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 2nd
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
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:
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Ondine Biomedical
Inc.
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|
|
Carolyn Cross,
CEO
|
+1 (604)
665 0555
|
|
|
|
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Singer Capital Markets (Nominated Adviser and Joint Broker)
|
|
|
Phil Davies, Sam
Butcher
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+44
(0)20 7496 3000
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RBC Capital Markets (Joint
Broker)
|
|
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Rupert Walford, Kathryn
Deegan
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+44
(0)20 7653 4000
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Vane Percy & Roberts (Media Contact)
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Simon Vane Percy, Amanda
Bernard
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+44
(0)77 1000 5910
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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] and over
200,000 annual intensive care unit (ICU) admissions.[2]
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 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
|
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.
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,
2024
$
|
December
31, 2023
$
|
|
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,
2024
$
|
December
31, 2023
$
|
|
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,
2024
$
|
December
31, 2023
$
|
|
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,
2024
$
|
December
31, 2023
$
|
|
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,
2024
$
|
December
31, 2023
$
|
|
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.