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Exhibit 99.1
Condensed Interim Consolidated Financial Statements
As at MARCH 31, 2022 and for the three-month periodS ended March 31, 2022 and 2021
(In thousands of US dollars)
(Unaudited)
Condensed Interim Consolidated Statements of Financial Position
(In thousands of US dollars)
(Unaudited)
| | | March 31, 2022 | | | December 31, 2021 | |
| | | | $ | | | | $ | |
| ASSETS | | | | | | | | |
| Current assets | | | | | | | | |
| Cash and cash equivalents | | | 63,596 | | | | 65,300 | |
| Trade and other receivables (note 4) | | | 693 | | | | 1,314 | |
| Inventory | | | 278 | | | | 73 | |
| Income taxes receivable | | | 1,480 | | | | 2,361 | |
| Prepaid expenses and other current assets (note 5) | | | 1,050 | | | | 1,772 | |
| Total current assets | | | 67,097 | | | | 70,820 | |
| Restricted cash equivalents | | | 330 | | | | 335 | |
| Right of use assets | | | 153 | | | | 150 | |
| Property, plant and equipment | | | 45 | | | | 42 | |
| Other non-current assets | | | 130 | | | | — | |
| Identifiable intangible assets | | | 612 | | | | 625 | |
| Goodwill | | | 7,977 | | | | 8,130 | |
| Total Assets | | | 76,344 | | | | 80,102 | |
| LIABILITIES | | | | | | | | |
| Current liabilities | | | | | | | | |
| Payables and accrued liabilities (note 6) | | | 2,795 | | | | 2,672 | |
| Current portion of provisions | | | 34 | | | | 34 | |
| Income taxes payable | | | 112 | | | | 115 | |
| Current portion of deferred revenues (note 3) | | | 2,582 | | | | 4,815 | |
| Current portion of lease liabilities | | | 143 | | | | 130 | |
| Total current liabilities | | | 5,666 | | | | 7,766 | |
| Deferred revenues (note 3) | | | 2,783 | | | | 1,493 | |
| Deferred gain | | | 96 | | | | 98 | |
| Lease liabilities | | | 22 | | | | 31 | |
| Employee future benefits (note 7) | | | 14,386 | | | | 17,485 | |
| Provisions | | | 232 | | | | 243 | |
| Total liabilities | | | 23,185 | | | | 27,116 | |
| SHAREHOLDERS’ EQUITY | | | | | | | | |
| Share capital (note 8) | | | 293,410 | | | | 293,410 | |
| Warrants (note 8) | | | 5,085 | | | | 5,085 | |
| Other capital (note 8) | | | 89,815 | | | | 89,788 | |
| Deficit | | | (334,510 | ) | | | (334,619 | ) |
| Accumulated other comprehensive loss (“AOCI”) | | | (641 | ) | | | (678 | ) |
| Total shareholders’ equity | | | 53,159 | | | | 52,986 | |
| Total liabilities and shareholders’ equity | | | 76,344 | | | | 80,102 | |
Commitments (note 13)
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
Approved by the Board of Directors
| /s/ Carolyn Egbert | | /s/ Dennis Turpin |
Carolyn Egbert Chair of the Board | | Dennis Turpin Director |
Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
For the three months ended march 31, 2022 and 2021
(In thousands of US dollars, except share data, unaudited)
| | | Common shares (number of) | | | Share capital | | | Warrants | | | Other capital | | | Deficit | | | Accumulated other comprehensive income | | | Total | |
| | | | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
| Balance - January 1, 2022 | | | 121,397,007 | | | | 293,410 | | | | 5,085 | | | | 89,788 | | | | (334,619 | ) | | | (678 | ) | | | 52,986 | |
| Net loss | | | — | | | | — | | | | — | | | | — | | | | (2,640 | ) | | | — | | | | (2,640 | ) |
| Other comprehensive loss: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Foreign currency translation adjustments | | | — | | | | — | | | | — | | | | — | | | | — | | | | 37 | | | | 37 | |
| Actuarial gain on defined benefit plans (note 7) | | | — | | | | — | | | | — | | | | — | | | | 2,749 | | | | — | | | | 2,749 | |
| Comprehensive income | | | — | | | | — | | | | — | | | | — | | | | 109 | | | | 37 | | | | 146 | |
