REG - Aqua Bounty Tech Inc - Interim Results <Origin Href="QuoteRef">ABTU.L</Origin>

Aquabounty TechnologiesAnnouncement

28/07/2016 07:07

RNS Number : 4566F
Aqua Bounty Technologies, Inc.
28 July 2016
28 July 2016
AquaBounty Technologies, Inc.
("AquaBounty" or "the Company")
Interim results for the six months ended 30 June 2016
AquaBounty Technologies, Inc. (AIM: ABTU; OTC: AQBT), a biotechnology company focused on enhancing productivity in aquaculture and a majority-owned subsidiary of Intrexon Corporation (NYSE: XON), announces its interim results for the six months ended 30 June 2016.
Summary:
 Health Canada concluded its review of the AquAdvantage Salmon ("AAS") and approved it for commercial sale in Canada;
 Initiated field trials of AAS in Brazil and Argentina;
 Purchase of Snow Island's Atlantic Sea Smolt plant in Rollo BayWest for use as a brood stock farm completed post period;
 Agreed to a US$10.0 million convertible debt facility with Intrexon Corporation ("Intrexon");
 Net loss for the first six months was US$3.9 million (H1 2015: US$3.5 million); and
 Balance of cash and marketable securities at 30 June 2016 was US$1.9 million (31 December 2015: US$1.3 million) with US$5.0 million of the debt facility remaining to be drawn.
Ron Stotish, Chief Executive Officer of AquaBounty, commented:
"This was another significant milestone period for us during which AquaBounty took important steps towards the commercialization of our AquAdvantage Salmon. Health Canada authorities gave their approval for our salmon to be produced, sold and consumed in Canada, following a similar approval from the U.S. Food and Drug Administration in 2015. We now have independent scientific reviews and approvals from two of the most respected regulatory agencies in the world that have confirmed the safety of our salmon for human consumption and for the environment. 
"We are making the necessary preparations for the commercial launch of our product and we look forward to bringing our more sustainably produced salmon to consumers, with the assurance that it is nutritious, safe and healthy."
This announcement contains inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations 
For further information, please contact:
AquaBounty Technologies, Inc.  +1 978 648 6048
David Frank, Chief Financial Officer
Stifel Nicolaus Europe Ltd  +44 (0)20 7710 7600
Stewart Wallace
Luther Pendragon Ltd  +44 (0)20 7618 9100
Harry Chathli, Claire Norbury
Chairman's Statement
Regulatory Review
Health Canada Approval
As reported on 20 May 2016, Health Canada, the department of the government of Canada with responsibility for national public health, conducted a comprehensive assessment of AAS according to the Codex Alimentarius Guideline for the Conduct of Food Safety Assessment of Foods Derived from Recombinant-DNA Animals. The Health Canada review concluded that AAS does not raise concerns related to food safety. The Department also noted its opinion that fillets derived from AAS are as safe and nutritious as fillets from currently available farmed Atlantic salmon.
Having received approval from the U.S. Food and Drug Administration ("FDA") in November 2015, AquaBounty now has regulatory approval for the production, sale and consumption of AquAdvantage Salmon in both the United States and Canada.
Update on Legal Actions
In January 2014, an application was brought before the Federal Court ("Court") in Canada by the Ecology Action Centre and Living Oceans Society (the "Petitioners") that challenged the decision by the Ministers of Environment and Health ("Ministers") to allow production of AquAdvantage Salmon in Canada for commercial use. In December 2015, the Court ruled that the decision of the Ministers was "reasonable and made in the manner prescribed by the Canadian Environmental Protection Act." Accordingly, the Court dismissed the entire application brought before it. The Petitioners have now filed an appeal of the Court's ruling.
In April 2016, a coalition of NGOs sued the FDA for their approval of AquAdvantage Salmon. The coalition, including the Centre for Food Safety and Friends of the Earth, claims that the agency failed to analyze and prevent the risks to wild salmon and the environment, including the risk that AquAdvantage Salmon could escape and threaten endangered wild salmon stocks.
