Source: Zomedica Pharmaceuticals Corp. 8/8/19
Zomedica Pharmaceuticals Corp. (NYSE American:ZOM) (TSX-V:
ZOM)
(“Zomedica” or “Company”), a veterinary diagnostic and pharmaceutical
company, today reported consolidated financial results for the second
quarter ended June 30, 2019. Amounts, unless specified otherwise, are
expressed in U.S. dollars and presented under accounting principles
generally accepted in the United States of America (“U.S. GAAP”).
“We
have made significant progress in the first half of 2019 with our
development of TRUFORMA™, Zomedica’s point-of-care biosensor platform,
as well as our digital data platform and other product lines,” said
Gerald Solensky Jr., Chairman and CEO of Zomedica. “We believe our
continued progress on our diagnostic platforms and therapeutic
candidates will enable us to deliver products that make a real
difference for clinical veterinarians and the care they provide to our
companion animals.”
Corporate Highlights
- In
May 2019, Zomedica entered into subscription agreements to sell
$12,000,000 of its Series 1 Preferred Shares to an accredited investor
in a private placement at a purchase price of $1,000,000 per Series 1
Preferred Share; $5,000,000 of the purchase price was paid in May 2019
and $7,000,000 was paid in June 2019. The preferred shares do not have
voting rights except to the extent required by applicable law and are
not convertible into the Company’s common shares. Holders of the
preferred shares will not be entitled to dividends but, in lieu thereof,
will receive Net Sales Payments (annual payments equal to 9 percent of
net sales of the Company) until such time as the holders have received
total Net Sales Payments equal to 9 times the aggregate stated value of
the outstanding preferred shares.
- In May 2019, the Company
announced the achievement of beta finalization of the TRUFORMA™
instrument design, and the completion of feasibility testing of the
first assays. With the achievement of these milestones, we have
transitioned to final design and commercial production for the
instrument. Based on our development work, the initial assays have
satisfied Zomedica’s target product specification for correlation
greater than 0.95 and for dynamic range, which depending on the assay,
are as low as 9 pg/mL and greater than 500 ng/mL. Time to result during
this feasibility testing averaged less than 15 minutes utilizing canine
and feline serum samples. We expect to commence commercialization of
TRUFORMA™ and the initial assays in the first quarter of 2020.
- In
June 2019, Zomedica announced the completion of initial development
work on a blood-borne lymphoma cancer assay, designated ZM-022, intended
for use with its canine cancer liquid biopsy platform, ZM-017. The
lymphoma assay is designed to identify specific genetic abnormalities
using fluorescence in situ hybridization. The assay is being developed
for use on Zomedica’s liquid biopsy platform. Zomedica expects to
commence commercialization of the platform and initial assays in the
second half of 2020.
- In July 2019, the Company announced
development initiation of a digital customer data platform to enhance
customer experience and the Company’s diagnostic pipeline. The platform
is also intended to support veterinary teams with clinically relevant
business services, including inventory management and key performance
metrics reporting. The platform is expected to launch in the first
quarter of 2020 along with the commercialization of TRUFORMA™.
Summary Second Quarter 2019 Results
Zomedica
recorded net loss and comprehensive loss for the three and six months
ended June 30, 2019 of $2,404,427, or $0.02 per share, and $14,081,337,
or $0.13 per share, compared to a loss of $4,144,398, or $0.04 per
share, and $6,315,727, or $0.07 per share, for the three and six months
ended June 30, 2018.
Research and development expense for the
three months ended June 30, 2019 was $1,061,507 compared to $2,534,620
for the three months ended June 30, 2018, a decrease of $1,473,113 or
58%. The decrease was primarily due to the payment in the 2018 period of
an up-front licensing fee of $1,738,513 to Seraph Biosciences, Inc.
