Innovotech Inc.
TSX VENTURE : IOT

Innovotech Inc.

August 15, 2012 08:00 ET

Innovotech Reports Second Quarter 2012 Financial Results

EDMONTON, ALBERTA--(Marketwire - Aug. 15, 2012) - Innovotech Inc. (TSX VENTURE:IOT) announced its audited financial and operational results for the quarter ended June 30, 2012.

Highlights:

  • Health Canada approval of InnovoSCEPT products
  • Hospital for Sick Children clinical trial funding extended
  • Advances in Agress and AgreGuard
  • Private placement closed

In April 2012 Health Canada approved Innovotech's two (2) InnovoSCEPT antimicrobial susceptibility tests for sale in Canada, an important step in the improved treatment of chronic bacterial infections in humans. With these two tests and bioFILM PA, Innovotech now is able to offer doctors better guidance for the selection of antibiotics in treating all chronic human bacterial infections, a substantial advancement in improving patient lives and reducing costs to healthcare systems says Ken Boutilier, President of Innovotech. "Furthermore the Company secured continued funding from the Industrial Research Assistance Program (IRAP) of the National Research Council until January 2013, for the 5-site clinical trial in cystic fibrosis biofilm lung infections led by the Hospital for Sick Children."

Development work during the period has made advancements for Innovotech's Agress silver based agricultural seed treatment product as well as within the silver based AgreGuard family of products.

In the case of Agress key studies required for regulatory approval have been performed that will hasten the outcome of the regulatory process and subsequent entry of this effective, environmentally friendly and economic seed treatment into the market. Within the AgreGuard family one potential product has been identified that demonstrates many advantages as an antimicrobial wound dressing component or device coating, compared to existing products. This opens new, potentially significant market segments for Innovotech's technology and has sparked interest from several industry participants.

During the second quarter, Innovotech received final acceptance from the TSX Venture Exchange for a non-brokered private placement. The transaction provided the Company with over $520,000 to improve its cash reserves.

Financial Summary

($)
Three-month period ended June 30, 2012 Three-month period ended June 30, 2011 Six-month period ended June 30, 2012 Six-month period ended June 30, 2011
Revenues
129,834

138,612

302,829

431,457
G&A
248,712

272,787

546,698

554,323
R&D
315,975

227,566

553,694

507,259
Net loss
(445,059
)
(345,287
)
(840,053
)
(653,850
)
Share Price
-

-

.37

.72
Cash position
-

-

409,185

671,905

Revenues

In the three-month period ended June 30, 2012, total revenues were $129,834 (2011 - $138,612; 2010 - $408,288). This included contract research revenue of $111,989 (2011 - $115,287; 2010 - $383,023) and product sales of $17,845 (2011 - $23,325; 2010 - $25,265). Product development of former significant clients has continued the slow pace established in 2011 and has resulted in a continuation of reduced contract research revenue in the period. Increased marketing efforts to recruit new clients are in full progress. Indications are that activities such as the Biofilm Workshop that Innovotech hosted in the spring for FDA personnel and potential clients will bear fruit. Slowed growth of product sales was due to delays in manufacturing of InnovoSCEPT veterinary tests during the period. The company anticipates revenue to follow later in the fiscal year. In the six-month period ended June 30, 2012, total revenues were $302,829 (2011 - $431,457; 2010 - $862,658).

General and Administrative Expense

In the three-month period ended June 30, 2012, general and administrative expense, including stock based compensation expense and allocated amortization expense, was $248,712 (2011 - $272,787). In the six-month period ended June 30, 2012, general and administrative expenses were $546,698 (2011 - $554,323). Salary inflation was balanced by a limited reduction in staffing to account for reduced Contract Research activity. The net result was a small reduction in G&A expenses.

Research and Development

In the three-month period ended June 30, 2012, research and development expense was $315,975 (2011 - $227,566). The cost was partially offset by various grants of $32,850 (2011 - $134,564). In the six-month period ended June 30, 2012, research and development expense was $553,694 (2011 - $507,259). Increased research and development costs are largely due to costs associated with the regulatory package and manufacturing processes being developed for Agress for the EPA submission; and for cost incurred in the development of the AgreGuard product for medical devices.

Liquidity and Capital Resources

At June 30 2012, the Company had $409,185 in cash compared to $459,275 at December 31, 2011. Slower than anticipated recovery of contract research revenue combined with manufacturing delays of InnovoSCEPT veterinary tests have contributed to a decrease in cash reserves. The company has taken active measures to increase contract research revenue and is in the final stages of approving the custom InnovoSCEPT tests for the veterinary market.

Innovotech's first quarter 2011 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.

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 biofilms. Biofilms are organized communities of microorganisms that exist in virtually every natural environment and are responsible for a host of diseases in human health, animal health and agriculture. There are few products or regulatory standards, aside from those of Innovotech, designed specifically for biofilm-forming organisms.

Innovotech has a broad range of products that address the issue of biofilms within a number of different industries, including commercially available products in three market segments; the MBEC Assay, bioFILM PA, InnovoSCEPT-Human and InnovoSCEPT-Veterinary tests. The MBEC Assay is a high throughput biofilm growth device that was recently approved as an ASTM International standard. bioFILM PA and InnovoSCEPT-Human are the first diagnostic tests to assist physicians in the selection of the most effective antibiotic treatment for patients with biofilm-based chronic infections, while the InnovoSCEPT veterinary tests are designed to determine the most effective antibiotic treatment for chronic infections in both large and small animals.

Innovotech also has two products in advanced stages of development; Agress is a unique, environmentally friendly seed treatment and plant spray designed to protect crops against both bacterial and fungal infections and AgreGuard is a unique antimicrobial for coating medical devices such as catheters.

Blog: www.cf-test.ca

Twitter: www.twitter.com/innovotech

Facebook: www.facebook.com/innovotech

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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