VANCOUVER, BRITISH COLUMBIA--(Marketwired - Oct. 25, 2017) - Novoheart Holdings Inc. (TSX VENTURE:NVH) ("Novoheart" or the " Company") today announced financial results for the three and twelve months ended June 30, 2017. Amounts, unless specified otherwise, are expressed in US dollars and are in accordance with International Financial Reporting Standards (IFRS).
2017 Highlights:
- Announced listing on the TSX Venture Exchange by way of a reverse takeover and a concurrent financing with gross proceeds of C$7.15 million. The transaction was completed in September 2017 with Novoheart trading under the symbol "NVH". The Company also closed a round of private placement in 2017 raising a total of C$2.13 million.
- Published research demonstrating the ability of our hvCAS technology to detect and predict drug- induced arrhythmias. The research was done in collaboration with the University of California Irvine and the University of Hong Kong for which the Hong Kong Government's Innovation and Technology Fund pledged grant funding of C$1.67 million. A new patent has been filed.
- Completed a sponsored research project with the University of California Irvine on machine learning approaches for automated drug classification. Joint publication on this research has been published along with another patent filed.
Filing of a new patent on hvCAS technology to detect and predict drug-induced arrhythmias
In January 2017, the Company published in Advanced Materials, a prestigious international peer- reviewed bioengineering journal, the invention of a novel cardiomimetic biohybrid material, termed as the human ventricular cardiac anisotropic sheet (hvCAS), by which human pluripotent stem-cell-derived ventricular heart muscle cells are strategically aligned by design to reproduce key features of the native human heart. Currently, development of a new drug candidate costs US$2-4bn and takes over 10 years to develop yet the success rates are extremely poor. The primary cause for drug withdrawal and attrition is heart toxicity. For the first time, hvCAS is able to predict and visualise the lethal arrhythmias (i.e. electrical disturbances of the heart) caused by several drugs including flecainide, procainamide and cisapride that were previously withdrawn in clinical trials by paradoxically increasing the mortality of tested patients. Therefore, hvCAS represents a revolutionary tool to assess preclinical drug-induced arrhythmogenicity without involving human individuals. A new patent application (Systems and Methods for Modeling Disease and Assessing Adverse Side Effects of Therapeutics Therefor, U.S. Provisional Patent Application No. 62/373,748) has been filed.
Filing of a new patent on artificial intelligence for automated drug classification
In April 2017, University of California Irvine ("UC Irvine") successfully completed an 18-month sponsored research project on machine learning for automated drug discovery funded by Novoheart as a collaborative effort with our scientists. The project focused on the development of a novel artificial intelligence-based approach uniquely combine with the Company's human ventricular cardiac tissue strip (hvCTS) of the MyHeart™ Platform to accelerate the analysis of complex content-rich data for facilitated drug screening. This disruptive technology can greatly enhance the efficiency of drug discovery and therefore the commercial capability of the Company. The research has led to a joint publication accepted in the esteemed peer-reviewed journal Stem Cell Reports, and filing of another patent application (Methods and Apparatuses for Prediction of Mechanism of Activity of Compound, U.S. Provisional Patent Application 62/525,044), both of which will further strengthen the Company's position as a market leader in drug screening technologies.
"We are very pleased with our research progress made so far," said Dr. Ronald Li, CEO of Novoheart. "The funding secured over the past several months ensures that we have the capital needed to further enhance our ground-breaking technology, which is already being used by a global pharmaceutical company, and to expand our commercialization platform."
Financial Results for 2017
The Company recorded net loss of US$1,978,919 (loss per share of US$163.63) for the year ended June 30, 2017 compared to a net loss of US$888,258 (loss per share of US$87.43) for the year ended June 30, 2016. The increase in the net loss was due primarily to an increase in general and administrative expenses in the area of professional fees and personnel costs, offset by an increase in other income.
Operating expenses for 2017 was US$2,201,425 compared to operating expense of US$992,761 for 2016. The increase in operating expenses is primarily related to an increase in research and development expenses as well as general and administrative expenses. Research and development expenses increased from US$576,478 in 2016 to US$868,645 in 2017 primarily due to growth in our scientific team to support additional contract work and research projects.