The Company expects that the Canadian appeal will be dismissed and that the FDA approval will stand, as both the Canadian and U.S. regulatory agencies were extraordinarily thorough and transparent in the review and approval of AquaBounty's applications.
Congressional Developments
In January 2016, the U.S. Congress passed the 2016 Omnibus Appropriations Act ("Act") which was signed into law. The Act contained an amendment that directed the FDA to issue final guidance for GMO labeling of AAS, despite the absence of any GMO labeling requirement in the FDA's New Animal Drug Application approval. Current FDA policy does not require labeling for method of production if there is no material difference compared with its traditional counterpart, and the FDA found AAS to be as safe to consume as traditional farmed Atlantic salmon. However, given this directive, the FDA issued an Import Alert on AAS and stated that a temporary hold was being implemented to comply with language in the Act. At this time, the Company has no information on when the Import Alert will be lifted or when the FDA will finalize its labeling guidance for AAS.
Operational Review
Production Expansion in Canada
AquaBounty purchased the former Snow Island Sea Smolt plant in Rollo Bay West on Prince Edward Island ("PEI") after receiving approval by the Prince Edward Island Department of Environment of the Company's application to use the site for brood stock expansion. The transaction closed in July 2016 and the Company plans to use the new location to raise conventional Atlantic salmon to provide eggs that will be transferred to its plant in Bay Fortune. The purchase of this property is part of the Company's plan to scale up its production capacity to support the commercial rollout of AquAdvantage Salmon. The Company expects to complete renovations to the site by November 2016 in order to commence egg production.
Field Trials
Since mid-2014, the Company has been working with local regulatory agencies to prepare for field trials of AAS in several foreign markets. This process has progressed and in April 2016 field trials were initiated in Argentina and Brazil.
Financial Review
Convertible Debt Facility
On 23 February 2016, AquaBounty executed an unsecured, convertible bridge loan of US$10.0 million from Intrexon to cover the Company's immediate working capital requirements. The terms of the loan include an interest rate of 10%, a maturity date of 1 March 2017, and conversion into the Company's common shares at a price of 23 pence per share. This source of funds is expected to allow the Company sufficient capital to continue operations through Q1 2017.
Six-Month Results
Operating expenses for the six-month period ended 30 June 2016 were US$3.8 million (H1 2015: US$3.5 million). The increase reflected the Company's costs to defend against legal challenges to its regulatory approvals in the United States and Canada. Spending on sales and marketing projects were level, though expenses shifted to the implementation of field trials in Argentina and Brazil. Research spending increased slightly, as the Company added headcount to its primary PEI facility. Cash used, net of new financing, in the first half of 2016 was higher than the comparable period in 2015 at US$4.4 million (H1 2015: US$3.5 million) due to the Company's expansion in Canada and legal costs. Cash and equivalents at the end of the first half of 2016 were US$1.9 million (31 December 2015: US$1.3 million) with US$5.0 million of the debt facility remaining to be drawn.
Outlook
The Company believes that the market opportunity for its salmon remains strong, especially in light of the current restrictive limits on global Atlantic salmon farm production. The Board is evaluating all options for the commercial development of AAS and depending upon the extent of the Company's direct involvement in such activity, it will, as previously stated, require funding in addition to the Company's ongoing working capital needs. The Board remains mindful of the importance of shareholder value in determining the appropriate course forward. 
R. J. Clothier
Chairman
AquaBounty Technologies, Inc.
