REG - Ondine Biomedical - Ondine Biomedical Reports Robust Growth in H1 2024
30/09/2024 07:15
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RNS Number : 1970G Ondine Biomedical Inc. 30 September 2024
ONDINE BIOMEDICAL INC.
("Ondine Biomedical", "Ondine" or the "Company")
Ondine Biomedical Reports Robust Growth in H1 2024
Unaudited results for the six months to 30 June 2024
Ondine Biomedical Inc. (AIM:OBI), a leading provider of light-activated
antimicrobial technology to prevent and treat hospital infections, is pleased
to announce strong operational results for the first half of 2024,
highlighting significant progress and expansion in its commercial and clinical
endeavors.
Financial figures throughout this interim report are in Canadian dollars
unless otherwise specified.
Operational Highlights
· Commercial growth: Adoption of the Company's novel
light-activated antimicrobial, Steriwave(®), increased by 190% to 29
hospitals by the end of H1 2024 (H1 2023: 10 Hospitals). Commenced commercial
roll-out of the 2(nd) generation Nasal Illuminator in Canada post-period.
· Strategic partnership: Following the end of H1 2024, the Company
announced a strategic partnership with Mölnlycke Health Care, a world-leading
MedTech company that specializes in innovative solutions for wound care and
surgical procedures, to bring Ondine's Steriwave nasal decolonization
technology to the UK, EU, and Middle Eastern markets.
· Clinical trial progress: In June, the Clinical trial agreement
for the US Phase 3 trial was signed with HCA Healthcare (HCA). Ondine, HCA and
the contract research organization are collaboratively finalizing the details
and site selection for the trial.
· Advancing into ICU: As previously announced, the Company
accelerated plans to pursue the large and critical ICU market, and has
partnered with the Royal Columbian Hospital Foundation's Advancing Innovation
in Medicine (AIM) division to study Steriwave in intensive care units (ICU).
Financial Highlights
· Revenue of $0.9 million, reflecting a 101% increase compared to
$0.4 million in H1 2023.
· Gross margin at 62%, up 300 basis points from 59% in H1 2023.
· Loss from operations of $7.8 million (H1 2023: $8.0 million).
· Cash, cash equivalents and restricted cash of $1.4 million as at
30 June 2024 (31 December 2023: $3.1 million).
· Secured c.$11 million of capital in support of commercial growth
and general operations comprised of $6 million in May 2024 and a post-period
private placement of $5 million to be delivered on or before 8 November 2024.
· Financial support of $0.7 million from Founder and CEO Carolyn
Cross was received on an interest free, unsecured basis along with commitment
for continued working capital support on similar terms while the Company
secures additional long-term finance.
Carolyn Cross, CEO:
"Our significant revenue growth and expanded hospital adoption of Steriwave
are testaments to the technology's efficacy as well as the need for simple
solutions to prevent complex hospital infections. The Mölnlycke partnership
underscores the value we bring to healthcare systems and marks a new era of
accelerated growth for Ondine as we pursue approval for the large US market
and expansion into critical care settings. We are excited about the road ahead
and continued momentum in the second half of 2024."
Live Presentation
Ondine will be hosting a presentation to all existing and potential
shareholders at 16:30 BST (08:30 Pacific time) held via the Investor Meet
Company platform. Questions can be submitted at any time during the live
presentation.
Investors can sign up to Investor Meet Company for free and add to meet ONDINE
BIOMEDICAL INC. via:
https://www.investormeetcompany.com/ondine-biomedical-inc/register-investor
(https://www.investormeetcompany.com/ondine-biomedical-inc/register-investor)
Investors who already follow ONDINE BIOMEDICAL INC. on the Investor Meet
Company platform will automatically be invited.
Related Party Transaction
On 30 September Carolyn Cross provided a loan (the "Loan") of C$400,000 to the
Company for additional working capital ahead of securing longer term
financing. This is in addition to the C$285,000 loan provided on 11 September
2024. The Loan is deemed to constitute a related party transaction for the
purpose of AIM Rule 13. The Company's Independent Directors, having consulted
with Singer Capital Markets, the Company's nominated adviser, consider that
the terms of the Loan are fair and reasonable insofar as Shareholders are
concerned.
