MAYNARD, Mass., March 16, 2017 /PRNewswire/ -- AquaBounty Technologies, Inc. (NASDAQ: AQB; AIM: ABTU) ("AquaBounty" or the "Company"), a biotechnology company focused on enhancing productivity in the aquaculture market and a majority-owned subsidiary of Intrexon Corporation (NYSE: XON), announces the Company's financial results for the year ended December 31, 2016.
Ronald Stotish, Chief Executive Officer of AquaBounty, stated: "This was a highly successful year in which we continued to advance both our regulatory and commercial goals. We achieved a major milestone in receiving regulatory approval from Health Canada, making it the second major regulatory organization, alongside the FDA, to approve the production, sale, and consumption of our AquAdvantage Salmon. We also took steps towards progressing our commercial plan by purchasing a salmon hatchery site in Canada for broodstock expansion and egg production. We now eagerly look forward to working to bring our nutritious, safe, and more sustainably produced salmon to consumers."
Chairman's Statement:Following the historic regulatory clearance by the United States Food and Drug Administration ("FDA") in 2015 of AAS, the Company received a second approval for AAS, in Canada, in May 2016. Based on these events, AquaBounty began the initial stages of its plans to commercialize AAS and to further its progress with regulators in several other countries. The strong support and financial backing of the Company's majority shareholder, Intrexon, have been crucial to this endeavour and have put AquaBounty on a solid footing.
Regulatory ApprovalHealth Canada, the department of the government of Canada with responsibility for national public health, conducted a comprehensive assessment of AAS according to the Codex Alimentarius Guideline for the Conduct of Food Safety Assessment of Foods Derived from Recombinant-DNA Animals. The Health Canada review concluded that AAS does not raise concerns related to food safety. Health Canada also noted its opinion that fillets derived from AAS are as safe and nutritious as fillets from currently available farmed Atlantic salmon.
Commercial DevelopmentsIn July, the purchase of the former Atlantic Sea Smolt hatchery in Rollo Bay West on Prince Edward Island was completed for the purpose of broodstock expansion to increase production of Atlantic salmon eggs. Renovations to the site are proceeding, and, when completed, it is expected to provide sufficient egg production to meet the Company's requirements for the next several years.
The plan to expand commercial development outside North America was advanced with approval for the importation of AAS eggs for local field trials in Argentina and Brazil. These trials commenced in April and, although the timescales involved in this are outside of AquaBounty's control, the Company is encouraged by the progress that has been made to date.
In Panama, the Company received approval for the commercial production and export of fish produced from its most recent batch of AAS eggs delivered to the farm in 2016. These fish are expected to be ready for harvest and export to North America in early 2018. AquaBounty continues to seek full regulatory approval for the production and local sale of AAS in Panama, but we do not currently have a timescale for receipt of this approval.
Additionally, the Company has begun an active search in both the United States and Canada for either an existing land-based recirculating aquaculture system facility or a site on which to build a new facility for the commercial production of AAS.
Update on Legal ActionsDuring 2016, a coalition of Non-Governmental Organizations ("NGOs") filed a complaint against the FDA for the approval of AAS in the United States, claiming that the agency did not have the authority to regulate genetically modified animals. The Company believes this action, which remains ongoing, lacks legal merit, but it may have the effect of prolonging the commercialization process in the United States.
In Canada, a legal challenge was filed in 2014 by a group of NGOs against the decision by the Ministers of Environment and Health (the "Ministers") to allow production of AAS in Canada for commercial use. In December 2015, the Federal Court in Canada ruled that the decision of the Ministers was reasonable and dismissed the entire application brought before it. The petitioners then appealed the Court's ruling, but the Federal Court of Appeal in Canada dismissed the appeal in October 2016.
Congressional DevelopmentsIn January 2016, as part of the 2016 Omnibus Appropriations Act (the "Act") passed by the United States Congress, an amendment was added that directed the FDA to issue final guidance for the labeling of AAS. Given this directive, the FDA issued an Import Alert on AAS and stated that a temporary hold was being implemented to comply with language in the Act, which was extended beyond its initial end date to April 2017 by a continuing resolution. The temporary hold has no current impact on the Company's operations as AquaBounty is not currently importing AAS into the United States. At this time, the Company cannot predict when or if the Import Alert might be lifted or when the FDA might finalize its labeling guidance.