(“Seraph”) upon the execution of our development, commercialization and
exclusive distribution agreement and $333,247 of additional development
costs due to Seraph. This decrease was partially offset by a $119,030
increase in contract expenditures principally related to development of
the five assays for TRUFORMA™ in the June 2019 period, as well as a
$58,862 increase in salaries, bonus and benefits and $50,000 in
additional licensing fees upon the achievement of milestone activities
under our license and supply agreement with Celsee, Inc. (“Celsee”).
Research
and development expense for the six months ended June 30, 2019 was
$8,592,882 compared to $3,134,961 for the six months ended June 30,
2018, an increase of $5,457,921 or 174%. The increase was primarily due
to $5,000,000 of expenses recognized upon the achievement of
development milestones relating to TRUFORMA™ under our development and
supply agreement with Qorvo Biotechnologies, LLC. (“Qorvo”) and $736,841
of additional milestone expenses relating to our development of ZM-017
under our license and supply agreement with Celsee, as well as a
$123,351 increase in salaries, bonus and benefits and an increase of
$59,691 in consulting expenses. The increase was partially offset by
expenses in the 2018 period of an up-front licensing fee of $1,738,513
to Seraph upon the execution of our development, commercialization and
exclusive distribution agreement and $333,247 of additional development
fees due to Seraph.
General and administrative expense for the
three months ended June 30, 2019 was $921,446, compared to $1,248,490
for the three months ended June 30, 2018, a decrease of $327,044 or 26%.
The decrease was primarily due to $215,749 of accrued severance
payments incurred in the 2018 period to a former officer of the Company,
and the reclassification of rent expense to amortization of
right-of-use asset of $127,345.
General and administrative
expense for the six months ended June 30, 2019 was $4,152,709, compared
to $2,408,662 for the six months ended June 30, 2018, an increase of
$1,744,047 or 72%. The increase was primarily due to a $2,070,466
increase in salaries, bonus and benefits, which included share–based
compensation expense of $2,341,104. After adjusting for the share-based
compensation expense, general and administrative expense decreased
$597,057 or 25% primarily as a result of a $270,638 decrease in
salaries, bonus and benefits, and the reclassification of rent expense
to amortization of right-of-use asset of $254,690.
Professional
fees for the three months ended June 30, 2019 were $211,520 compared to
$336,455 for the three months ended June 30, 2018, a decrease of
$124,935 or 37%. The decrease was due to a reduction in legal and
consulting fees associated with SEC and related filings.
Professional
fees for the six months ended June 30, 2019 were $950,914 compared to
$708,402 for the six months ended June 30, 2018, an increase of $242,512
or 34%. The increase was primarily due to increased expenses related to
the filing of our S-3 resale registration statement and our S-8
registration statement.
Liquidity and Outstanding Share Capital
Zomedica
had cash and cash equivalents of $5,822,148 as of June 30, 2019,
compared to $1,940,265 as of December 31, 2018. The increase in cash
during the six months ended June 30, 2019 resulted primarily from the
financing activities described below, partially offset by cashflows used
in operating and investing activities as discussed below.
Net
cash used in operating activities for the three months ended June 30,
2019 was $8,436,011, compared to $2,740,495 for the three months ended
June 30, 2018, an increase of $5,695,516 or 208%. The largest use of
cash was the payment of $5,000,000 upon the achievement of development
milestones relating to TRUFORMA™ under our development and supply
agreement with Qorvo. Other increased uses of cash included an increase
in salaries, bonus and benefits as we had 25 employees at June 30, 2019
compared to 20 employees at June 30, 2018. Additional uses of cash
include costs associated with deposits on research and development
projects, regulatory costs, insurance and professional fees, and
reporting costs associated with being subject to U.S. securities law
reporting obligations and pre-marketing activities.
