REG - Ondine Biomedical - Half-year Report
25/09/2023 09:00
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RNS Number : 5158N Ondine Biomedical Inc. 25 September 2023
25 September 2023
ONDINE BIOMEDICAL INC.
("Ondine Biomedical", "Ondine" or the "Company")
Interim results for the six months to 30 June 2023
Significant operational progress
Ondine Biomedical Inc (AIM: OBI), the Canadian life sciences company
developing non-antibiotic photodisinfection therapies to prevent and treat
healthcare-associated and drug-resistant infections announces its unaudited
results for the six months that ended 30 June 2023 and provides an update on
commercial progress in approved markets and next steps for its planned Phase 3
study being finalised to seek US regulatory approval.
Unless otherwise specified, all financial figures throughout this interim
report are in Canadian dollars.
Operating results for the first half year were in line with management
expectations despite a challenging economic backdrop and unfavorable stock
markets which contributed to the deferral of 2023 fundraising plans. The
Company has made solid progress toward its two key 2023 corporate objectives:
· Preparing for the upcoming Phase 3 clinical study-a critical
component for US market approval of the Company's nasal photodisinfection. (
Steriwave)
· Advancing commercial efforts and geographic footprint into the
Canadian, British, Spanish, and Mexican markets.
Financial highlights
· Loss from operations in H1 2023 of $8.03 million (H1 2022: $8.41
million), a 7% loss decrease year-over-year. This loss largely comprises the
costs associated with clinical and regulatory efforts for the US market,
public company-related costs, and expanding commercialization reach.
· Total revenues in H1 2023 were $0.43 million (H1 2022: $0.26 million)
a 63% increase during the period, reflecting the additional hospital clinical
deployments.
· Cash, cash equivalents and restricted cash of $4.59 million as at 30
June 2023 (31 December 2022: $13.27 million).
Other advances (including post-period)
I. Clinical & regulatory
· Submission of pivotal Phase 3 file to FDA for review.
· Review meeting held with the FDA on September 22, 2023 confirmed that
the Company has satisfied the FDA's pre-clinical and safety requirements and
will be working closely with the FDA on specific details of the Phase 3
protocol. Finalising preparations with HCA Healthcare for Phase 3 clinical
trial.
· Appointed senior pharma executive as Chief Medical Officer.
II. Commercial
· Significant expansion into new Canadian hospitals, with Steriwave®
nasal disinfection technology now deployed in 12 hospitals across all four of
Canada's largest provinces, including Vancouver General Hospital, The Ottawa
Hospital, the Montreal Heart Institute and the Mazankowski Alberta Heart
Institute.
· Outstanding results at Canada's second-largest hospital, The Ottawa
Hospital, demonstrated significant clinical outcomes from the universal
pre-surgical photodisinfection (Steriwave) protocol:
o 48% shorter mean length of stay among those treated compared with those
not treated (P<0.001)
o 51% fewer readmissions compared with the pre-intervention period
(P<0.001)
o 33% fewer instances of return to the Emergency Department compared with
the pre-intervention period (P=0.005)
o Only 12.8% of patients who received Steriwave treatment required
antibiotics between 72 hours and 30 days post-surgery compared with 23.1% of
patients who had not received treatment (P<0.001)
· Commencement of first UK NHS pilot at Pontefract Hospital, Mid
Yorkshire Teaching NHS Trust, announced in August 2023.
· Development of targeted sales and distributor onboarding processes to
support commercialization efforts.
III. Data and wider recognition
· Ondine presented Phase 2 results at the 33(rd) European Congress of
Clinical Microbiology and Infectious Diseases (ECCMID) in Denmark -
significant reductions in S. aureus colonisations and 66% fewer surgical site
infections than the US national average.
· Release of University Hospital Zurich publication demonstrated
Ondine's Steriwave photodisinfection technology eradicates biofilms
(>99.99%) associated with periprosthetic joint infections.
· In July 2023, Ondine received the Tayyaba Hasan IMPACT Award at the
International Photodynamic Association's biennial 18(th) World Congress for
anti-infective clinical work. 1
· In September 2023, Ondine presented research at the 2023
International Consortium on Prevention & Infection Control (ICPIC) in
Geneva demonstrating Steriwave's strong efficacy against extensively
drug-resistant (XDR) bacteria. 2
· The COVID study run by the University of Navarra (Spain) was
published in Frontiers in Cellular and Infection Microbiology
(https://www.frontiersin.org/articles/10.3389/fcimb.2023.1110467/full) , and
met its primary endpoint, with a highly significant decrease in viral
infectivity (p<0.0001).
· Increased media attention including BBC News
(https://www.bbc.co.uk/news/uk-england-leeds-66464842) and Bloomberg
(https://www.bloomberg.com/news/articles/2023-02-24/photodisinfection-uses-lasers-to-cut-post-surgery-infections)
.
IV. Operational
· Planning and organisation of production capacity ahead of schedule to
prepare for expected launch post FDA approval. Cost reduction measures
implemented post period end to extend cash runway.
· Completed development of a new, injection-molded, low-cost light
diffuser to reduce COGS for the USA commercialization.
Ondine CEO, Carolyn Cross, said:
"We continue to build on the momentum of previous years' work and the solid
foundation of demonstrated safety and efficacy of our nasal photodisinfection
technology proven in leading Canadian hospitals. We have invested a great deal
of time and effort in hospital integration workflows which are now assisting
in our commercialization expansion plans. With respect to the key US market,
we are in detailed discussions with FDA on our Phase 3 protocol, and are
coordinating site and other details with our partner HCA Healthcare. We look
forward to reporting on the progress of this groundbreaking study."