As previously announced, Carolyn and Robert Cross, who jointly own 49.5% of
the Company, have indicated they will continue to support the Company with
short term financing on similar favourable terms to extend the runway while
the Company secures longer term financing.
Enquiries:
Ondine Biomedical Inc.
Carolyn Cross, CEO +1 (604) 665 0555
Singer Capital Markets (Nominated Adviser and Joint Broker)
Phil Davies, 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 clinical Canadian life sciences company and leader
in light-activated antimicrobial therapies (also known as
'photodisinfection'). Ondine has a pipeline of investigational products, based
on its proprietary photodisinfection technology, in various stages of
development.
Ondine's nasal photodisinfection system has a CE mark in Europe and the UK and
is approved in Canada and several other countries under the name
Steriwave(®). In the US, it has been granted Qualified Infectious Disease
Product designation and Fast Track status by the FDA and is currently
undergoing clinical trials for regulatory approval. 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
The first half of 2024 has been productive for Ondine, marked by robust growth
and significant commercial advancements. Our continued progress is a direct
reflection of the dedication and hard work of our team, our supporters and
shareholders, as well as the trust placed in us by the healthcare
professionals we serve.
Commercial Traction
Our recent commercial traction and rapid new hospital adoption rate have led
to our strategic partnership with Mölnlycke Health Care, a global leader in
the wound care and infection control industry, announced on 23 September 2024.
This partnership will help to accelerate adoption of Steriwave in key markets,
starting initially with the United Kingdom, which has a total addressable
market of over 3 million major surgeries annually(( 1 (#_ftn1) )) and over
200,000 annual intensive care unit (ICU) admissions. 2 (#_ftn2)
Successful outcomes in initial hospital deployments continue to fuel adoption
growth in our target markets of Canada and the UK. We grew the number of
hospitals which are using, or have approved use of, Steriwave to 29 (190%
increase year-over-year) and doubled our revenues compared to the same period
last year. We are now deployed in five of Canada's 10 largest hospitals and
aim to be in 9 of 10 of Canada's largest hospitals by the end of next year.
This year Ondine made significant inroads into the UK's National Health
Service (NHS), in addition to our existing sales into the HCA UK network. In
June, Steriwave became the first light-activated antimicrobial therapy to be
listed on the NHS Supply Chain, the online procurement system which simplifies
the purchasing process for NHS hospitals and clinics across England and Wales.
Following a successful initial pilot program, Ondine signed its first
commercial contract with Mid Yorkshire Teaching NHS Trust - the first of the
NHS Trusts to officially adopt universal nasal decolonization for presurgical
patients. Mid Yorkshire Teaching NHS Trust accelerated its adoption of
Steriwave into 2 hospitals, Pinderfields and Pontefract Hospitals, as standard
of care. In a collaboration with Health Innovation Yorkshire & Humber and
the York Health Economics Consortium (YHEC), data from the Mid Yorkshire
hospitals is being used to conduct a health economic analysis of Steriwave.
The findings, expected in the fourth quarter, should help to support further
adoption into hospitals across the NHS Trusts in light of the NHS long term
goals of innovative solutions to address antimicrobial resistance, reduced
costs and improved patient outcomes.
Clinical Advancements
With the clinical trial and CRO agreements signed, and work progressing on
site selections and finalizing details with principal investigators, we are
poised to initiate our US Phase 3 trial with HCA Healthcare once the necessary
funding is obtained, a key steppingstone to access the large US market. This
trial, to be conducted at 14 HCA hospitals, will compare standard-of-care
infection prevention practices with, and without, Steriwave nasal
decolonization. The primary endpoint of this 5,000-patient trial is the
reduction of surgical site infections, one of the most prevalent
healthcare-associated infections (HAI) that costs US healthcare billions of
dollars annually. We are very pleased to have esteemed Dr. Ed Septimus -
Professor of Internal Medicine, Texas A&M College of Medicine and Senior
Lecturer at Harvard Medical School - as Co-Medical Monitor for this large US
clinical study.