| Share-based compensation costs | | | — | | | | — | | | | — | | | | 27 | | | | — | | | | — | | | | 27 | |
| Balance – March 31, 2022 | | | 121,397,007 | | | | 293,410 | | | | 5,085 | | | | 89,815 | | | | (334,510 | ) | | | (641 | ) | | | 53,159 | |
| | | Common shares (number of) | | | Share capital | | | Warrants | | | Other capital | | | Deficit | | | Accumulated other comprehensive income | | | Total | |
| | | | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
| Balance - January 1, 2021 | | | 62,678,613 | | | | 235,008 | | | | 12,402 | | | | 89,505 | | | | (322,659 | ) | | | (1,045 | ) | | | 13,211 | |
| Net loss (as restated note 1) | | | — | | | | — | | | | — | | | | — | | | | (1,458 | ) | | | — | | | | (1,458 | ) |
| Other comprehensive loss: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Foreign currency translation adjustments | | | — | | | | — | | | | — | | | | — | | | | — | | | | 547 | | | | 547 | |
| Actuarial gain on defined benefit plans | | | — | | | | — | | | | — | | | | — | | | | 882 | | | | — | | | | 882 | |
| Comprehensive loss | | | — | | | | — | | | | — | | | | — | | | | (576 | ) | | | 547 | | | | (29 | ) |
| Issuance of common shares, net of transaction costs | | | 23,586,207 | | | | 29,082 | | | | 1,897 | | | | — | | | | — | | | | — | | | | 30,979 | |
| Exercise of warrants | | | 34,888,965 | | | | 29,691 | | | | (9,704 | ) | | | | | | | — | | | | — | | | | 19,987 | |
| Share-based compensation costs | | | — | | | | — | | | | — | | | | 13 | | | | — | | | | — | | | | 13 | |
| Balance – March 31, 2021 | | | 121,153,785 | | | | 293,781 | | | | 4,595 | | | | 89,518 | | | | (323,235 | ) | | | (498 | ) | | | 64,161 | |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
Condensed Interim Consolidated Statements of Comprehensive INCOME (Loss)
For the three months ended March 31, 2022 and 2021
(In thousands of US dollars, except share and per share data)
(Unaudited)
| | | | | | | | | |
| | | Three months ended | |
| | | March 31 | |
| | | 2022 | | | 2021 | |
| | | | | | (As restated- Note 1) | |
| | | | $ | | | | $ | |
| Revenues (note 3) | | | | | | | | |
| License fees | | | 432 | | | | 524 | |
| Development services | | | 966 | | | | 1,095 | |
| Product sales | | | 57 | | | | — | |
| Royalties | | | 19 | | | | 8 | |
| Supply chain | | | 43 | | | | 41 | |
| Total revenues | | | 1,517 | | | | 1,668 | |
| Operating expenses | | | | | | | | |
| Cost of sales | | | 79 | | | | 29 | |
| Research and development expenses | | | 2,390 | | | | 1,458 | |
| General and administrative expenses | | | 1,558 | | | | 1,264 | |
| Selling expenses | | | 303 | | | | 246 | |
| Total operating expenses (note 9) | | | 4,330 | | | | 2,997 | |
| Loss from operations | | | (2,813 | ) | | | (1,329 | ) |
| Gains (loss) due to changes in foreign currency exchange rates | | | 174 | | | | (248 | ) |
| Other finance costs | | | (1 | ) | | | (10 | ) |
| Net finance income (costs) | | | 173 | | | | (258 | ) |
| Loss before income taxes | | | (2,640 | ) | | | (1,587 | ) |
| Income tax recovery | | | — | | | | 129 | |
| Net loss | | | (2,640 | ) | | | (1,458 | ) |
| Other comprehensive income (loss): | | | | | | | | |
| Items that may be reclassified subsequently to profit or loss: | | | | | | | | |
| Foreign currency translation adjustments | | | 37 | | | | 547 | |
| Items that will not be reclassified to profit or loss: | | | | | | | | |
| Actuarial gain on defined benefit plans (note 7) | | | 2,749 | | | | 882 | |
| Comprehensive income (loss) | | | 146 | | | | (29 | ) |
| Net loss per share [basic and diluted] | | | (0.02 | ) | | | (0.02 | ) |
| Weighted average number of shares outstanding (note 12): | | | | | | | | |