Ondine Biomedical Inc.
Carolyn Cross, CEO +001 (604) 665 0555
Singer Capital Markets (Nominated Adviser and Joint Broker)
Aubrey Powell, Asha Chotai, Sam Butcher +44 (0)20 7496 3000
RBC Capital Markets (Joint Broker)
Rupert Walford, Kathryn Deegan +44 (0)20 7653 4000
Vane Percy & Roberts (Media Contact)
Simon Vane Percy, Amanda Bernard +44 (0)77 1000 5910
About Ondine Biomedical Inc.
Ondine Biomedical Inc. is a Canadian headquartered company innovating in the
field of photodisinfection therapies. Ondine has a pipeline of investigational
products, based on its proprietary photodisinfection platform, in various
stages of development. Products beyond nasal photodisinfection include
therapies for a variety of medical indications such as chronic sinusitis,
ventilator-associated pneumonia, burns, and other indications.
Chief Executive Officer's Statement
In an era of growing concern over antimicrobial resistance (AMR) and high
costs of healthcare-associated infections, our patented photodisinfection
technology is uniquely positioned to address the significant and growing
threat that AMR poses to global healthcare systems. AMR is already killing
more than a million people worldwide each year, and without alternative
treatments that figure could rise to tens of millions a year. 3 The emergence
and spread of extensively drug-resistant microbes are of particular concern as
infections caused by these pathogens are proving virtually
untreatable. 4 (, 5 ) This rise in resistance underscores the need for the
swift adoption of non-antibiotic alternatives like photodisinfection, which
has already been proven highly effective at reducing hospital infection rates.
6
The Company's lead product, Steriwave®, is a nasal disinfection therapy used
to decolonize the nose - a major reservoir of pathogens - prior to surgery.
Its main application is to prevent healthcare-associated infections (HAIs).
HAIs are recognised as the most deadly and costly adverse events in hospitals
around the world, consuming up to 6% of global public hospital budgets. 7
(#_edn7) In the United States each day, one in 31 hospital patients suffers
from one or more HAI's, representing a significant cost to both the patients
and the healthcare providers.
We have made substantial progress towards our key objectives over the first
half of the year and are continuing to build momentum.
FDA approval
We are continuing to work with FDA as well as our partner HCA Healthcare on
the planning and execution of the pivotal Phase 3 study. Following a recent
review meeting held with FDA on September 22, 2023, we can confirm that FDA
has agreed that Ondine's summary of the extensive safety data is sufficient to
proceed into the Phase 3. We are now working closely with FDA on specifics
of the Phase 3 protocol.
Preparing for the US market
To prepare for the major effort of addressing the US market, we have
substantially improved our infrastructure and are continuing to enhance our
processes to scale our business to meet post-FDA approval demands. From this
platform and using the same core technology and know-how, we plan to widen the
applications for photodisinfection-based solutions, including in ICU,
dialysis, chemotherapy, healthcare workers during disease outbreaks, and
immunocompromised patients.
Alongside our focus on achieving our US regulatory approval milestone, we have
initiated a scientific awareness program in North America to drive awareness
and uptake as we get closer to approval.
Commercial expansion
In 2023, our primary objective was to extend our presence to 10-12 additional
hospitals, and we are on track to realize this goal. Building upon our initial
hospital implementations, which have yielded positive results, we are proud to
report substantial progress in Canada, where we will soon see Steriwave
deployments in hospitals coast-to-coast. Currently, Steriwave is being used in
12 hospitals across Canada (including in pilots/evaluations), with plans for
additional deployments later this year.
In the UK we have marked a significant milestone by securing our first
placement at the Mid Yorkshire Teaching NHS Trust. We are in discussions with
several other NHS Trusts and have further evaluation deployments in the
pipeline in the near future. We are also engaging, via distributors, with
several other hospital groups both in Spain and Mexico where we are in
advanced discussions on Steriwave deployments. Mexico, we believe, is an
important market for our nasal photodisinfection therapy, as medical tourism
from the US now exceeds more than four million patient procedures annually.
To facilitate our broader commercialization efforts, we have made strategic
investments in leveraging the expertise of external specialists in innovation
sales and marketing. This strategic move will allow us to develop and refine
sales processes, ensuring the optimization of productivity and effectiveness
across our commercial endeavors.
Fundraising
We are confident in our plans to raise capital to fund the key Phase 3
clinical trial, our ongoing commercial expansion plans, and to fund the
Company's operating expenses more generally as we seek to attain short-term
milestone objectives and prepare to scale further.
The rise of antimicrobial resistance ("AMR") is driving governments and
research institutes to seek new solutions to combat antimicrobial-resistant
pathogens and help prevent millions of deaths. Because of the demonstration of
efficacy against ESKAPE and extremely drug-resistant pathogens of major
concern to global health authorities, we are accelerating our pursuit of
non-dilutive funding opportunities and numerous AMR-related government
initiatives.
Pipeline
Beyond our initial focus on nasal decolonization, the possible application
areas for photodisinfection are vast - anywhere our proprietary photosensitive
compound can be applied and activated with our specifically-dosed light.
Ondine has a pipeline of products that we believe will address a number of
substantial infection concerns, including chronic sinusitis,
ventilator-associated pneumonia, burns, wounds catheter-associated urinary
tract infections (CA-UTI), and others. These additional pipeline products will
leverage the current clinical and regulatory efforts and will be taken forward
as resourcing permits.