FundingIn February 2016, AquaBounty obtained an unsecured, convertible bridge loan of US$10.0 million from Intrexon to cover the Company's immediate working capital requirements. In December, Intrexon converted the US$10.4 million of outstanding principal and accrued interest on this loan into common shares. The Company also executed a share purchase agreement with Intrexon in November 2016 for US$25.0 million in new equity funding. This transaction closed, post period, in January 2017 and was accompanied by a distribution of AquaBounty common shares by Intrexon to its shareholders. In connection with the listing of the Company's common shares on NASDAQ, the Company effected a 1-for-30 reverse share split in January 2017.
Financial ReviewOperating expenses for the year amounted to US$8.1 million (2015: US$7.0 million). The increase was due primarily to headcount additions in the Company's research group and legal fees for the SEC registration and FDA legal challenge. Sales and marketing expenses were US$0.9 million (2015: US$1.0 million); research and development expenses were US$3.4 million (2015: US$3.3 million); and general and administrative expenses were US$3.8 million (2015: US$2.7 million). Including US$0.4 million of non-cash interest expense for the convertible loan, the net loss for the year increased to US$8.5 million (2015: US$7.0 million), and cash used for the year, net of new equity received, was US$8.0 million (2015: US$6.8 million). Funds available at the year-end amounted to US$3.3 million, not including the US$25.0 million of new equity funding that closed in January 2017.
OutlookThe Board continues to carefully consider its commercial options and expects to make meaningful progress with the implementation of the Company's near-term development plan in 2017. With the support of Intrexon, the recent infusion of new funding allows the Company to move forward with the completion of renovations at Rollo Bay and the construction of a pilot-scale grow-out unit for commercial production. It is expected that this will be followed by the establishment of a site suitable for the larger scale commercial grow-out of AAS in North America. As a result, whilst there remains uncertainty over the timing of commercialization, the Board remains confident in the market need for AAS as a sustainable alternative to imported sea cage produced Atlantic salmon and looks forward to updating shareholders on progress in due course.
Forward-Looking Statements:This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact contained in this press release are forward-looking statements, including statements regarding management's expectations for future financial and operational performance and operating expenditures, expected growth, and business outlook; the nature of and progress toward the Company's commercialization plan; the future introduction of AAS to consumers; the countries in which the Company may obtain regulatory approval and the progress toward such approvals; any continued backing of the Company by Intrexon; the volume of eggs the Company may be able to produce; the timeline for production of saleable fish; the expected advantages of land-based systems over sea cage production; the validity and impact of legal actions; the potential for lifting of the FDA Import Alert and the issuance of labeling guidance; the anticipated progress to be made by the Company during 2017; the completion of the Rollo Bay renovations and the construction of a pilot-scale grow-out unit; and the establishment of a larger-scale grow-out facility. Forward-looking statements may be identified with words such as "will," "may," "expect," "plan," "anticipate," "upcoming," "believe," "estimate", or similar terminology, and the negative of these terms. Forward-looking statements are not promises or guarantees of future performance, and are subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. Forward-looking statements speak only as of the date hereof, and, except as required by law, we undertake no obligation to update or revise these forward-looking statements. For additional information regarding these and other risks faced by us, refer to our public filings with the Securities and Exchange Commission ("SEC"), available on the Investors section of our website at www.aquabounty.com and on the SEC's website at www.sec.gov.
This announcement contains inside information. The person responsible for arranging for the release of this announcement on behalf of the Company is David Frank, Chief Financial Officer.