| Basic | | | 121,397,007 | | | | 95,444,990 | |
| Diluted | | | 121,397,007 | | | | 95,444,990 | |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
Condensed Interim Consolidated Statements of Cash Flows
For the three months ended March 31, 2022 and 2021
(In thousands of US dollars)
(Unaudited)
| | | | | | | | | |
| | | Three months ended | |
| | | March 31, | |
| | | 2022 | | | 2021 | |
| | | | | | (As restated-
Note 1) | |
| | | | $ | | | | $ | |
| Cash flows from operating activities | | | | | | | | |
| Net loss for the period | | | (2,640 | ) | | | (1,458 | ) |
| Items not affecting cash and cash equivalents: | | | | | | | | |
| Provision | | | (2 | ) | | | 19 | |
| Depreciation and amortization | | | 36 | | | | 36 | |
| Share-based compensation costs | | | 27 | | | | 13 | |
| Employee future benefits (note 7) | | | 99 | | | | 49 | |
| Amortization of deferred revenues | | | (828 | ) | | | (524 | ) |
| Foreign exchange on items denominated in foreign currencies | | | (174 | ) | | | 266 | |
| Other non-cash items | | | 14 | | | | 31 | |
| Receipt of income taxes receivable | | | 881 | | | | (1,124 | ) |
| Changes in operating assets and liabilities (note 10) | | | 1,126 | | | | 1,647 | |
| Net cash used in operating activities | | | (1,461 | ) | | | (1,045 | ) |
| Cash flows from financing activities | | | | | | | | |
| Issuance of common shares (note 8) | | | — | | | | 34,200 | |
| Transaction costs (note 8) | | | — | | | | (3,221 | ) |
| Proceeds from exercise of warrants (note 8) | | | — | | | | 19,987 | |
| Payments on lease liabilities | | | (34 | ) | | | (33 | ) |
| Net cash (used in) provided by financing activities | | | (34 | ) | | | 50,933 | |
| Cash flows from investing activities | | | | | | | | |
| Purchase of intangible assets | | | — | | | | (490 | ) |
| Purchase of property and equipment | | | (6 | ) | | | (17 | ) |
| Net cash used in investing activities | | | (6 | ) | | | (507 | ) |
| Effect of exchange rate changes on cash and cash equivalents | | | (203 | ) | | | (281 | ) |
| Net change in cash and cash equivalents | | | (1,704 | ) | | | 49,100 | |
| Cash and cash equivalents – Beginning of period | | | 65,300 | | | | 24,271 | |
| Cash and cash equivalents – End of period | | | 63,596 | | | | 73,371 | |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT MARCH 31, 2022 AND FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021
(amounts in thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)
Summary of business
Aeterna Zentaris (the “Company” or “Aeterna”) is a specialty biopharmaceutical company commercializing and developing therapeutics and diagnostic tests. The Company’s lead product, Macrilen™ (macimorelin), is the first and only U.S. Food and Drug Administration (“FDA”) and European Medicines Agency-approved oral test indicated for the diagnosis of patients with adult growth hormone deficiency (“AGHD”). Macrilen™ is currently marketed in the US through a license agreement (the “Novo Amendment”) between the Company and Novo Nordisk Health Care AG (“Novo”) and in the United Kingdom and Europe through a license agreement with Consilient Healthcare Inc (the “Consilient” or “CH”) under the trade name of Ghryvelin®. The Company is also dedicated to the development of therapeutic assets and has recently taken steps to establish a pre-clinical pipeline to potentially address unmet medical needs across a number of indications with a focus on rare or orphan indications and with the potential for pediatric use.
These unaudited condensed interim consolidated financial statements were approved by the Board of Directors (the “Board”) on May 10, 2022.