Outlook
There is a huge need and growing international support for novel technologies
that can address rising rates of AMR, and we are in the unique position of
having a simple, cost-effective solution that does not generate resistance.
Our vision, mission, and purpose remain steadfast and clear: to bring
photodisinfection to hospitals around the world to better respond to the
growing antimicrobial resistance threat. With significant progress through
recent and ongoing data delivery, I am excited for the months ahead and
confident that we will be successful in the upcoming FDA-related and
commercial milestones.
Carolyn Cross
CEO
Unaudited condensed consolidated
interim financial statements
Ondine Biomedical Inc.
For the six months ended June 30, 2023 and 2022
Ondine Biomedical Inc.
Unaudited condensed consolidated interim statements of financial position
(In thousands of Canadian dollars)
Note June 30, 2023 December 31, 2022
Assets
Current assets
Cash $ 4,439 $ 13,125
Restricted cash 147 147
Accounts and other receivables 4 97 182
Inventory 5 1,088 1,294
Prepaid expenses and deposits 6 437 381
6,208 15,129
Non-current assets
Property and equipment 7, 15 1,163 1,404
Other assets 6 35 36
1,198 1,440
Total Assets $ 7,406 $ 16,569
Liabilities
Current liabilities
Accounts payable and other liabilities 8 2,250 3,548
Current portion of lease liabilities 9 401 359
2,651 3,907
Non-current liabilities
Lease liabilities 9 329 537
Other long-term liabilities 10 281 481
Total Liabilities 3,261 4,925
Equity
Share capital 11 235,412 235,042
Contributed surplus 10,528 10,528
Reserves 18,027 17,996
Deficit (259,822) (251,922)
Total Shareholders' Equity 4,145 11,644
Total Liabilities and Shareholders' Equity $ 7,406 $ 16,569
Going concern - Note 1; Commitments and contingencies - Note 14; Subsequent
events - Note 21
Approved on behalf of the Board:
"Carolyn Cross" "Jean Charest"
Ondine Biomedical Inc.
Unaudited condensed consolidated interim statements of loss and comprehensive
loss
(In thousands of Canadian dollars, except share and per share amounts)
For the six months ended June 30,
Note 2023 2022
Revenue 13,15 $ 428 $ 262
Cost of goods sold 17 (177) (118)
Gross margin 251 144
Expenses 18
General and administration 4,747 5,082
Research and development 2,185 2,642
Marketing and sales 1,055 603
Depreciation and amortization 7 294 223
8,281 8,550
Loss from operations (8,030) (8,406)
Other income (expense)
Government loan forgiveness 10 151 -
Accretion and interest expense (20) (9)
Interest income 204 25
Loss on disposal of property and equipment (95)
Other expense (5) (4)
Foreign exchange loss (105) (176)
130 (164)
Net loss for the period (7,900) (8,570)
Other comprehensive loss
Exchange differences on translation of foreign operations((1)) (16) 45
Total comprehensive loss for the period $ (7,916) $ (8,525)
Net loss per share
Basic and diluted $ (0.04) $ (0.04)
Weighted average number of shares outstanding
Basic and diluted 194,715,848 194,584,524
(1) May be reclassified to profit or loss in subsequent periods.
Ondine Biomedical Inc.
Unaudited condensed consolidated interim statements of changes in equity
(In thousands of Canadian dollars, except share amounts)
Number of common Share capital Contributed surplus Share-based payment reserve Currency translation reserve Accumulated Deficit Equity
shares
(Note 11)
Balance, January 1, 2022 194,584,524 $ 235,037 $ 10,528 $ 17,034 $ (398) (232,544)
$ 29,657
Share-based payments - Note 12 - - - 686 - - 686
Total comprehensive loss for the period - - - - 45 (8,570) (8,525)
Balance, June 30, 2022 194,584,524 235,037 10,528 17,720 (353) (241,114) 21,818
Balance, January 1, 2023 194,592,857 235,042 10,528 18,479 (483) (251,922) 11,644
Issuance of share capital 390,550 370 - (370) - - -
Share-based payments - Note 12 - - - 417 - - 417
Total comprehensive loss for the period - - - - (16) (7,900) (7,916)
Balance, June 30, 2023 194,983,407 $ 235,412 $ 10,528 $ 18,526 $ (499) $ (259,822) $ 4,145
Ondine Biomedical Inc.
