Edmonton, Alberta, Canada
August 15, 2012
Innovotech Inc. (TSX VENTURE:IOT) announced its audited financial and operational results for the quarter ended June 30, 2012.
Highlights:
-- Health Canada approval of InnovoSCEPT products
-- Hospital for Sick Children clinical trial funding extended
-- Advances in Agress and AgreGuard
-- Private placement closed
In April 2012 Health Canada approved Innovotech's two (2) InnovoSCEPT antimicrobial susceptibility tests for sale in Canada, an important step in the improved treatment of chronic bacterial infections in humans. With these two tests and bioFILM PA, Innovotech now is able to offer doctors better guidance for the selection of antibiotics in treating all chronic human bacterial infections, a substantial advancement in improving patient lives and reducing costs to healthcare systems says Ken Boutilier, President of Innovotech. "Furthermore the Company secured continued funding from the Industrial Research Assistance Program (IRAP) of the National Research Council until January 2013, for the 5-site clinical trial in cystic fibrosis biofilm lung infections led by the Hospital for Sick Children."
Development work during the period has made advancements for Innovotech's Agress silver based agricultural seed treatment product as well as within the silver based AgreGuard family of products.
In the case of Agress key studies required for regulatory approval have been performed that will hasten the outcome of the regulatory process and subsequent entry of this effective, environmentally friendly and economic seed treatment into the market. Within the AgreGuard family one potential product has been identified that demonstrates many advantages as an antimicrobial wound dressing component or device coating, compared to existing products. This opens new, potentially significant market segments for Innovotech's technology and has sparked interest from several industry participants.
During the second quarter, Innovotech received final acceptance from the TSX Venture Exchange for a non-brokered private placement. The transaction provided the Company with over $520,000 to improve its cash reserves.
Financial Summary
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Three-month Three-month Six-month Six-month
period ended period ended period ended period ended
($) June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011
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Revenues 129,834 138,612 302,829 431,457
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G&A 248,712 272,787 546,698 554,323
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R&D 315,975 227,566 553,694 507,259
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Net loss (445,059) (345,287) (840,053) (653,850)
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Share Price - - .37 .72
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Cash position - - 409,185 671,905
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Revenues
In the three-month period ended June 30, 2012, total revenues were $129,834 (2011 - $138,612; 2010 - $408,288). This included contract research revenue of $111,989 (2011 - $115,287; 2010 - $383,023) and product sales of $17,845 (2011 - $23,325; 2010 - $25,265). Product development of former significant clients has continued the slow pace established in 2011 and has resulted in a continuation of reduced contract research revenue in the period. Increased marketing efforts to recruit new clients are in full progress. Indications are that activities such as the Biofilm Workshop that Innovotech hosted in the spring for FDA personnel and potential clients will bear fruit. Slowed growth of product sales was due to delays in manufacturing of InnovoSCEPT veterinary tests during the period. The company anticipates revenue to follow later in the fiscal year. In the six-month period ended June 30, 2012, total revenues were $302,829 (2011 - $431,457; 2010 - $862,658).
General and Administrative Expense
In the three-month period ended June 30, 2012, general and administrative expense, including stock based compensation expense and allocated amortization expense, was $248,712 (2011 - $272,787). In the six-month period ended June 30, 2012, general and administrative expenses were $546,698 (2011 - $554,323). Salary inflation was balanced by a limited reduction in staffing to account for reduced Contract Research activity. The net result was a small reduction in G&A expenses.
Research and Development
In the three-month period ended June 30, 2012, research and development expense was $315,975 (2011 - $227,566). The cost was partially offset by various grants of $32,850 (2011 - $134,564). In the six-month period ended June 30, 2012, research and development expense was $553,694 (2011 - $507,259). Increased research and development costs are largely due to costs associated with the regulatory package and manufacturing processes being developed for Agress for the EPA submission; and for cost incurred in the development of the AgreGuard product for medical devices.
Liquidity and Capital Resources
At June 30 2012, the Company had $409,185 in cash compared to $459,275 at December 31, 2011. Slower than anticipated recovery of contract research revenue combined with manufacturing delays of InnovoSCEPT veterinary tests have contributed to a decrease in cash reserves. The company has taken active measures to increase contract research revenue and is in the final stages of approving the custom InnovoSCEPT tests for the veterinary market.
Innovotech's first quarter 2011 Financial Statements and Management's Discussion and Analysis will be filed on The System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com.
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