Basis of presentation
These unaudited condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) applicable to the preparation of interim financial statements, including IAS 34, Interim Financial Reporting. These unaudited condensed interim consolidated financial statements should be read in conjunction with the Company’s annual consolidated financial statements as at and for the year ended December 31, 2021. The accounting policies in these condensed interim consolidated financial statements are consistent with those presented in the Company’s annual consolidated financial statements, with the exception of the Company’s policy with respect to the government assistance which is as follows:
Government assistance
Amounts received or receivable resulting from government assistance programs, including grants and refundable investment tax credits for research and development, are accounted for in accordance with IAS 20 - Accounting for government grants and disclosure of government assistance and are recognized where there is reasonable assurance that the amount of government assistance will be received, and all attached conditions will be complied with. When the amount relates to an expense item such as research and development costs, it is recognized as income on a systematic basis as a reduction to the costs that it is intended to compensate. When the grant relates to an asset, it reduces the carrying amount of the asset and is then recognized as income over the useful life of the depreciable asset by way of a reduced depreciation charge.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT MARCH 31, 2022 AND FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021
(amounts in thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)
COVID-19 & Russia and Ukraine conflict
The rise in COVID-19 variants has caused delays in site initiation and patient enrollment in our DETECT-trial and may be impacting sales activities for Macrilen™ in the US. Further, the continuation of the COVID-19 pandemic and the Russia/Ukraine conflict may also cause some patients to be unwilling to enroll in our trials or be unable to comply with clinical trial protocols if such events impede patient movement or interrupt healthcare services, both of which would delay our ability to conduct clinical trials or release clinical trial results on a timely basis and could delay our ability to obtain regulatory approval and commercialize our product candidates. For the period ended March 31, 2022, the Company assessed the impact of the uncertainties around the COVID-19 pandemic and the Russia/Ukraine conflict on its judgments, estimates, accounting policies and amounts recognized in these unaudited condensed interim consolidated financial statements and determined that no adjustments were required to the carrying value of assets and liabilities. Management determined that the recruitment for the DETECT-trial may now continue until later into 2023 compared to the end of the 2022 year as anticipated at the end of the previous fiscal year. As such, an amount of $1.2 million of deferred revenue has been reclassified from current to long-term portion as of March 31, 2022 to reflect the revised timeline. We are currently assessing with Novo the impact on timelines and study cost.
The Company will continue to monitor the impact of the development of the COVID-19 pandemic and Russia/Ukraine conflict in further reporting periods. Actual results could differ from these estimates, and such differences may be material.
Restatement of comparative period figures
At the end of the prior fiscal year2021, the Company restated its previously reported condensed consolidated interim financial statements for the three-month period ended March 31, 2021 and the three-month and six-month periods ended June 30, 2021 and three-month and nine-month periods ended September 30, 2021 with respect to the recognition of revenue for the Novo Amendment, signed in November 2020. During the fourth quarter of 2021, management reassessed the classification of the development activities associated with the DETECT-trial and concluded that subsequent to the Novo Amendment, the parties no longer shared joint control of these activities and, as such, these development activities no longer met the definition of a joint operation, as defined in IFRS 11 -Joint Arrangements. Therefore, pursuant to the guidance in IFRS 15 -Revenue from Contracts with Customers, the Company reclassified the charges to Novo, from research and development expenses to development services revenue, in the related periods. In addition, the license fees related to the pediatric indication were adjusted to reflect the revised pattern of recognition as the performance obligation for the development services has now been combined with the pediatric license. In addition, the accounting for prepaid expenses and other assets and deferred revenues related the DETECT-trial expenses incurred was restated.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT MARCH 31, 2022 AND FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021
(amounts in thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)
The condensed interim consolidated financial statements were not adjusted and refiled at the time of discovery of the error, rather the comparatives are being corrected now with the filing of the interim financials for the period ended March 31, 2022. The impacts of the March 31, 2021 restatements are as follows (amounts in thousands, except for basic and diluted loss per share):
Disclosure of Restatements
| 2. | Critical accounting estimates and judgements |
The preparation of condensed interim consolidated financial statements in accordance with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of the Company’s assets, liabilities, revenues, expenses and related disclosures. Judgments, estimates and assumptions are based on historical experience, expectations, current trends and other factors that management believes to be relevant at the time at which the Company’s condensed interim consolidated financial statements are prepared.