Unaudited condensed consolidated interim statements of cash flows
(In thousands of Canadian dollars)
For the six months ended June 30,
Note 2023 2022
Cash flows from (used in) operating activities
Net loss for the period $ (7,900) $ (8,570)
Adjustments for non-cash items:
Depreciation of right-of-use assets 7 187 122
Depreciation and amortization of other property and equipment and 7 118 116
intangible assets
Accretion and interest expense 20 9
Share-based payments 12 417 686
Unrealized foreign exchange loss 111 171
Government loan forgiveness (151) -
Loss on disposal of property and equipment 95 -
Other 24 (28)
Changes in non-cash working capital 19 (1,095) (900)
Net cash used in operating activities (8,174) (8,394)
Cash flows from (used in) financing activities
Interest paid - (23)
Repayment of lease obligations (171) (138)
Repayment of government loans (40) -
Net cash used in financing activities (211) (161)
Cash flows used in investing activities
Purchase of property and equipment 7 (174) (269)
Net cash used in investing activities (174) (269)
Net decrease in cash, cash equivalents and restricted cash $ (8,559) $ (8,824)
Effect of foreign exchange rate change on cash, cash equivalents and (127) (118)
restricted cash
Cash, cash equivalents and restricted cash, beginning of period 13,272 29,868
Cash, cash equivalents and restricted cash, end of period $ 4,586 $ 20,926
Supplemental cash flow information 19
Cash, cash equivalents and restricted cash are comprised of:
For the six months ended June 30,
2023 2022
Cash $ 4,439 $ 20,926
Restricted cash 147 -
Cash, cash equivalents and restricted cash, end of period $ 4,586 $ 20,926
1. Nature of operations and going concern
Ondine Biomedical Inc. (the "Company") was incorporated under the British
Columbia Business Corporations Act on September 9, 1996. The Company is a
biotechnology company engaged in the development and commercialization of
innovative anti-infective therapies covering a broad spectrum of bacterial,
fungal and viral infections primarily using antimicrobial photodynamic therapy
("aPDT") as a platform technology for its products, which are used as an
alternative to the use of antibiotics. The Company's aPDT products employ
laser-based activation of proprietary compounds to treat a wide range of
medical infections. The address of the Company's corporate office is 888-1100
Melville Street, Vancouver, BC, Canada. The common shares of the Company are
listed on the AIM Market of the London Stock Exchange under the symbol
"OBI.L".
These consolidated financial statements have been prepared on a going concern
basis, which assumes the Company will be able to meet its obligations and
continue its operations in the normal course of business for at least twelve
months from June 30, 2023.
The Company has a history of incurring significant losses and as at June 30,
2023, had an accumulated deficit of $259,822 (December 31, 2022 - $251,922).
As at June 30, 2023, the Company had a cash and cash equivalents balance of
$4,439 (December 31, 2022 - $13,125) and a positive working capital balance of
$3,557 (December 31, 2022 - $11,222). In the six months ended June 30, 2023,
cash used in operating activities totaled $8,174 (June 30, 2022 - $8,394).
The Company's ability to continue as a going concern is dependent on its
ability to develop profitable operations and/or to continue to obtain the
necessary financing to meet its corporate expenditures and discharge its
liabilities in the normal course of business. The Company will need to raise
funds through public or private equity and/or debt financings. Although the
Company has been successful in raising finance in the past there can be no
assurance that it will be successful in the future. If the Company is unable
to generate positive cash flows or obtain adequate financing, the Company may
need to curtail operations. These factors give rise to material uncertainty
that may cast significant doubt on the Company's ability to continue as a
going concern. The consolidated financial statements do not give effect to
adjustments to carrying values and to the classification of assets and
liabilities that would be required if the Company were unable to continue as a
going concern and such adjustments could be material.
2. Basis of preparation
(a) Statement of compliance
These unaudited condensed consolidated interim financial statements have been
presented in accordance with International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board ("IASB') as
applicable to the preparation of consolidated financial statements, as set out
in International Accounting Standard ("IAS") 34, Interim Financial Reporting.
They do not include all the information required for a complete set of IFRS
financial statements. However, selected explanatory notes are included to
explain events and transactions that are significant to an understanding of
the changes in the Company's financial position and performance since the last
annual consolidated financial statements as at and for the year ended December
31, 2022.
The unaudited condensed consolidated interim financial statements were
approved and authorized for issue by the Board of Directors on September 21,
2023.
(b) Basis of measurement
The unaudited condensed consolidated interim financial statements have been
prepared on a historical cost basis as stated in the accounting policies. The
expenses within the consolidated statements of loss and comprehensive loss are
presented by function. Refer to Note 18 for details of expenses by nature.
(c) Use of estimates, assumptions and judgments
The preparation of unaudited condensed consolidated interim financial
statements in conformity with IFRS requires management to make judgments,
estimates and assumptions that affect the application of accounting policies
and the amounts reported in the consolidated financial statements and
accompanying disclosures. Although these estimates are based on management's
knowledge of current events and actions the Company may undertake in the
future, actual results may differ from the estimates and the differences may
be material.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates, if any, are recognized in the year in which
the estimates are revised and in any future years affected.
Information about the judgments, estimates and assumptions made by management
in preparing these condensed consolidated interim financial statements are as
described under "Basis of presentation - Judgments and estimates" in the
Company's consolidated financial statements for the year ended December 31,
2022.
3. Significant accounting policies and changes in estimates
The accounting policies in these unaudited condensed consolidated interim
financial statements are as described under "Significant accounting policies"
in the Company's consolidated financial statements for the year ended December
31, 2022 with the exception of property and equipment and bonus expense:
During the six months ended June 30, 2023, the Company conducted a review of
its property and equipment and the timing of which economic benefits are
derived from its use. This resulted in a change in estimate for the Company's
depreciation method from declining balance to straight-line for the assets
under the categories of computer equipment, laboratory and office equipment,
furniture and fixtures, and manufacturing equipment and tools. The estimated
useful lives of the assets have not changed. The annual effect of these
changes on actual and expected depreciation expenses, included in
'depreciation and amortization' and 'cost of goods sold' in the consolidated
statement of comprehensive income, is as follows.
2023 2024 2025 2026 2027 Thereafter
(Decrease) increase in depreciation expense 7 44 (16) (15) (24) (21)
During the six months ended June 30, 2023, the Company reassessed the initial
estimates of the employees and managements' performance against the
established criteria, leading to a change in estimate of the bonus accrual.
This change primarily reflects the nonperformance of the established criteria.
The effect of these changes on actual bonus expense, included in 'general and
administration' and 'research and development', in the consolidated statement
of comprehensive income, is a decrease of $290 and $583, respectively, for
2023.
