Innovotech Inc.
TSX VENTURE : IOT

Innovotech Inc.

March 16, 2011 08:00 ET

Innovotech Reports 2010 Year End Financial Results

EDMONTON, ALBERTA--(Marketwire - March 16, 2011) - Innovotech Inc. (TSX VENTURE:IOT), a pioneer in the field of biofilm product development, today announced its audited financial and operational results for the year ended December 31, 2010.

Highlights:

  • Innovotech increases revenue and decreases loss in 2010, while meeting development goals and expanding its position as the leader in providing biofilm solutions
  • Innovotech's biofilm diagnostic test, bioFILM PA™, achieves commercial and clinical milestones
  • Innovotech's Sani-Lux™ submitted for Canadian Food Inspection Agency approval
  • Innovotech's seed treatment and plant spray, Agress®, attracts additional development funding

"Innovotech's proprietary platform technology and unique focus results in effective and versatile solutions to problems caused by biofilms," stated Ken Boutilier, President and Chief Executive Officer of Innovotech. "Biofilms cause devastation in human, animal and plant health as well as in industrial settings, ranging from meat plants to paper mills. Old technology is often either ineffective or harmful to the environment. The impact on human health, for example, is huge. In the U.S. alone, over 17 million patients suffer from difficult to treat biofilm infections, and of this group, 550,000 people die annually. This is equal to the number of patients who die from cancer. Aside from the disaster this represents for human lives, the health care system is forced to respond by diverting time, people, and over 90 billion dollars in extra costs."

In the fourth quarter of 2010, The Hospital for Sick Children in Toronto, Canada, reported in their ongoing clinical trial, that in 71% of cases Innovotech's bioFILM PA™ suggested different antibiotic treatment choices for lung infections in Cystic Fibrosis (CF) patients compared to conventional testing. Using the right antibiotic early in the treatment of a patient can result in quicker and better recovery, lower cost, and less opportunity for bacteria to develop resistance.

Innovotech has filed with the Canadian Food Inspection Agency (CFIA), a hard surface sanitizer, Sani-Lux™, that reacts with light to kill bacteria and fungi for approval for use in the food industry. The next step will be to work with potential food industry customers to field test the product. Innovotech has already signed Material Transfer Agreements with interested companies.

During the fourth quarter 2010, Innovotech secured funding of $154,000 for Agress®, from Pulse Crops (Canada) Association. This funding was in addition to the more than $900,000 Innovotech secured from the Agriculture and Food Council of Alberta in the second quarter of 2010, which will be used to expand the potential applications of Agress™ from pulse crops (dry beans, dry peas, lentils, chickpeas) and soybeans to high value horticultural crops such as tomatoes, peppers, and potatoes, and to support regulatory approval for Agress®.

Financial Summary        

($)
Year ended December 31, 2010   Year ended December 31, 2009  

Revenues
1,595,052   1,453,924  

G&A
1,253,802   984,178  

R&D
763,815   809,326  

Net loss
(1,069,883 ) (1,127,203 )

Share Price
0.70   0.65  

Cash position
766,758   1,375,559  

Revenues

In the year ended December 31, 2010, total revenues were $1,595,052 in comparison to $1,453,924 in fiscal 2009. In spite of a challenging trading environment due to the strength of the Canadian dollar, the Company managed to grow its contract research revenue in 2010. Increased interest in biofilm research by other organizations and institutions, following Innovotech's lead, has contributed to a steady sales growth of the Company's fundamental proprietary tool for growing biofilms.

General and Administrative Expense

In the year ended December 31, 2010, general and administrative expense was $1,253,802 in comparison to $984,178 for the year ended 2009. The increase was mainly due to expenses for legal costs incurred in pursuing commercial agreements for the Company's two lead products, other professional costs related to the assistance with transition to International Financial Reporting Standards (IFRS) and costs related to the marketing of its products.

Research and Development

In the year ended December 31, 2010, research and development expense was $763,815 in comparison to $809,326 in 2009. The cost was partially offset by various grants totaling $236,892 (2009 - $106,467). The reduction of research and development expense in 2010 occurred as bioFILM PA™ enters the market, thereby reducing development costs but increasing marketing costs. The increase in grant revenue in three and nine-month periods was a direct result of repayable contributions received under Canadian Agricultural Adaptation Program ("CAAP") for the development of Agress®.

Liquidity and Capital Resources

At December 31, 2010, the Company had $766,758 in cash compared to $1,375,559 at December 31, 2009. Increased expenses in professional costs and continued investment in development and marketing of the Company's two lead products have contributed to a decrease in cash reserves since December 31, 2009. These expenditures were partially offset by the cash inflows from strong contract research revenue and increased product sales.

The Company will need to expand its cash reserves in 2011 in order to more rapidly build revenue from its new and existing product pipeline. The Company has several options at hand, including near-term revenue from within the bioFILM™ family of products, additional grants to cover existing development expenditures or to raise cash through the financial markets. The Company will assess and act on these options through the course of the year.

Innovotech's complete 2010 year-end Financial Statements and Management's Discussion and Analysis will be filed on The System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com.

Annual General Meeting

Innovotech's Annual General Meeting of Shareholders will be held on April 19, 2011 at 10:00am (Edmonton time) in the King Edward Room, 3rd Floor, Conference Centre, Manulife Place, 10180 – 101 Street, Edmonton, Alberta, T5J 3S4.

About Innovotech Inc.:

Innovotech Inc. is a pioneer in the field of biofilm product development, focused on providing innovative and practical solutions to medical, agricultural and industrial problems caused by microbial biofilmsBiofilms are responsible for a host of diseases both in human health and agriculture due to their inherent resistance to existing antibiotics and disinfectants. Aside from Innovotech's products there are no antibiotics, disinfectants, diagnostics or regulatory standards designed specifically for biofilm-forming organisms.

Innovotech currently has one commercial product, bioFILM PA™, and one product, Agress®, in advanced stages of development. bioFILM PA™ is the first diagnostic kit to assist physicians in the selection of the most effective combination antibiotic treatment of patients with biofilm-based chronic lung infections and Agress® is a unique, environmentally friendly seed treatment and plant spray designed to protect crops against both bacterial and fungal infections.

This document may contain forward-looking statements that are predictive in nature and subject to risks and uncertainties that cannot be predicted or quantified; consequently, actual results may differ materially from past results and those expressed or implied by any forward-looking statements. Factors that could cause or contribute to such risks or uncertainties include, but are not limited to: the regulatory environment including the difficulty of predicting regulatory outcomes; changes in the value of the Canadian dollar; the Company's reliance on a small number of customers including government organizations; fluctuations in operating results; government policies or actions; progress and cost of clinical trials; reliance on key strategic relationships; uncertainty related to intellectual property protection and potential costs associated with its defense; the Company's exposure to lawsuits and other matters beyond the control of management. Should known or unknown risks or uncertainties materialize, or should management's assumptions prove inaccurate, actual results could vary materially from those anticipated. The Company undertakes no obligation to publicly make or update any forward-looking statements, except as required by applicable law.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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