Management reviews, on a regular basis, the Company’s accounting policies, assumptions, estimates and judgments in order to ensure that the condensed interim consolidated financial statements are presented fairly and in accordance with IFRS applicable to interim financial statements. Critical accounting estimates and assumptions, as well as critical judgments used in applying accounting policies in the preparation of the Company’s condensed interim consolidated financial statements, were the same as those applied to the Company’s annual consolidated financial statements as at and for the year ended December 31, 2021 and December 31, 2020 and for the years ended December 31, 2021, and 2020.
| 3. | License and supply arrangements |
On January 16, 2018, the Company, through AEZS Germany, entered into License Agreement with Strongbridge Ireland Limited (“Strongbridge”) to carry out development, manufacturing, registration, regulatory and supply chain services for the commercialization of Macrilen™ (macimorelin) in the U.S. and Canada. Effective December 19, 2018, Strongbridge sold the entity which owned the License Agreement for the U.S. and Canadian rights to Macrilen™ (macimorelin) to Novo Nordisk Biopharm Ltd. Ireland (Novo). In 2019, the Interim Supply Arrangement was concluded and Novo contracted AEZS Germany to provide supply chain services for the manufacture of Macrilen™ (macimorelin). On November 16, 2020, the Company, through AEZS Germany, entered into Novo Amendment of its existing License Agreement with Novo related to the development and commercialization of macimorelin. The Company earns license fees, product sales, royalties and supply chain revenue, in addition to development service revenue from conducting the Study P02, from Novo.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT MARCH 31, 2022 AND FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021
(amounts in thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)
In June 2020, the Company entered into an exclusive distribution and quality agreement with MegaPharm Ltd. (“MegaPharm”) for the commercialization in Israel and in the Palestinian Authority of macimorelin to be used in the diagnosis of patients with adult growth hormone deficiency and in clinical development for the diagnosis of pediatric growth hormone deficiency (the “MegaPharm Agreement”). As of March 31, 2022, there have been no products supplied under this agreement. On December 7, 2020, the Company entered into an exclusive licensing agreement with Consilient Health Limited (“CH”) for the commercialization of macimorelin (the “Licensed Product”) in the European Economic Area and the United Kingdom (the “CH License Agreement”). The Company earns licenses fees and product sale revenue from CH.
The Company and NK Meditech Limited (“NK”) entered into a licensing agreement, effective November 30, 2021 and pursuant to which the Company granted to NK the exclusive right to commercialize (including marketing, selling and offering to sell) macimorelin in the Republic of Korea (the “ROK”) and as applicable, in the Democratic People’s Republic of Korea (“DPRK”) to the extent NK is allowed to use the aforementioned licensed rights in the latter (“NK License Agreement”). As of March 31, 2022, there have been no products supplied under this agreement.
The following table provides a summary of deferred revenue balances:
Disclosure of Revenue
| | | March 31, 2022 | |
| | | Current | | | Non-Current | | | Total | |
| | | $ | | | $ | | | $ | |
| Novo Amendment | | | 2,580 | | | | 1,328 | | | | 3,908 | |
| CH License Agreement | | | 2 | | | | 1,322 | | | | 1,324 | |
| NK License Agreement | | | — | | | | 133 | | | | 133 | |
| Total | | | 2,582 | | | | 2,783 | | | | 5,365 | |
| | | December 31, 2021 | |
| | | Current | | | Non-Current | | | Total | |
| | | | $ | | | | $ | | | | $ | |
| Novo Amendment | | | 4,791 | | | | 23 | | | | 4,814 | |
| CH License Agreement | | | 24 | | | | 1,334 | | | | 1,358 | |
| NK License Agreement | | | — | | | | 136 | | | | 136 | |
| Total | | | 4,815 | | | | 1,493 | | | | 6,308 | |
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT MARCH 31, 2022 AND FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021
(amounts in thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)
| 4. | Trade and other receivables |
Disclosure of Detailed Trade and Other Receivables Explanatory
| | | March 31, 2022 | | | December 31, 2021 | |
| | | | $ | | | | $ | |
| Trade accounts receivable (net of expected credit losses of $55 (December 31, 2021 - $55)) | | | 302 | | | | 877 | |
| Value-added tax | | | 193 | | | | 372 | |
| Grant receivable | | | 146 | | | | — | |
| Other | | | 52 | | | | 65 | |
| Trade and other receivables | | | 693 | | | | 1,314 | |
In March 2022, the Company was awarded a monetary subsidy with respect to two pre-clinical programs—namely, the Company’s development of an oral vaccine against infections with SARS-CoV-2 and the development of a product candidate for the treatment of neuromyelitis optica. The subsidy was awarded pursuant to the provisions of the German Act on Tax Incentives for Research and Development, which provides direct reimbursement of certain qualifying R&D expenditures to eligible entities. CoV-2 grant is related to R&D expenditures incurred in 2021 and during the first quarter of 2022. Neuromyelitis Optica grant is related to expenditures incurred in 2021 and during the first quarter of 2022.