General and administrative expenses increased from US$289,287 in 2016 to US$1,123,169 in 2017 mainly due to increases in personnel costs and professional and regulatory fees. Personnel costs increased from US$48,714 in 2016 to US$587,083 in 2017 as a result of increased headcount to support the growth of the Company. Professional and regulatory fees increased from US$102,804 in 2016 to US$281,168 in 2017 mainly due to the legal fees, accounting fees, and due diligence work undertaken for the reverse takeover transaction.
The Company earned other income of US$209,599 in 2017 compared to other income of US$64,478 in 2016. Other Income is earned from the agreement with the global pharmaceutical partner.
Financial Results for the Fourth Quarter of 2017
The Company recorded net loss of US$486,175 (loss per share of US$37.90) for the three months ended June 30, 2017 ("Q4 2017") compared to a net loss of US$454,875 (loss per share of US$44.10) for the three months ended June 30, 2016 ("Q4 2016"). The increase in net loss was due primarily to an increase in general and administrative expenses to support the growth and commercialization efforts of the Company.
Operating expenses for Q4 2017 was US$545,904 compared to operating expenses of US$510,710 for Q4 2016. The increase in operating expenses is primarily related to an increase in general and administrative expenses of US$148,278, of which includes an increase in personnel costs of US$123,792. Personnel costs increased as a result of the increase in headcount resulting from the growth of the Company and the build-out of the management team. The increase in general and administrative expense is partially offset by a US$95,647 decrease in research and development expenses due to the completion of the development project with the University of Hong Kong and the Hong Kong Government's Innovation and Technology Fund.
Liquidity and Outstanding Share Capital
As at June 30, 2017, the Company had cash of $1,016,000. As of October 25, 2017, there were 93,462,018 common shares issued and outstanding, and 4,203,576 common shares issuable upon the exercise of outstanding stock options (of which none are exercisable) at an exercise price of C$0.50 per share. The Company also has 972,037 purchase warrants outstanding with an exercise price of C$0.50, expiring in September 2019.
Change of Auditors
In connection with the reverse takeover listing, the Company changed its auditor to MNP LLP effective immediately. In the opinion of the Company and its previous auditor, Davidson & Company LLP, no "reportable event", as such term is defined in National Instrument 51-102 ("NI 51-102"), has occurred. The Company is relying on section 4.11(3)(a) of NI 51-102 for an exemption from the change of auditor requirements of section 4.11 of NI 51-102.
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 "novoHeart™" (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 pre-clinical cardiotoxicity screening and to develop custom-tailored engineered heart constructs for disease modeling and drug discovery. Novoheart also believes that the MyHeart™ platform is well-positioned for the potential development of cell-based cardiac regenerative therapies with superior safety and efficacy.
Common shares of Novoheart is traded on the TSX Venture Exchange under the symbol "NVH".
