Change of fiscal year-end
To better align its financial reporting with the calendar year and that of its industry peers, during the six months ended December 31, 2019, the Company changed its fiscal year-end to December 31, from June 30. The Company’s transition year is the six months ended December 31, 2019, and the comparative period is the twelve months ended June 30, 2019. The variation in the duration of the comparative must be considered in evaluating the financial information noted below.
Financial Results for the six months ended December 31, 2019
The Company recorded a net loss after tax of $3,995,070 (loss per share of $0.02) for the six months ended December 31, 2019 compared to a net loss of $7,656,520 (loss per share of $0.08) for the year ended June 30, 2019.
Revenue and Cost of Sales
For the six months ended December 31, 2019, the Company recorded revenue of $266,747 and cost of sales of $93,138 compared to revenue of $165,031 and cost of sales of $75,487 for the year ended June 30, 2019. The increase in revenue was mainly due the completion of Phase II with the Global Pharma Partner (see “Business Highlights”, above). Services for Phase II commenced in August 2019 and was completed in December 2019. Cost of sales mainly comprised of labour and material costs.
Operating expenses for the six months December 31, 2019 was $4,511,814 compared to $8,327,059 for the year ended June 30, 2019. The most significant contributing factors to the increase was a result of the acquisition of Xellera Therapeutics Limited, increases in research and development expenses and general and administrative expense. The increase was offset by the decrease of share-based compensation expenses, marketing expenses and intellectual property expenses.
Financial Results for the Three Months Ended December 31, 2019
The Company recorded a net loss after tax of $2,539,336 (loss per share of $0.02) in the three months ended December 31, 2019 compared to $1,932,758 (loss per share of $0.03) in the three months ended December 31, 2018. The increase in the net loss was due primarily to an increase in research and development expenses, general and administrative expenses in the area of occupancy costs, while being offset by the increase in revenue.
Operating expenses for the three months ended December 31, 2019 was $2,643,509 as compared to $1,999,010 for the three months ended December 31, 2018. The increase was primarily related to increases in research and development expense and general and administrative expenses while partially offset by the decrease in share-based compensation expenses. Research and development expenses increased as the Company enters into more commercial agreements and partnership research and development projects. The increase in general and administrative expenses was a result of the expansion of the lab and office, as well as the build-out of the GMP facility. Share-based compensation expenses decreased due to some of the restricted share units and options being fully vested.
Liquidity and Outstanding Share Capital
As at December 31, 2019, the Company had cash and cash equivalents of $12,167,583 and pledged bank deposits of $5,004,000. As at March 11, 2020, there were 188,640,774 common shares issued and outstanding, and 8,798,373 of common shares issuable upon the exercise of outstanding stock options at an exercise price range of $0.32 to $0.50 per share and 176,251 of the issuance of vested restricted share units.
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