Another major application for Steriwave is in intensive care units (ICU),
where 12-13% of patients suffer from hospital-acquired infections,
significantly increasing length of stay, mortality, and costly burden to
overstretched healthcare resources. Preventing these infections is a priority
for hospitals and nasal decolonization for these high-risk patients is
recommended in multiple guidelines, including from the Centers for Disease
Control and Prevention (CDC), the World Health Organization (WHO), the Society
for Healthcare Epidemiology of America (SHEA) and Infectious Diseases Society
of America (IDSA), and the European Guidelines (ESCMID). We are, therefore,
very pleased with our recently announced research collaboration with the Royal
Columbian Hospital Foundation & Advancing Innovation in Medicine (AIM)
division led by Dr Steven Reynolds in support of Steriwave's intensive care
unit application. This collaboration sets the stage to unlock the expansive
global ICU market, where nasal decolonization (using topical antibiotic
ointments over 5 days) is already recognized as a key infection prevention
strategy.
The purpose of this strategic initiative is to integrate Ondine's Steriwave
into ICU infection control and workflow protocols to determine the impact of
rapid broad spectrum nasal decolonization on ICU infection rates, length of
stay and mortality rates. Commencing with a four-month feasibility phase with
a minimum of 320 ICU patients at Royal Columbian Hospital (RCH), the initial
research is aimed at optimizing workflow protocols and collecting vital data
on enrolment rates and baseline infection metrics. Results from this initial
phase will inform a larger multicenter study involving up to 2,000 ICU
patients to assess pharmacoeconomics, infection prevention, and patient
outcomes in critical care settings. The $855,000 pilot study, supported by the
RCH Foundation, will be funded by Ondine through the issuance of equity, over
four milestones.
Financial Performance
On the financial front, we are pleased that revenues more than doubled
year-on-year while holding operating costs steady, offsetting increased costs
related to Phase 3 clinical trial preparations with strategic cost-saving
measures. Cost of goods sold continued to fall, further increasing gross
margins to 62%, up 300 basis points from 59% in H1 2023.
We raised circa $11 million, including a successful financing of over $6
million in May and $5 million post-period in a private placement financing.
Furthermore, Ondine has the working capital support of founders and
substantial shareholders while currently exploring longer term funding options
with our advisors, and we are confident in the ability to secure longer-term
growth capital.
Outlook
2024 is proving to be a pivotal year for the Company with significant progress
made on the commercial and clinical development fronts. Looking ahead, we have
an exciting and challenging chapter before us, one that will very much define
us in the years to come. We are ready.
On behalf of the Board and all the Ondine employees, we would like to thank
our numerous supporters and shareholders for the many contributions that pave
the way for our continued success.
Carolyn Cross
Chief Executive Officer
30 September 2024
Ondine Biomedical Inc.
Unaudited condensed consolidated interim statements of financial position
(In thousands of Canadian dollars)
Notes June 30, 2024 December 31, 2023
$ $
Assets
Current assets
Cash 1,218 2,981
Restricted cash 152 157
Accounts and other receivables 4, 16 238 326
Inventory 5 1,288 1,066
Prepaid expenses and deposits 6 326 220
3,222 4,750
Non-current assets
Property and equipment 7 767 949
Other assets 6 36 35
803 984
Total Assets 4,025 5,734
Liabilities
Current liabilities
Accounts payable and other liabilities 8, 16 3,440 3,108
Current portion of lease liability 9 351 382
Current portion of warrant liability 10 215 -
4,006 3,490
Non-current liabilities
Lease liability 9 - 159
- 159
Total Liabilities 4,006 3,649
Equity
Share capital 11 244,829 239,647
Contributed surplus 10,528 10,258
Reserves 18,758 18,244
Deficit (274,096) (266,334)
Total Shareholders' Equity 19 2,085
Total Liabilities and Shareholders' Equity 4,025 5,734
Going concern - Note 1; Commitments and contingencies - Note 14; Subsequent
events - Note 22
Approved on behalf of the Board:
"Carolyn Cross" "Jean Charest"
The accompanying notes are an integral part of these unaudited condensed
consolidated interim financial statements.