| 5. | Prepaid expenses and other current assets |
Disclosure of Prepaid Expenses and Other Current Assets Explanatory
| | | March 31, 2022 | | | December 31, 2021 | |
| | | | $ | | | | $ | |
| Prepaid insurance | | | — | | | | 421 | |
| Prepaid research and development | | | 907 | | | | 1,329 | |
| Other | | | 143 | | | | 22 | |
| Prepaid expenses and other current assets | | | 1,050 | | | | 1,772 | |
| 6. | Payables and accrued liabilities |
Disclosure of Detailed Information about Payables and Accrued Liabilities Explanatory
| | | March 31, 2022 | | | December 31, 2021 | |
| | | | $ | | | | $ | |
| Trade accounts payable | | | 1,022 | | | | 934 | |
| Salaries, employment taxes and benefits | | | 517 | | | | 531 | |
| Accrued research and development costs | | | 695 | | | | 596 | |
| Other accrued liabilities | | | 561 | | | | 611 | |
| Payables and accrued liabilities | | | 2,795 | | | | 2,672 | |
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT MARCH 31, 2022 AND FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021
(amounts in thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)
| 7. | Employee future benefits |
The change in the Company’s accrued benefit obligations is summarized as follows:
DIsclosure of Net Defined Benefit Liability Asset
| | | | | | | | | | | | | | | | | |
| | | Three months ended March 31, 2022 | | | Year ended December 31, 2021 | |
| | | Pension benefit plans | | | Other benefit plans | | | Total | | | Total | |
| | | | $ | | | | $ | | | | $ | | | | $ | |
| Change in plan liabilities | | | | | | | | | | | | | | | | |
| Balances – Beginning of the period | | | 29,313 | | | | 99 | | | | 29,412 | | | | 15,435 | |
| Current service cost | | | 17 | | | | 3 | | | | 20 | | | | 65 | |
| Interest cost | | | 80 | | | | — | | | | 80 | | | | 88 | |
| Employee Contributions | | | 2 | | | | — | | | | 2 | | | | — | |
| Actuarial gain arising from changes in financial assumptions | | | (3,194 | ) | | | — | | | | (3,194 | ) | | | (1,130 | ) |
| Past service cost associated with multi-employer plan | | | — | | | | — | | | | — | | | | 16,137 | |
| Actuarial loss arising from change in current assumptions on funding of future pension increases | | | — | | | | — | | | | — | | | | 556 | |
| Benefits paid | | | (165 | ) | | | (1 | ) | | | (166 | ) | | | (511 | ) |
| Impact of foreign exchange rate changes | | | (551 | ) | | | (2 | ) | | | (553 | ) | | | (1,228 | ) |
| Balances – End of the period | | | 25,502 | | | | 99 | | | | 25,601 | | | | 29,412 | |
| | | | | | | | | | | | | | | | | |
| Change in plan assets | | | | | | | | | | | | | | | | |
| Balances – Beginning of the period | | | 11,927 | | | | — | | | | 11,927 | | | | — | |
| Presentation of plan assets as of December 31, 2021 | | | — | | | | — | | | | — | | | | 11,963 | |
| Remeasurement of plan assets | | | (445 | ) | | | — | | | | (445 | ) | | | — | |
| Employer contributions | | | 12 | | | | — | | | | 12 | | | | — | |
| Employee contributions | | | 2 | | | | — | | | | 2 | | | | — | |
| Benefits paid | | | (57 | ) | | | — | | | | (57 | ) | | | — | |
| Impact of foreign exchange rate changes | | | (224 | ) | | | — | | | | (224 | ) | | | (36 | ) |
| Balances – End of the period | | | 11,215 | | | | — | | | | 11,215 | | | | 11,927 | |
| | | | | | | | | | | | | | | | | |
| Net liability of the unfunded plans | | | 10,976 | | | | 99 | | | | 11,075 | | | | 12,749 | |
| Net liability of the funded plans | | | 3,311 | | | | — | | | | 3,311 | | | | 4,736 | |
| Net amount recognized as Employee future benefits | | | 14,287 | | | | 99 | | | | 14,386 | | | | 17,485 | |
| | | | | | | | | | | | | | | | | |