4. Accounts and other receivables
June 30, 2023 December 31, 2022
Trade receivables $ 97 $ 133
Other receivables - 49
$ 97 $ 182
The following table reflects the loss allowance for trade receivables balance:
June 30, 2023 December 31, 2022
Gross carrying value $ 961 $ 997
Expected credit loss allowance (864) (864)
Trade receivables - net $ 97 $ 133
5. Inventory
June 30, 2023 December 31, 2022
Raw materials $ 560 $ 943
Work-in-progress 147 -
Finished goods 381 351
$ 1,088 $ 1,294
During the six months ended June 30, 2023, raw materials and finished goods
included in cost of goods sold amounted to $157 (June 30, 2022 - $90). During
the six months ended June 30, 2023 and 2022, inventory valued at $9 and $13,
respectively, was written off and reflected within cost of goods sold.
6. Prepaids and deposits, and non-current assets
June 30, 2023 December 31, 2022
Prepaid insurance $ 217 $ 252
Lease deposits 35 36
Other prepaid costs 220 129
$ 472 $ 417
Less: Current portion of prepaid expenses and deposits $ 437 $ 381
Other non-current assets $ 35 $ 36
7. Property and equipment
The Company's property and equipment gross carrying amounts and accumulated
depreciation were as follows:
Computer equipment Furniture and fixtures Lab Leasehold improvements Manufacturing equipment Demo equipment Right-of-use Total
and office equipment and tools
Cost
Balance, January 1, 2022 $ 214 $ 224 $ 382 $ 278 $ 571 $ 378 $ 797 $ 2,844
Additions 88 16 30 - 177 - 877 1,188
Transfers and other - - 33 - - 131 - 164
Disposals and derecognition (38) - - - - (335) (630) (1,003)
Exchange adjustment 27 6 27 $ 14 33 (10) 42 139
Balance, December 31, 2022 $ 291 $ 246 $ 472 $ 292 $ 781 $ 164 $ 1,086 $ 3,332
Additions 22 - 62 25 65 - - 174
Transfers and other - - - - - 25 - 25
Disposals and derecognition (171) (193) (275) - (506) (15) - (1,160)
Exchange adjustment (11) (1) (11) (6) (17) - (20) (66)
Balance, June 30, 2023 $ 131 $ 52 $ 248 $ 311 $ 323 $ 174 $ 1,066 $ 2,305
Accumulated depreciation
Balance, January 1, 2022 $ 171 $ 220 $ 360 $ 278 $ 457 $ 193 $ 564 $ 2,243
Additions 50 6 24 - 55 83 275 493
Transfers and other - - 23 - - (20) - 3
Disposals and derecognition (38) - - - - (225) (630) (893)
Exchange adjustment 10 4 26 14 15 1 12 82
Balance, December 31, 2022 $ 193 $ 230 $ 433 $ 292 $ 527 $ 32 $ 221 $ 1,928
Additions 27 2 20 2 43 24 187 305
Transfers and other - - - - - (6) - (6)
Disposals and derecognition (152) (193) (271) - (429) - - (1,045)
Exchange adjustment (10) - (8) (4) (12) - (6) (40)
Balance, June 30, 2023 $ 58 $ 39 $ 174 $ 290 $ 129 $ 50 $ 402 $ 1,142
Net book value
December 31, 2022 $ 98 $ 16 $ 39 $ - $ 254 $ 132 $ 865 $ 1,404
June 30, 2023 $ 73 $ 13 $ 74 $ 21 $ 194 $ 124 $ 664 $ 1,163
During the six months ended June 30, 2023, depreciation of $11 (June 30, 2022
- $15) was allocated to cost of goods sold (Note 17), and $294 to operating
expenses (June 30, 2022 - $223).
8. Accounts payable and other liabilities
June 30, 2023 December 31, 2022
Accounts payable $ 233 $ 388
Accrued liabilities 1,521 1,110
Employee related payables 419 1,970
Accrued interest 77 80
$ 2,250 $ 3,548
9. Lease liabilities
Office spaces and facilities
As at January 1, 2022 $ 242
Additions 866
Interest accretion 26
Lease payments (252)
Exchange adjustment 14
As at December 31, 2022 $ 896
As at January 1, 2023 $ 896
Additions -
Interest accretion 21
Lease payments (171)
Exchange adjustment (16)
As at June 30, 2023 $ 730
June 30, 2023 December 31, 2022
Current portion $ 401 $ 359
Non-current 329 537
Total lease liabilities $ 730 $ 896
The Company's leases are for office spaces and facilities. Interest expense on
lease obligations for the six months ended June 30, 2023 was $21 (June 30,
2022 - $7). The expense relating to variable lease payments not included in
the measurement of lease obligations was $86 (June 30, 2022 - $62). This
consists of variable lease payments for operating costs and property taxes.
Total cash outflow for leases was $257 (June 30, 2022 - $200), including $150
(June 30, 2022- $131) of principal payments on lease obligations.
As at June 30, 2023, the minimum annual payments under these leases, including
an estimate of operational costs for its office and laboratory premises based
on current costs, is provided below.
2023 $ 265
2024 500
2025 218
$ 983
10. Other long-term liabilities
Other long-term liabilities represent government guaranteed loans received.
