) for the nine months ended March 31, 2017. The increase in net loss on a year-to-date basis was due primarily to an increase of operating expenses and 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.
For the third quarter of 2018, the company recorded revenue of $19,348 and cost of sales of $7,818. This is the first time the company recorded revenue and a corresponding cost of sales. The revenue was recognized from a drug screening services contract that the company has with Sumocor, a New York-based biotechnology company focused on the development of therapeutics for cardiovascular diseases. The drug screening services commenced in March, 2018. Cost of sales of $7,818 included labour costs, material costs and royalties payable for the intellectual property licences required to perform the drug screening services.
Operating expenses for the third quarter of 2018 were $1,622,173, compared with operating expense of $839,422 for the second quarter of 2017. Operating expenses for the nine months ended March 31, 2018, and March 31, 2017, were $4,442,929 and $2,201,612, respectively. The increase in operating expenses is primarily related to an increase in intellectual property and patent expenses, general and administrative expenses, and share-based compensation expenses. The increase in intellectual property and patent expenses is due to a one-time milestone payment made to a licensor pursuant to the company's achievement of a public listing on the TSX Venture Exchange. The increase in general and administrative expenses is primarily due to increases in professional and regulatory fees due to the reverse takeover listing and the listing on the Frankfurt Stock Exchange, as well as the increase in personnel costs resulting from the buildout of the company's management team. As for share-based compensation expenses, the company's first stock options were issued on completion of Novoheart's reverse takeover listing on Sept. 27, 2017, and, as such, there were no such expenses for the three and nine months ended March 31, 2017.
The company earned other income of nil and $110,665 in the three and nine months ended March 31, 2018, compared with other income of $70,186 and $205,457 in the three and nine months ended March 31, 2017. Other income is earned from the agreement with a global pharmaceutical partner. Work for the agreement was completed in December, 2017.
Liquidity and outstanding share capital
As at March 31, 2018, the company had cash of $2,855,271. As at May 11, 2018, there were 93,462,025 common shares issued and outstanding, and 4,897,098 common shares issuable upon the exercise of outstanding stock options (of which none are exercisable) at an exercise price of 50 cents per share. The company also has 972,037 purchase warrants outstanding with an exercise price of 50 cents, 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 MyHeart platform, including the world's first human mini-heart (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 preclinical cardiotoxicity screening and to develop custom-tailored engineered heart constructs for disease modelling and drug discovery.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF (LOSS) AND COMPREHENSIVE (LOSS)
(expressed in Canadian dollars)
Three months ended Nine months ended
March 31, 2018 March 31, 2017 March 31, 2018 March 31, 2017
Revenue $ 19,348 $ - $ 19,348 $ -
Cost of sales 7,818 - 7,818 -
11,530 - 11,530 -
Research and development 345,967 374,493 961,805 978,827
Intellectual property and patent 52,316 133,750 413,655 185,013
General and administrative 765,963 312,306 2,236,386 984,015
Share-based compensation 289,715 - 589,938 -
Depreciation 168,212 18,873 241,145 53,757
1,622,173 839,422 4,442,929 2,201,612
(Loss) from operations (1,610,643) (839,422) (4,431,399) (2,201,612)
Government grants 18,331 5,009 40,018 16,993
Other income - 70,186 110,665 205,457
Finance expense 7,441 (160) 5,673 (821)
Foreign exchange gain (loss) (1,600) (1,707 (31,074) (2,340)
Non-cash (loss) on completion of reverse takeover - - (5,213,597) -
Net (loss) for the quarter (1,586,471) (766,094) (9,519,714) (1,982,323)
Other comprehensive income (loss)
Foreign currency translation adjustment 22,731 298,925 (35,309) 284,810
Comprehensive (loss) for the quarter (1,563,740) (467,169) (9,555,023) (1,697,513)
(Loss) per share -- basic and diluted $ (0.02) $ (0.15) $ (0.14) $ (0.38)
We seek Safe Harbor.
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