Net cash
used in operating activities for the six months ended June 30, 2019 was
$11,017,287, compared to $4,448,289 for the three months ended June 30,
2018, an increase of $6,568,998 or 148%. The largest use of cash was the
payment of $5,000,000 upon the achievement of development milestones
relating to TRUFORMA™ under our development and supply agreement with
Qorvo. Other increased uses of cash included an increase in salaries,
bonus and benefits as we had 25 employees at June 30, 2019 compared to
20 employees at June 30, 2018. Additional uses of cash include costs
associated with deposits on research and development projects,
regulatory costs, insurance and professional fees, and reporting costs
associated with being subject to U.S. securities law reporting
obligations and pre-marketing activities.
Net cash used in
operating activities for the three and six months ended June 30, 2018
was $2,740,495, and $4,448,289, which resulted primarily from our net
loss of $4,144,398 and $6,315,727, respectively. The largest use of
cash stemmed from an increase in salaries, bonus and benefits. Other
significant uses of cash included the Seraph up-front licensing fee cash
payment of $500,000, increased regulatory and insurance expenses
related to our listing on the NYSE American, and increased travel and
accommodation expenses related to business development and pre-marketing
activities.
Net cash from financing activities for the three
months ended June 30, 2019 was $11,966,905, compared to $4,009,212 for
the three months ended June 30, 2018 an increase of $7,957,693 or 198%.
Cash from financing activities resulted primarily from the $12,000,000
private offering of our preferred shares, net of financing costs.
Net
cash from financing activities for the six months ended June 30, 2019
was $14,973,733, compared to $5,416,998 for the six months ended June
30, 2018 an increase of $9,556,735 or 176%. Cash from financing
activities resulted from the $12,000,000 private offering of our
preferred shares and $3,000,000 from the underwritten public offering of
our common stock, net of financing costs, and $600,000 from the
exercise of stock options.
Net cash from financing activities
for the three and six months ended June 30, 2018 was $4,009,212 and
$5,416,998, which was due to cash proceeds from financing and the
exercise of stock options.
Net cash used in investing activities
for the three months ended June 30, 2019 was $5,477, compared to
$124,474 for the three months ended June 30, 2018, a decrease of
$118,997 or 96%. Net cash used in investing activities during the 2018
period included the build-out of office space, and purchases of lab and
office equipment for our new Ann Arbor facility, which was completed in
the third quarter of 2018.
Net cash used in investing activities
for the six months ended June 30, 2019 was $74,563, compared to
$137,693 for the six months ended June 30, 2018, a decrease of $63,130
or 46%. Net cash used in investing activities during the 2018 period
included the build-out of office space, and purchases of lab and office
equipment for our new Ann Arbor facility, which was completed in the
third quarter of 2018.
As of June 30, 2019, Zomedica had 20
Series 1 preferred shares authorized with 12 Series 1 preferred shares
issued and outstanding. As of August 8, 2019, Zomedica had 12 preferred
shares issued and outstanding.
As of June 30, 2019, Zomedica had
an unlimited number of authorized common shares with 108,038,398 common
shares issued and outstanding.
As of August 8, 2019, Zomedica had
108,038,398 common shares issued and outstanding.
As of June 30, 2019 and December 31, 2018, Zomedica had shareholders’ equity of $7,682,604 and $3,657,000, respectively.
For complete financial results, please see Zomedica’s filings on EDGAR and SEDAR or visit the Zomedica website at
www.ZOMEDICA.com.
About Zomedica
Based in Ann Arbor, Michigan, Zomedica (NYSE American:ZOM) (TSX-V:
ZOM)
is a veterinary diagnostic and pharmaceutical and company creating
products for companion animals (canine, feline and equine) by focusing
on the unmet needs of clinical veterinarians. Zomedica’s product
portfolio includes novel diagnostics and innovative therapeutics that
emphasize patient health and practice health. With a team that includes
clinical veterinary professionals, it is Zomedica’s mission to give
veterinarians the opportunity to lower costs, increase productivity, and
grow revenue while better serving the animals in their care. For more
information, visit
www.ZOMEDICA.com.