The balances of the government loans are as follows:
June 30, 2023 December 31, 2022
Paycheck Protection Program (a) $ 281 $ 421
Other - 60
Total other long-term liabilities $ $ 481
281
(a) Paycheck Protection Program
In 2021, Ondine Research Laboratories, Inc. and Ondine Biomedical U.S., Inc.,
subsidiaries of the Company received an unsecured advance of US$311 ($412)
under the Paycheck Protection Program ("PPP"), which is guaranteed by the
Small Business Administration ("US SBA"), pursuant to the Coronavirus Aid,
Relief and Economic Security Act. The loan bears interest at 1% per annum and
is repayable, in blended payments, over a two-year term.
In 2022, the Company filed a loan forgiveness application for the advance
received in 2021, and the Company was granted full loan forgiveness by the US
SBA in 2023 for the loan related to Ondine Biomedical U.S.,Inc. of US$99
($131) and this portion of the loan balance was released to the consolidated
statement of comprehensive income in 2023.
Subject to the satisfaction of certain conditions, the remainder of the loan
may be forgiven if the proceeds are used to fund qualifying expenditures such
as payroll and benefits costs, rent, and utilities costs over an elected
coverage period. As at June 30, 2023, the loan of US$212 ($281) (December 31,
2022 - US$311 ($421)) was recorded as part of "other long-term liabilities' in
the consolidated statement of financial position.
11. Share capital
(a) Common Stock
Authorized
An unlimited number of common shares without par value.
Issued
As at June 30, 2023, the Company's issued share capital comprised of
194,983,407 common shares (December 31, 2022 - 194,592,857).
On May 5, 2023, the Company issued 390,550 common shares in the Company ("the
Consideration Shares") to Hylife pursuant to the services agreement entered
into on December 15, 2020 ("Hylife Service Agreement"). In accordance with the
Hylife Service Agreement, the Consideration Shares are being issued at a price
of US$1.53 ($1.94).
12. Share-based payments
(a) Stock Option Plan
On November 1, 2021, the Board of Directors approved and adopted an amended
stock option plan for the Company which provides for the grant of stock
options to directors, officers, employees and consultants from time to time at
the discretion of the directors. Under the terms of the amended stock option
plan, the maximum number of options authorized for issuance is 10% of the
issued and outstanding common shares in any 10-year period for any Employee'
share scheme and the maximum number of options authorized for issuance is 5%
of the issued and outstanding common shares in any 10-year period for any
executive share scheme. As at June 30, 2023, the maximum number of total
options that can be outstanding are 19,498,341 (December 31, 2022 -
19,459,286).
A summary of the status of the stock options outstanding is as follows:
June 30, 2023 June 30, 2022
Number of options Weighted average exercise price Number of options Weighted average exercise price
Outstanding, beginning of period 8,070,000 $ 1.07 6,833,000 $ 1.73
Options granted 50,000 0.29 1,960,000 0.93
Options forfeited - - (136,750) 1.75
Options cancelled (75,000) 0.90 (1,261,250) 2.59
Outstanding, end of period 8,045,000 $ 1.07 7,395,000 $ 1.37
Exercisable, end of period 4,785,000 $ 1.11 6,000,856 $ 0.90
Share-based payments expense for the six months ended June 30, 2023, in the
amount of $417 (June 30, 2022 - $686) was recorded.
The outstanding options for the the six months ended June 30, 2023 is as
follows:
Exercise price Number of options Remaining life (years)
$ 0.01 200,000 3.26
$ 0.29 50,000 4.75
$ 0.36 330,000 4.44
$ 0.49 600,000 4.25
$ 0.50 140,000 0.42
$ 0.90 4,020,000 1.10
$ 0.91 50,000 3.67
$ 0.93 1,905,000 3.60
$ 2.70 650,000 0.42
$ 3.00 100,000 3.05
$ 0.99 8,045,000 2.11
The fair value of stock options granted during the six months ended June 30,
2023 were estimated with the Black-Scholes model using the following
assumptions at the time of grant:
Dividend yield 0%
Annualized volatility 76%
Risk-free interest rate 2.96%
Expected life of options (years) 5
Forfeiture rate 14%
Volatility was estimated by using the historical volatility of other companies
that the Company considers comparable that have trading history and volatility
history. The expected life in years represents the period of time that options
granted are expected to be outstanding. The risk-free interest rate is based
on Canadian government benchmark bonds with a term equal to or a remaining
term that approximates the expected life of the options.
The weighted average fair value of stock options granted during the six months
ended June 30, 2023, was $0.18 per option (June 30, 2022 - $0.55). As at June
30, 2023, stock options outstanding had a remaining contractual life of 2.11
years (June 30, 2022 - 2.73 years).
(b) Warrants
On May 30, 2020, December 23, 2020 and December 1, 2021, the Company granted
warrants entitling the holders to acquire common shares of the Company as
consideration for ongoing consulting and advisory services. A summary of the
status of the warrants outstanding is as follows:
June 30, 2023 June 30, 2022
Number of warrants Weighted average exercise price Number of warrants Weighted average exercise price
Outstanding, beginning and end of period 2,295,845 $ 1.08 2,795,845 $ 1.42
Exercisable, end of period 2,295,845 $ 1.08 2,795,845 $ 1.42
The expense for the six months ended June 30, 2023 was nil (June 30, 2022 -
$nil). As at June 30, 2023, warrants outstanding had a remaining contractual
life of 1.5 years (June 30, 2022- 2.1 years).