Consolidated balance sheetAs ofDecember 31,20162015AssetsCurrent assets:Cash and cash equivalents$ 3,324,609$ 1,313,421Certificate of deposit10,66610,339Other receivables164,74341,897Prepaid expenses and other current assets72,983109,898Total current assets3,573,0011,475,555Property, plant and equipment, net1,723,707741,340Definite-lived intangible assets, net198,698206,381Indefinite-lived intangible assets191,800191,800Other assets21,62821,628Total assets$ 5,708,834$ 2,636,704Liabilities and stockholders' equity (deficit)Current liabilities:Accounts payable and accrued liabilities$ 1,017,851$ 621,909Current debt17,913-0Total current liabilities1,035,764621,909Long-term debt2,645,0152,070,366Total liabilities3,680,7792,692,275Commitments and contingenciesStockholders' equity (deficit):Common stock, $0.001 par value, 200,000,000 shares authorized;6,463,935 (2015: 5,247,604) shares outstanding6,4645,248Additional paid-in capital101,581,72490,968,813Accumulated other comprehensive loss(286,272)(226,432)Accumulated deficit(99,273,861)(90,803,200)Total stockholders' equity (deficit)2,028,055(55,571)Total liabilities and stockholders' equity (deficit)$ 5,708,834$ 2,636,704
Consolidated statements of operations and comprehensive lossYears ended December 31,201620152014Costs and expensesSales and marketing$ 860,365$ 993,706
$ 729,655Research and development3,429,4003,338,411
3,212,908General and administrative3,775,2892,696,369
3,192,716Total costs and expenses8,065,0547,028,486
(7,135,279)Other income (expense)Interest expense(402,554)(10)
(62)Gain on disposal of equipment2,8611,912
-Other income (expense), net(5,914)(4,928)
7,966Total other income (expense)(405,607)(3,026)
7,904Net loss$ (8,470,661)$ (7,031,512)
$ (7,127,375)Other comprehensive income (loss):Foreign currency translation gain (loss)(59,840)228,740
111,138Total other comprehensive income (loss)(59,840)228,740
111,138Comprehensive loss $ (8,530,501)$ (6,802,772)
$ (7,016,237)Basic and diluted net loss per share$ (1.60)$ (1.40)
$ (1.52)Weighted average number of common shares -basic and diluted5,303,1135,037,367
Consolidated statements of changes in stockholders' equity (deficit) Common
deficitTotalBalance at December 31, 2013
$ 496,892Net loss(7,127,375)
(7,127,375)Other comprehensive income111,138111,138Issuance of common stock, net of
9,742,8519,743,486Exercise of options for common
12,29612,300Share based compensation
272,936272,938Balance at December 31, 2014
$ 3,509,379Net loss(7,031,512)
(7,031,512)Other comprehensive income228,740228,740Issuance of common stock, net of
2,999,5753,000,000Share based compensation
237,817237,822Balance at December 31, 2015
$ (55,571)Net loss(8,470,661)(8,470,661)Other comprehensive loss(59,840)(59,840)Conversion of debt and accrued
interest to common stock1,212,9081,21310,394,62010,395,833Cashless exercise of options for
common stock524---Share based compensation2,8993218,291218,294Balance at December 31, 20166,463,935$ 6,464$ 101,581,724$ (286,272)$ (99,273,861)$ 2,028,055
Consolidated statements of cash flowsYears ended December 31,201620152014Operating activitiesNet loss$ (8,470,661)$ (7,031,512)
$ (7,127,375)Adjustment to reconcile net loss to net cash used inoperating activities:Depreciation and amortization153,996105,952
272,938Gain on disposal of equipment(2,861)(1,912)
-Non-cash interest expense395,833-
-Changes in operating assets and liabilities:Other receivables(121,640)(21,195)
48,054Prepaid expenses and other assets38,054(12,421)
117,876Accounts payable and accrued liabilities340,092(25,032)
(13,135)Net cash used in operating activities(7,448,893)(6,748,298)
(6,560,900)Investing activitiesPurchase of property, plant and equipment(934,495)(74,113)
(116,911)Deposits on equipment purchases(156,982)-
-Proceeds from sale of equipment23,844-
-Payment of patent costs(5,664)(30,372)
(35,340)Net cash used in investing activities(1,073,297)(104,485)
(152,251)Financing activitiesProceeds from issuance of debt547,14244,004
268,491Repayment of term debt(6,268)-
-Proceeds from the issuance of convertible debt10,000,000-
-Proceeds from the issuance of common stock, net-3,000,000
9,743,486Proceeds from exercise of stock options--
12,300Net cash provided by financing activities10,540,8743,044,004
10,024,277Effect of exchange rate changes on cash and cash equivalents(7,496)(41,062)
(23,613)Net change in cash and cash equivalents2,011,188(3,849,841)
3,287,513Cash and cash equivalents at beginning of period1,313,4215,163,262
1,875,749Cash and cash equivalents at end of period$ 3,324,609$ 1,313,421
$ 5,163,262Supplemental disclosure of cash flow information and non-cash transactions:Interest paid in cash$ 6,721$ 10
$ 62Conversion of convertible debt and accrued interest to common stock$ 10,395,833$ -
$ -Acquisition of equipment through vendor payable$ 50,132$ -
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|SOURCE AquaBounty Technologies, Inc.|
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