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,
Notes 2024 2023
$ $
Revenue 13, 15 859 428
Cost of goods sold 17 (330) (177)
Gross margin 529 251
Expenses 18
General and administration 4,272 4,747
Research and development 3,301 2,185
Marketing and sales 514 1,055
Depreciation and amortization 7 272 294
8,359 8,281
Loss from operations (7,830) (8,030)
Other income (expense)
Government loan forgiveness - 151
Accretion and interest expense (22) (20)
Interest income - 204
Loss on disposal of property and equipment - (95)
Change in fair value of warrant liability 112 -
Other income (expense) (2) (5)
Foreign exchange gain (loss) (20) (105)
68 130
Net loss for the period (7,762) (7,900)
Other comprehensive loss
Exchange differences on translation of foreign operations (1) 28 (16)
Total comprehensive loss (7,734) (7,916)
Net loss per share
Basic and diluted (0.03) (0.04))
Weighted average number of shares outstanding
Basic and diluted 241,469,143 194,715,848
(1) May be reclassified to profit or loss in subsequent periods.
The accompanying notes are an integral part of these unaudited condensed
consolidated interim financial statements.
Ondine Biomedical Inc.
Unaudited condensed consolidated interim statements of changes in equity
(In thousands of Canadian dollars, except share amounts)
Number of common shares Share capital Contributed surplus Share-based payment reserve Currency translation reserve Accumulated Deficit Equity
(Note 11)
$ $ $ $ $ $
Balance, January 1, 2023 194,592,857 235,042 10,528 18,479 (483) (251,922)
11,644
Issuance of share capital - Note 11 390,550 370 - (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
Balance, January 1, 2024 226,753,789 239,647 10,528 18,726 (482) (266,334) 2,085
Issuance of share capital upon financing - Note 10 50,531,970 5,732 - - - - 5,732
Share issuance costs - Note 11 - (550) - - - - (550)
Share-based payments - Note 12 - - - 486 - - 486
Total comprehensive loss for the period - - - - 28 (7,762) (7,734)
Balance, June 30, 2024 277,285,759 244,829 10,528 19,212 (454) (274,096) 19
The accompanying notes are an integral part of these unaudited condensed
consolidated interim financial statements.
Ondine Biomedical Inc.
Unaudited condensed consolidated interim statements of cash flows
(In thousands of Canadian dollars)
For the six months ended June 30,
Notes 2024 2023
$ $
Cash flows from (used in) operating activities
Net loss for the period (7,762) (7,900)
Adjustments for non-cash items:
Depreciation of right-of-use assets 7 189 187
Depreciation and amortization of other property and equipment 7 95 118
Accretion and interest expense 22 20
Share-based payments 12 486 417
Change in fair value of warrant liability 10 (112) -
Unrealized foreign exchange (gain) loss (21) 111
Government loan forgiveness - (151)
Loss on disposal of property and equipment - 95
Other - 24
Changes in non-cash working capital 19 19 (1,095)
Net cash used in operating activities (7,084) (8,174)
Cash flows from (used in) financing activities
Repayment of lease obligations (224) (171)
Repayment of government loan - (40)
Proceeds from public offering 6,059 -
Share issuance costs (550) -
Net cash from financing activities 5,285 (211)
Cash flows used in investing activities
Purchase of property and equipment 7 (10) (174)
Net cash used in investing activities (10) (174)
Net decrease in cash and restricted cash (1,809) (8,559)
Effect of foreign exchange rate change on cash and restricted cash 41 (127)
Cash and restricted cash, beginning of period 3,138 13,272
Cash and restricted cash, end of period 1,370 4,586
Supplemental cash flow information 19
The accompanying notes are an integral part of these unaudited condensed
consolidated interim financial statements.
Ondine Biomedical Inc.
Unaudited condensed consolidated interim statements of cash flows
(In thousands of Canadian dollars)
Cash and restricted cash are comprised
of:
For the six months ended June 30,
2024 2023
$ $
Cash 1,218 4,439
Restricted cash 152 147
Cash, cash equivalents and restricted cash, end of period 1,370 4,586
The accompanying notes are an integral part of these unaudited condensed
consolidated interim financial statements.
Ondine Biomedical Inc.
Notes to the Unaudited Condensed Consolidated Interim Financial Statements
Year ended December 31, 2023 and 2022
(In thousands of Canadian dollars, except as otherwise indicated)
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 unaudited condensed consolidated interim 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, 2024.