13. Related party transactions
(a) Revenues, product shipments and expenses
For the six months ended June 30,
2023 2022
Product sales (i) $ - $ 5
(i) Product sales for the six months ended June 30, 2023 were to a
related company (which is not a related party under the AIM Rule for
Companies). The revenue associated with product shipments was not recognized
due to revenue recognition conditions not being met, and the cost of the
product shipped to a related company was included in cost of goods sold. The
revenue associated with product shipments will be recognized in a subsequent
year(s) upon invoice payment. For the six months ended June 30, 2023, there
was $5 (June 30, 2022- $8) of products shipped to a related party company for
which revenue was not recognized.
(b) Compensation of key management personnel
The Company's key management personnel have the authority and responsibility
for planning, directing and controlling the activities of the Company and
consists of the Company's executive officers and directors.
For the six months ended June 30,
2023 2022
Compensation and other short-term benefits $ 98 $ 896
Directors' fees 327 308
Share-based payments 52 164
Consulting expenses (i) 74 -
$ 551 $ 1,368
(i) Expenses incurred for consulting services provided by companies
under the control of an officer and a related party of the Company.
(c) Related party balances
June 30, 2023 December 31, 2022
Included in accounts payable and other liabilities $ 102 $ 714
Loans payable to related parties are due to the personal holding company of
the Company's controlling shareholder. The loans payable to related parties
are unsecured. The related party balances included in accounts payable and
other liabilities consist of bonus payable, the current portion of loans
payable to related parties and amounts payable for services provided.
14. Commitments and contingencies
Open purchase order commitments as at June 30, 2023 were $668 (December 31,
2022 - $887) for the purchase of inventory and contracted development and
clinical services.
The Company has the following contingency at June 30, 2023:
(i) The Company's Barbadian subsidiary held intellectual
property in Barbados until December 22, 2022. As a result of the Barbados
Companies (Economic Substance) Act passed in 2019, the Barbadian subsidiary
must comply with economic substance requirements set out in the legislation.
If the Barbadian subsidiary cannot establish economic substance in Barbados,
the Barbadian subsidiary could be subject to additional financial penalties
and/or could be struck from the register of companies. On December 22, 2022,
the Company transferred the intellectual property from the Barbadian
subsidiary to a new Swiss subsidiary via an intercompany sale at a fair value
which was determined by an independent third party. Challenges from Barbadian,
Swiss, Canadian or United States authorities regarding any of the foregoing,
which results in an unfavorable outcome, could have a material impact on the
financial position and operating results of the Company.
(ii) The Company and certain of its affiliates have also been
named as defendants in certain legal actions in the normal course of business,
none of which management believes singularly or cumulatively, will have a
material impact on the results of operations and financial position of the
Company.
15. Segmented information
Management has determined that the Company has one reportable operating
segment, aPDT products. This segment accounts for all of the Company's
revenue, cost of goods sold and operating expenses. Determination of the
operating segment was based on the level of financial reporting to the
Company's chief operating decision makers. Revenues are attributed to the
geographic area where the customer is located.
For the six months ended June 30,
2023 2022
Product revenue
Canada $ 390 $ 262
Other 38 -
$ 428 $ 262
Revenue from significant customers are as follows:
For the six months ended June 30,
2023 2022
Customer 1 $ 290 $ 204
Customer 2 46 33
Other 92 25
$ 428 $ 262
A summary of non-current assets (excluding other assets) by geographical area
based on the location of the asset is as follows:
June 30, 2023 December 31, 2022
Canada $ 204 $ 245
United States 959 1,159
$ 1,163 $ 1,404
16. Financial risk management and financial instruments
All assets and liabilities for which fair value is measured or disclosed in
the unaudited condensed consolidated interim financial statements are
categorized within the fair value hierarchy, described as follows, based on
the lowest level input that is significant to the fair value measurement as a
whole:
Level 1 Unadjusted quoted market prices in active markets for
identical assets or liabilities;
Level 2 Valuation techniques for which the lowest level input
that is significant to the fair value measurement is directly or indirectly
observable; and
Level 3 Valuation techniques for which the lowest level input
that is significant to the fair value measurement is not based on observable
market data.
As at June 30, 2023, the carrying values of cash, restricted cash, accounts
and other receivables, and accounts payable and other liabilities approximate
their fair values because of their nature, relatively short maturity dates.
(a) anagement of risks arising from financial instruments
The overall responsibility for the establishment and oversight of the
Company's risk management policies resides with the Board of Directors. The
Company's risk management policies are established to identify, analyze and
manage the risks faced by the Company and to implement appropriate procedures
to monitor risks and adherence to established controls. Risk management
policies and systems are reviewed periodically in response to the Company's
activities and to ensure applicability. The Company, through its financial
assets and liabilities, is exposed to certain risks as follows:
i. Credit risk
The Company is exposed to credit risk arising from the possibility that cash
held, receivables and amounts due from related parties are non-recoverable.
However, the Company believes that its exposure to credit risk in relation to
the cash and receivables is low. All of the cash held by the Company and its
subsidiaries was held with reputable financial institutions. The Company has
evaluated accounts receivable and determined an expected credit loss allowance
of $864 for the six months ended June 30, 2023 (December 31, 2022 - $864).
During the period ended June 30, 2023, the Company recorded a bad debt expense
of $nil (June 30, 2022- $nil).
ii. Foreign currency risk
The results of the Company's operations are subject to currency transaction
and translation risks. The fair value of future cash flows of a financial
instrument will fluctuate because of changes in foreign exchange rates. The
Company operates in Canada, the United States, the United Kingdom, Barbados,
and Switzerland and is exposed to foreign exchange risk due to fluctuations in
the US$, GBP, Barbadian Dollar, and Swiss Franc against the Canadian dollar.
Foreign exchange risk arises from financial assets and liabilities denominated
in currencies other than the functional currency of the respective entities.
