Financial Results for the First Quarter of 2020
The Company recorded net loss after tax of $1,458,181 (loss per share of $0.01) for the three months ended September 30, 2019 (“Q1 2020”) compared to a net loss of $1,949,801 (loss per share of $0.02) for the three months ended September 30, 2018 (“Q1 2019”). The decrease in the net loss was due to the revenue generated in Q1 2020 and increase in government grants, along with the decrease in share-based compensation expenses and marketing expenses as compared to Q1 2019. The decrease was offset by increases in research and development expenses and general and administrative expenses as compared to Q1 2019.
Revenue and Cost of Sales
For the three months ended September 30, 2019, the Company recorded revenue of $172,812 and cost of sales of $71,963 compared to revenue and cost of sales of $nil for the three months ended September 30, 2018. The increase was due to the increased efforts in pursuing commercial agreements. The revenue balance was comprised of several commercial agreements, including a commercial agreement with the Global Pharma Partner, which made up $147,218 of the revenue balance. Additional revenue will be recognized in the coming quarters as the commercial contracts signed in Q1 2020 are completed. Cost of sales comprised of direct labour costs, direct material costs and royalties.
Operating expenses for the three months ended September 30, 2019 amounted to $1,870,749 as compared to $1,975,684 for the three months ended September 30, 2018. The decrease in operating expenses was due to the decrease in share-based compensation expenses and marketing expenses, while offset by increase in research and development expenses and general and administrative expenses. Share-based compensation expenses decreased from $623,323 in Q1 2019 to $157,180 in Q1 2020 as a result of the majority of the restricted share units and options being vested and recognized during the year ended June 30, 2019. Marketing expenses decreased from $240,465 in Q1 2019 to $150,660 in Q1 2020 due to the one-time marketing expense incurred in Q1 2019. Research and development expenses increased from $359,277 in Q1 2019 to $604,052 in Q1 2020 due to the increase in personnel costs as a result of the Acquisition. The increase in general and administrative from $547,204 in Q1 2019 to $698,989 in Q1 2020 was mainly due to the increase in personnel costs and occupancy costs, while offset by a decrease in professional and regulatory fees.
Liquidity and Outstanding Share Capital
As at September 30, 2019, the Company had cash and bank balances of $19,755,643. As at November 19, 2019, there were 188,542,024 common shares issued and outstanding, and 7,091,373 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 275,000 of the issuance of vested restricted share units.
In connection with the acquisition of Xellera Therapeutics Limited that was completed on June 28, 2019, the Company issued pre-paid warrants which automatically convert into common shares upon obtaining clearance from the TSX-V. On October 10, 2019, clearance was obtained and 25,731,785 common shares were issued pursuant to the Warrant Agreement dated June 28, 2019.
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