The Company has a history of incurring significant losses and as at June 30,
2024, had an accumulated deficit of $274,096 (December 31, 2023 - $266,334).
As at June 30, 2024, the Company had a cash and cash equivalents balance of
$1,218 (December 31, 2023 - $2,981) and a negative working capital balance of
$784 (December 31, 2023 - positive $1,260). In the six months ended June 30,
2024, cash used in operating activities totaled $7,084 (June 30, 2023 - $
8,174).
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 as
issued by the International Accounting Standards Board ("IFRS Accounting
Standards") 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, 2023.
The unaudited condensed consolidated interim financial statements were
approved and authorized for issue by the Board of Directors on September 27,
2024.
(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,
2023.
3. Material accounting policies
The accounting policies in these unaudited condensed consolidated interim
financial statements are as described under "Material accounting policies" in
the Company's consolidated financial statements for the year ended December
31, 2023.
4. Accounts and other receivables
June 30, 2024 December 31, 2023
$ $
Trade receivables 232 324
Other receivables 6 2
238 326
5. Inventory
June 30, 2024 December 31, 2023
$ $
Raw materials 376 555
Work-in-progress - 118
Finished goods 912 393
1,288 1,066
During the six months ended June 30, 2024, raw materials, work-in-progress and
finished goods included in cost of goods sold amounted to $318 (June 30, 2023
- $157). During the six months ended June 30, 2024 and 2023, inventory valued
at $nil and $9, respectively, was written off and reflected within cost of
goods sold.
6. Prepaids and deposits, and non-current assets
June 30, 2024 December 31, 2023
$ $
Prepaid insurances 139 154
Lease deposits 36 35
Other prepaid costs 187 66
362 255
Less: Current portion of prepaid expenses and deposits 326 220
Other non-current assets 36 35
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 and office equipment Leasehold improvements Manufacturing equipment and tools Demo equipment Right-of-use Total
$ $ $ $ $ $ $ $
Cost
Balance, January 1, 2023 291 246 472 292 781 164 1,086 3,332
Additions 25 - 62 25 65 - - 177
Transfers and other - - - - - 69 - 69
Disposals and derecognition (176) (193) (275) - (512) - - (1,156)
Exchange adjustment (6) (1) (11) (6) (11) - (21) (56)
Balance, December 31, 2023 134 52 248 311 323 233 1,065 2,366
Additions 3 - 7 - - 67 - 77
Transfers and other - - - - - - - -
Disposals and derecognition - - (10) - - - - (10)
Exchange adjustment (6) 1 8 9 11 2 31 66
Balance, June 30, 2024 141 53 253 320 334 302 1,096 2,499
Accumulated depreciation
Balance, January 1, 2023 193 230 433 292 527 32 221 1,928
Additions 46 3 36 8 72 47 375 587
Transfers and other - - - - - (7) - (7)
Disposals and derecognition (158) (193) (271) - (435) (1) - (1,058)
Exchange adjustment (4) 1 (8) (5) (7) - (10) (33)
Balance, December 31, 2023 77 41 190 295 157 71 586 1,417
Additions 19 2 15 6 28 25 189 284
Transfers and other - - - - - - - -
Disposals and derecognition - - (10) - - - - (10)
Exchange adjustment 2 (1) 8 8 6 1 17 41
Balance, June 30, 2024 98 42 203 309 191 97 792 1,732
Net book value
December 31, 2023 57 11 58 16 166 162 479 949
June 30, 2024 43 11 50 11 143 205 304 767
During the six months ended June 30, 2024, depreciation of $12 (June 30, 2023
- $11) was allocated to cost of goods sold, and $272 to operating expenses
(June 30, 2023 - $294).