Consolidated balance sheets
(unaudited)
June 30,
December 31,
2016
2015
ASSETS
Current assets:
Cash and cash equivalents
$1,929,659
$1,313,421
Certificate of deposit
11,068
10,339
Other receivables
23,674
41,897
Prepaid expenses and other assets
977,273
109,898
Total current assets
2,941,674
1,475,555
Property, plant and equipment, net
744,615
741,340
Definite lived intangible assets, net
205,372
206,381
Indefinite lived intangible assets
191,800
191,800
Other assets
21,628
21,628
Total assets
$4,105,089
$2,636,704
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued liabilities
$812,725
$621,909
Current debt
5,000,000
-
Total current liabilities
5,812,725
621,909
Longterm debt
2,216,260
2,070,366
Total liabilities
8,028,985
2,692,275
Commitments and contingencies
Stockholders' equity (deficit):
Common stock, $0.001 par value, 200,000,000 shares authorized; 157,512,265 (2015: 157,425,309) shares outstanding
157,512
157,425
Additional paidin capital
90,931,212
90,816,636
Accumulated other comprehensive loss
(326,607)
(226,432)
Accumulated deficit 
(94,686,013)
(90,803,200)
Total stockholders' equity (deficit)
(3,923,896)
(55,571)
Total liabilities and stockholders' equity (deficit)
$4,105,089
$2,636,704
AquaBounty Technologies, Inc.
Consolidated statements of operations and comprehensive loss
(unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2016
2015
2016
2015
COSTS AND EXPENSES
Sales and marketing
$514,076
$380,293
$892,110
$948,023
Research and development
640,807
628,365
1,276,546
1,225,438
General and administrative
824,138
723,505
1,603,663
1,359,065
Total costs and expenses
1,979,021
1,732,163
3,772,319
3,532,526
OPERATING LOSS
(1,979,021)
(1,732,163)
(3,772,319)
(3,532,526)
OTHER INCOME (EXPENSE):
Interest and other income (expense), net
(84,815)
(949)
(110,494)
(2,712)
Total other income (expense)
(84,815)
(949)
(110,494)
(2,712)
NET LOSS
$(2,063,836)
$(1,733,112)
$(3,882,813)
$(3,535,238)
OTHER COMPREHENSIVE INCOME (LOSS):
Foreign currency translation gain (loss) 
(3,182)
(33,392)
(100,175)
74,261
Total other comprehensive income (loss)
(3,182)
(33,392)
(100,175)
74,261
COMPREHENSIVE LOSS
$(2,067,018)
$(1,766,504)
$(3,982,988)
$(3,460,977)
Basic and diluted net loss per share
$(0.01)
$(0.01)
$(0.02)
$(0.02)
Weighted average number of common shares - basic and diluted
157,512,265
144,837,134
157,483,598
144,715,431
AquaBounty Technologies, Inc.
Consolidated statements of cash flows
(unaudited)
Six Months Ended
June 30, 
2016
2015
OPERATING ACTIVITIES
Net loss
$(3,882,813)
$(3,535,238)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
64,728
51,213
Sharebased compensation
114,662
118,714
Gain on disposal of equipment
(2,861)
-
Changes in operating assets and liabilities:
Other receivables
20,640
(22,701)
Prepaid expenses and other assets
(129,771)
(120,476)
Accounts payable and accrued liabilities
178,434
49,558
Net cash used in operating activities
(3,636,981)
(3,458,930)
INVESTING ACTIVITIES
Purchases of equipment
(11,523)
(37,114)
Deposit on purchase of property, plant and equipment
(717,225)
-
Proceeds from sale of equipment
2,861
-
Payment of patent costs
(5,665)
(12,796)
Net cash used in investing activities
(731,552)
(49,910)
FINANCING ACTIVITIES
Proceeds from issuance of debt
5,000,000
44,004
Proceeds from issuance of common stock
-
3,000,000
Net cash provided by financing activities
5,000,000
3,044,004
Effect of exchange rate changes on cash and cash equivalents
(15,229)
(20,773)
Net change in cash and cash equivalents
616,238
(485,609)
Cash and cash equivalents at beginning of period
1,313,421
5,163,262
Cash and cash equivalents at end of period
$1,929,659
$4,677,653

This information is provided by RNS
The company news service from the London Stock Exchange
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