The Company's primary risk is associated with fluctuations between the US$ and
Canadian dollar, and the GBP and Canadian dollar.
The Company has determined that the effect of a 10% increase or decrease in
the US$ and GBP against the Canadian dollar on net financial assets and
liabilities, as at June 30, 2023, including cash, accounts receivables,
accounts payable and other liabilities denominated in US$, and GBP would
result in an increase or decrease of approximately $261 (June 30, 2022-
$2,066) in the unaudited condensed consolidated interim statements of loss and
comprehensive loss for the six months ended June 30, 2023.
iii. Interest rate risk
Interest rate risk is the risk that the fair values and future cash flows of
the Company will fluctuate because of changes in market interest rates. The
Company did not incur or have any other interest-bearing assets or
liabilities.
iv. Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its
obligations as they fall due. The Company ensures that there is sufficient
liquidity to meet its short-term business requirements, taking into account
its anticipated cash flows from operations and its holdings of cash. The
Company's principal sources of liquidity are cash provided by operations,
related party loans, debt and equity issuances. The Company projects and
monitors its cash requirements to accommodate changes in liquidity needs (Note
1).
In addition to the commitments in Note 9 and Note 14, the Company has the
following contractual financial liabilities as at June 30, 2023:
Carrying amount Contractual cash flows Less than one year More than one year
Financial liabilities
Accounts payable and other liabilities $ 2,250 $ 2,250 $ 2,250 $ -
Other long-term liabilities 281 281 - 281
$ 2,531 $ 2,531 $ 2,250 $ 281
17. Cost of goods sold
For the six months ended June 30,
2023 2022
Inventory - Note 5 $ 157 $ 90
Inventory write-off - Note 5 9 13
Depreciation - Note 7 11 15
$ 177 $ 118
18. Expenses by nature
General and administration, research and development, marketing and sales, and
depreciation and amortization expenses are comprised of the following expenses
by nature:
For the six months ended June 30,
2023 2022
Salaries and benefits $ 2,909 $ 3,958
Professional fees, contractors and consultants 2,985 1,646
Office and lab costs 676 724
Share based payment 417 686
Clinical trial costs 148 766
Technology costs 352 193
Travel and entertainment 325 160
Depreciation and amortization 294 223
Advertising and promotion 127 125
Delivery and logistics 48 69
$ 8,281 $ 8,550
During the six months ended June 30, 2023, Ondine Research Laboratories Inc.
and Ondine Biomedical U.S., Inc. received Employee Retention Credit, a
refundable tax credit for businesses that continued to pay employees while
shut down due to the COVID-19 pandemic from the Internal Revenue Service of
US$343 ($462) (June 30, 2022 - US$123 ($156)) and recorded it to the
Comprehensive Statements of Loss and Comprehensive Loss against salaries and
benefits.
During the six months ended June 30, 2023, the Company reassessed the initial
estimates of the employees and managements' performance against the
established criteria, leading to a change in estimate of the bonus accrual.
This change primarily reflects the nonperformance of the established criteria
subsequent to the 12 months ended December 31, 2022 resulting in a recovery of
bonus expense of $873 recorded in the Comprehensive Statements of Loss and
Comprehensive Loss against salaries and benefits.
19. Supplementary cash flow information
For the six months ended June 30,
2023 2022
Changes in non-cash working capital items
Accounts and other receivables $ 84 $ 55
Inventory 153 (170)
Prepaid expenses and deposits (60) 193
Accounts payable and other liabilities (1,272) (978)
$ (1,095) $ (900)
20. Ultimate controlling party
The Company's CEO is the ultimate controlling party of the Company, personally
owning and/or controlling through her personal holding company a total of
55.6% of the issued common shares of the Company as at June 30, 2023 (June 30,
2022 - 55.7%).
21. Subsequent events
Subsequent to June 30, 2023, the following transaction had occurred:
1. On August 23, 2023, the Company issued 78,719 common shares pursuant
to an annual bonus award for an employee at a price of US$0.21 ($0.29).
1
https://www.londonstockexchange.com/news-article/OBI/ondine-receives-impact-award-at-ipa-world-congress/16043800
2
https://www.londonstockexchange.com/news-article/OBI/steriwave-proven-effective-against-xdr-bacteria/16124940
3 Antimicrobial Resistance Collaborators (2022). Global burden of bacterial
antimicrobial resistance in 2019: a systematic analysis. Lancet (London,
England), 399(10325), 629-655. https://doi.org/10.1016/S0140-6736(21)02724-0
(https://doi.org/10.1016/S0140-6736(21)02724-0)
4 Ryding, S. "What are Extensively Drug Resistant (XDR) Bacteria?" News
Medical Life Sciences. Nov. 16, 2021.
https://www.news-medical.net/health/What-are-Extensively-Drug-Resistant-(XDR)-Bacteria.aspx
(https://www.news-medical.net/health/What-are-Extensively-Drug-Resistant-(XDR)-Bacteria.aspx)
5 CDC. COVID-19: U.S. Impact on Antimicrobial Resistance, Special Report
2022. Atlanta, GA: U.S.
Department of Health and Human Services, CDC; 2022.
6 https://ondinebio.com/steriwave-cuts-ssi-risk-by-47-at-major-hospital
7
https://www.oecd-ilibrary.org/sites/4af33743-en/index.html?itemId=/content/component/4af33743-en
(https://www.oecd-ilibrary.org/sites/4af33743-en/index.html?itemId=/content/component/4af33743-en)
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