8. Accounts payable and other liabilities
June 30, 2024 December 31, 2023
$ $
Accounts payable 1,884 1,363
Accrued liabilities 1,375 1,605
Employee related payables 108 69
Accrued interest 73 71
3,440 3,108
9. Lease liability
Office spaces and facilities
$
As at January 1, 2023 896
Interest accretion 46
Lease payments (388)
Exchange adjustment (13)
As at December 31, 2023 541
As at January 1, 2024 541
Interest accretion 18
Lease payments (224)
Exchange adjustment 16
As at June 30, 2024 351
June 30, 20224 December 31, 2023
$ $
Current portion 351 382
Non-current - 159
Total lease liability 351 541
The Company's leases are for office spaces and a laboratory facility. The
expense relating to variable lease payments not included in the measurement of
lease obligations was $115 (June 30, 2023 - $86). This consists of variable
lease payments for operating costs and property taxes. Total cash outflow for
leases was $339 (June 30, 2023- $257), including $206 (June 30, 2023 - $150)
of principal payments on lease obligations.
As at June 30, 2024, 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.
$
2024 293
2025 232
525
10. Warrant liability
Units Amount
$
Balance, December 31, 2023 - -
Issued 25,265,977 327
Fair value adjustment - (112)
Balance, June 30, 2024 25,265,977 215
On May 9, 2024, as part of the Company's finance raise, 25,265,977 warrants
were granted with an exercise price of GBP0.15 ($0.26) and an expiration date
of February 9, 2025.
The fair value of warrants granted were estimated with the Black-Scholes model
using the following assumptions at the time of grant on May 9, 2024:
Dividend yield 0%
Expected volatility 92%
Risk-free interest rate 4.28%
Expected life of options (years) 0.8
Forfeiture rate 0%
Volatility was estimated by using the historical volatility of the Company's
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
warrants.
Issuance costs for the warrants of $31 were recorded in the Comprehensive
Statements of Loss and Comprehensive Loss.
The fair value of the warrants were determined estimated with the
Black-Scholes model using the following assumptions as at June 30, 2024:
Dividend yield 0%
Expected volatility 78%
Risk-free interest rate 4.02%
Expected life of options (years) 0.6
Forfeiture rate 0%
As at June 30, 2024, warrants outstanding had a remaining contractual life of
0.6 years (June 30, 2023- nil).
11. Share capital
Common Stock
Authorized
An unlimited number of common shares without par value.
Issued
As at June 30, 2024, the Company's issued share capital consisted of
277,285,759 common shares (December 31, 2023 - 226,753,789).
On May 9, 2024, the Company issued 50,531,970 common shares at a price of
GBP0.07 ($0.12). The Company incurred accounting, legal, advisory and
disbursement costs of $550 directly related to the completion of the finance
raise. The costs incurred were recorded to equity in the consolidated
statement of financial position.
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, 2024, the maximum number of total
options that can be outstanding are 27,728,576 (December 31, 2023 -
22,675,379).
A summary of the status of the stock options outstanding is as follows:
June 30, 2024 December 31, 2023
Number of options Weighted average exercise price Number of options Weighted average exercise price
$ $
Outstanding, beginning of period 3,690,000 0.81 8,070,000 1.07
Options granted 8,940,000 0.15 50,000 0.29
Options expired - - - -
Options forfeited (86,250) 0.46 - -
Options cancelled (28,750) 0.46 (75,000) 0.90
Outstanding, end of period 12,515,000 0.35 8,045,000 1.07
Exercisable, end of period 1,795,000 0.82 4,785,000 1.11
Share-based payments expense for the six months ended June 30, 2024, in the
amount of $486 (June 30, 2023 - $417) was recorded.
The outstanding options for the six months ended June 30, 2024 is as follows:
Exercise price Number of options Remaining life (years)
$ 0.01 200,000 2.25
$ 0.15 8,940,000 4.58
$ 0.29 30,000 3.74
$ 0.36 310,000 3.44
$ 0.49 390,000 3.24
$ 0.90 1,070,000 1.88
$ 0.93 1,475,000 2.60
$ 3.00 100,000 2.05
$ 0.35 12,515,000 3.98
The fair value of stock options granted during the six months ended June 30,
2024 and 2023 were estimated with the Black-Scholes model using the following
assumptions at the time of grant:
For the six months ended June 30,
2024 2023
Dividend yield 0% 0%
Annualized volatility 81% 76%
Risk-free interest rate 3.52% 2.96%
Expected life of options (years) 5 5
Forfeiture rate 11% 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 twelve
months ended June 30, 2024, was $0.12 per option (June 30, 2023 - $0.18). As
at June 30, 2024, stock options outstanding had a remaining contractual life
of 3.98 years (June 30, 2023 - 2.11 years).