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 MyHeart™ 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 LIMITED |
| CONSOLIDATED STATEMENTS OF FINANCIAL POSITION |
| (Expressed in United States dollars) |
| June 30, | June 30, | ||||||
| 2017 | 2016 | ||||||
| ASSETS | |||||||
| Current | |||||||
| Cash and cash equivalents | $ | 1,016,000 | $ | 1,891,500 | |||
| Accounts and other receivables | 463,709 | - | |||||
| Prepaid expenses and deposits | 75,651 | 101,998 | |||||
| Due from related parties | 10,683 | - | |||||
| 1,566,043 | 1,993,498 | ||||||
| Long-term prepayment | - | 6,272 | |||||
| Equipment | 165,494 | 173,489 | |||||
| $ | 1,731,537 | $ | 2,173,259 | ||||
| Accounts payable and accrued liabilities | $ | 341,208 | $ | 264,194 | |||
| Deferred income | - | 26,161 | |||||
| Due to related parties | 31,317 | 76,620 | |||||
| 372,525 | 366,975 | ||||||
| Deferred government grants | 49,289 | 70,163 | |||||
| 421,814 | 437,138 | ||||||
| Shareholders' Equity | |||||||
| Share capital | 13,199 | 11,834 | |||||
| Share premium | 4,519,075 | 2,962,300 | |||||
| Accumulated other comprehensive income | (908 | ) | 4,711 | ||||
| Accumulated deficit | (3,221,643 | ) | (1,242,724 | ) | |||
| 1,309,723 | 1,736,121 | ||||||
| $ | 1,731,537 | $ | 2,173,259 | ||||
| NOVOHEART HOLDINGS LIMITED |
| CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS FOR THE YEARS ENDED JUNE 30, 2017 AND 2016 |
| (Expressed in United States dollars) |
| 2017 | 2016 | ||||||
| OPERATING EXPENSES | |||||||
| Research and development | $ | 868,645 | $ | 576,478 | |||
| IP and Patent | 154,777 | 79,815 | |||||
| General and administrative expenses | 1,123,169 | 289,287 | |||||
| Depreciation | 54,834 | 47,181 | |||||
| 2,201,425 | 992,761 | ||||||
| LOSS FROM OPERATIONS | (2,201,425 | ) | (992,761 | ) | |||
| Government grants | 17,074 | 41,236 | |||||
| Other income | 209,599 | 64,478 | |||||
| Finance expense | (1,000 | ) | (1,267 | ) | |||
| Foreign exchange gain (loss) | (3,167 | ) | 56 | ||||
| 222,506 | 104,503 | ||||||
| NET LOSS FOR THE YEAR | (1,978,919 | ) | (888,258 | ) | |||
| OTHER COMPREHENSIVE INCOME (LOSS) | |||||||
| Foreign currency translation adjustment | (5,619 | ) | (364 | ) | |||
| COMPREHENSIVE LOSS FOR THE YEAR | (1,984,538 | ) | (888,622 | ) | |||
| Loss per share - Basic and Diluted | $ | (163.63 | ) | $ | (87.43 | ) | |
| Weighted average number of shares outstanding - basic and diluted | 12,094 | 10,160 | |||||
| NOVOHEART HOLDINGS LIMITED |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| FOR THE YEARS ENDED JUNE 30, 2017 AND 2016 |
| (in United States dollars) |
| 2017 | 2016 | |||||
| $ | $ | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||
| Net loss for the year | (1,978,919 | ) | (888,258 | ) | ||
| Items not affecting cash: | ||||||
| Depreciation | 54,834 | 47,181 | ||||
| (1,924,085 | ) | (841,077 | ) | |||
| Changes in non-cash working capital items: | ||||||
| Increase in accounts and other receivables | (466,044 | ) | - | |||
| Decrease/(increase) in prepaid expenses | 25,795 | 180,098 | ||||
| Increase in accounts payable and accrued liabilities | 78,436 | 244,442 | ||||
| Decrease in due to related parties | (58,606 | ) | 5,393 | |||
| Decrease in deferred income | (26,167 | ) | 26,161 | |||
| Decrease in deferred government grants | (20,571 | ) | (41,236 | ) | ||
| (467,157 | ) | 414,858 | ||||
| Net cash used in operating activities | (2,391,242 | ) | (426,219 | ) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||
| Prepayment for equipment | - | (6,272 | ) | |||
| Acquisition of equipment | (41,576 | ) | (9,041 | ) | ||
| Net cash used in investing activities | (41,576 | ) | (15,313 | ) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||
| Government grants | - | 25,775 | ||||
| Issuance of common shares, net of share issuance cost | 1,558,140 | 2,140,800 | ||||
| Net cash provided by financing activities | 1,558,140 | 2,166,575 | ||||
| Change in cash during the year | (874,678 | ) | 1,725,043 | |||
| Effect of exchange rate changes on cash held in a foreign currency | (822 | ) | (91 | ) | ||
| Cash and cash equivalents, beginning of year | 1,891,500 | 166,548 | ||||
| Cash and cash equivalents, end of year | 1,016,000 | 1,891,500 | ||||
Contact Information:
Investor Relations
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Christian Darbyshire
Media Relations
+1 587-352-5053