(b) Warrants
On May 30, 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, 2024 June 30, 2023
Number of warrants Weighted average exercise price Number of warrants Weighted average exercise price
$ $
Outstanding, beginning of period 2,295,845 1.08 2,295,845 1.08
Outstanding, end of year 2,295,845 1.08 2,295,845 1.08
Exercisable, end of year 2,295,845 1.08 2,295,845 1.08
The expense for the six months ended June 30, 2024 was $nil (June 30, 2023 -
$nil). As at June 30, 2024, warrants outstanding had a remaining contractual
life of 0.5 years (June 30, 2023- 1.5 years).
13. Related party transactions
(a) Revenues, product shipments and expenses
For the six months ended June 30,
2024 2023
$ $
Product sales (i) 20 -
(i) Product sales for the six months ended June 30, 2024 were to a related
company. 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, 2024, there was $11
(June 30, 2023 - $5) 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 activities of the Company and consists
of the Company's executive officers and directors.
For the six months ended June 30,
2024 2023
$ $
Compensation and other short-term benefits (i) 721 98
Directors' fees (ii) 271 327
Share-based payments (iii) 195 52
Consulting expenses (iv) 221 74
1,408 551
(i) During the six months ended June 30, 2023, the Company reassessed the
initial estimates of the key managements' performance against the established
criteria, leading to a change in estimate of the bonus accrual and reduced
compensation and other short-term benefits by $625.
(ii) On May 9, 2024, as part of the Company's finance raise, directors'
fees of $271 were paid in the form of Common Shares.
(iii) On January 25, 2024, the Company granted 5,815,000 stock options to
key management personnel.
(iv) 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, December 31, 2023
2024 $
$
Included in warrant liability (i) 17 -
Included in accounts payable and other liabilities (ii) 100 45
117 45
(i) On May 9, 2024, as part of the Company's finance raise,
key management personnel received 2,039,989 warrants
(ii) 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 payables for services incurred to
related parties
14. Commitments and contingencies
Open purchase order commitments as at June 30, 2024 were $1,521 (December 31,
2023 - $469) for the purchase of inventory and contracted development and
clinical services.
The Company and its subsidiaries may, from time to time, be a party to certain
legal disputes and claims arising from employment, environmental or commercial
issues in the normal course of business. The Company has the following
contingency at June 30, 2024:
(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.
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,
2024 2023
$ $
Product revenue
Canada 824 390
Other 35 38
859 428
Revenue from significant customers are as follows:
For the six months ended June 30,
2024 2023
$ $
Customer 1 316 290
Customer 2 212 11
Other 331 127
859 428
A summary of non-current assets (excluding other assets) by geographical area
based on the location of the asset is as follows:
June 30, December 31, 2023
2024
$
$
Canada 220 210
United States 547 739
767 949
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, 2024, 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.
Financial liabilities measured at fair value through profit or loss on a
recurring basis include the warrant liabilities (Note 10) which are
categorized as Level 2 fair value inputs.
(a) Management 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:
Credit risk
The Company is exposed to credit risk arising from the possibility that cash
held, and accounts receivable 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. Since the majority of the
Company's customers are considered to have low default risk and its historical
default rate and frequency of losses are low, the lifetime expected credit
loss allowance as at June 30, 2024 is shown in the table below. The Company's
maximum exposure to credit risk is limited to the carrying amount of financial
assets recognized as at June 30, 2024 and June 30, 2023 summarized below:
June 30, December 31, 2023
2024
$
$
Classes of financial assets - carrying amounts
Cash and cash equivalents 1,218 2,981
Restricted cash 152 157
Accounts receivable, net of credit loss allowance 238 326
1,608 3,464
The aging of the Company's accounts receivable is as follows:
June 30, December 31, 2023
2024
$
$
Trade accounts receivable, net of credit loss
allowance
Current 212 231
Past due 1 to 30 days - 39
Past due 31 to 60 days 20 54
232 324
Other receivables 6 2
238 326
The change in the Company's credit loss allowance for provision is as follows:
June 30, December 31, 2023
2024
$
$
Balance - beginning of period 903 864
Credit loss expense - net of reversals - 9
Balance - end of period 903 903
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 Dollar ("US$"), Great British Pound ("GBP"), Barbadian Dollar, and
Swiss Franc against the Canadian dollar. Foreign exchange risk arises from
financial assets and liabilities denominated in currencies other than the
functional currency of the respective entities. The Company's primary risk is
associated with fluctuations between the US$ 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, 2024, including cash, accounts receivables,
accounts payable and other liabilities denominated in US$, and GBP would
result in an increase or decrease of approximately $151 (June 30, 2023 - $261)
in the unaudited condensed consolidated interim statements of loss and
comprehensive loss for the six months ended June 30, 2024.
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.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its
obligations as they fall due. The Company's objective is to ensure 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, Note 10 and Note 14, the Company has
the following contractual financial liabilities as at June 30, 2024:
Carrying amount Contractual cash flows Less than one year More than one year
$ $ $ $
Financial liabilities
Accounts payable and other liabilities 3,440 3,440 3,440 -
3,440 3,440 3,440 -
17. Cost of goods sold
For the six months ended June 30,
2024 2023
$ $
Inventory - Note 5 318 157
Inventory write-off - Note 5 - 9
Depreciation - Note 7 12 11
330 177
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,
2024 2023
$ $
Salaries and benefits 3,621 2,909
Professional fees, contractors and consultants 2,333 2,985
Clinical trial costs 833 148
Share based payment 486 417
Office and lab costs 371 676
Depreciation and amortization 272 294
Technology costs 258 352
Travel and entertainment 113 325
Delivery and logistics 39 48
Advertising and promotion 33 127
8,359 8,281
19. Supplementary cash flow information
For the six months ended June 30,
2024 2023
Changes in non-cash working capital items
Accounts and other receivables 90 84
Inventory (262) 153
Prepaid expenses and deposits (105) (60)
Accounts payable and other liabilities 296 (1,272)
19 (1,095)
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
40.1% of the issued common shares of the Company as at June 30, 2024 (June 30,
2023 - 55.6%).
On May 9, 2024, as part of the Company's finance raise, 1,825,650 Common
Shares and 912,825 warrants were issued to the controlling shareholder.
21. Capital management
The Company's objectives when managing capital are to ensure sufficient
liquidity for operations and adequate funding for growth and capital
expenditures while maintaining an efficient balance between debt and equity.
The Company's capital consists of items included in shareholders' equity, debt
facilities net of cash and restricted cash.
In order to facilitate the management of capital, the Company prepares annual
expenditure budgets that are updated as necessary and dependent on various
factors, including successful deployment of capital and industry conditions.
The annual budgets are approved by the Board of Directors. The Company is not
subject to any externally imposed capital requirements.
Management believes that existing cash resources, together with cash generated
through operations and funds raised through public or private equity and/or
debt financings, will generate sufficient liquidity to meet operating cash
requirements for at least the next twelve months.
22. Subsequent events
Subsequent to June 30, 2024, the following transactions had occurred:
1. On September 11, 2024 the Company's controlling shareholder advanced
$285 as unsecured, non-interest-bearing with no specific terms of repayment
related party loan.
2. On September 23, 2024, the Company has agreed to sell 22,222,222 common
shares for $5,000 at a price of $0.225 (GBP0.125). The closing of the
transaction is expected to be on or before November 8, 2024.
3. As of September 27, 2024, the Company's controlling shareholder has
agreed to provide the company $400 as unsecured, non-interest-bearing with no
specific terms of repayment related party loan by the end of September.
1 (#_ftnref1) Surgical Procedure Volumes in UK from 2021-2029. Life Science
Intelligence; 2023 Jan. Volume 23.
2 (#_ftnref2) Hospital Admitted Patient Care Activity, 2011-22. Secondary
Care Analytical Team, NHS Digital. Health and Social Care Information Centre.
22 Sep 2022. (link
(https://digital.nhs.uk/data-and-information/publications/statistical/hospital-admitted-patient-care-activity/2021-22)
)
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