| Amounts recognized: | | | | | | | | | | | | | | | | |
| In net loss | | | 97 | | | | 3 | | | | 100 | | | | (153 | ) |
| In other comprehensive loss | | | (3,076 | ) | | | (2 | ) | | | (3,078 | ) | | | 2,408 | |
The calculation of the pension benefit obligation is sensitive to the discount rate assumption. Discount rates were 1.1% at December 31, 2021 and 1.7% at March 31, 2022 causing much of the gain noted above.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT MARCH 31, 2022 AND FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021
(amounts in thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)
| 8. | Share capital, warrants and other capital |
The Company has an unlimited number of authorized common shares (being voting and participating shares) with no par value, as well as an unlimited number of preferred, first and second ranking shares, issuable in series, with rights and privileges specific to each class, with no par value.
2021
On February 19, 2021, the Company completed an underwritten public offering of 20,509,746 common shares at $1.45 per common share, resulting in aggregate gross proceeds of $29,739, before deducting underwriting discounts, commissions and offering expenses of $2,837 (the “February 2021 Financing). The Company also granted the underwriter and placement agent (the “Underwriter”), a 30-day over-allotment option to purchase up to 3,076,461 additional common shares at a price of $1.45 per common share (the “Underwriter Option”). Additionally, the Company issued warrants underlying 1,435,682 common shares to the Underwriter, with each warrant bearing an exercise price of $1.8125 (the “February 2021 Placement Agent Warrants”). The February 2021 Placement Agent Warrants expire on February 17, 2026.
On February 22, 2021, the underwriter exercised the Underwriter Option in full and received 3,076,461 common shares in exchange for gross proceeds to the Company of $4,461. Upon exercise of the Underwriter Option, the Underwriter also an additional 215,352 February 2021 Placement Agent Warrants.
Aggregate gross proceeds received in connection with the February 2021 Financing totaled $34,200, less cash transaction costs of $3,221 and non-cash transaction costs, which represent the issue-date fair value of the February 2021 Placement Agent Warrants, of $1,897.
The table presented below shows the inputs and assumptions applied to the Black-Scholes option pricing model in order to determine the fair value of these Placement agent warrants:
Disclosure of Fair Value of Warrants Assumptions Explanatory
| | | Number of equivalent shares | | | Market value per share price | | | Weighted average exercise price | | | Risk-free annual interest rate | | | Expected volatility | | | Expected life (years) | | | Expected dividend yield | |
| | | | | | | | ($) | | | | ($) | | | | (i) | | | | (ii) | | | | (iii) | | | | (iv) | |
| February 2021 Placement agent warrants – public offering | | | 1,435,682 | | | | 1.48 | | | | 1.8125 | | | | 0.58734 | % | | | 119.18 | % | | | 4.99 | | | | 0.00 | % |
| February 2021 Placement agent warrants – Underwriter Option | | | 215,352 | | | | 1.48 | | | | 1.8125 | | | | 0.58544 | % | | | 119.57 | % | | | 4.98 | | | | 0.00 | % |
| | (i) | Based on United States Treasury Government Bond interest rates with a term that is consistent with the expected life of the warrants. |
| | (ii) | Based on the historical volatility of the Company’s stock price over the most recent period consistent with the expected life of the warrants. |
| | (iii) | Based upon time to expiry from the issuance date. |
| | (iv) | The Company has not paid dividends and it does not intend to pay dividends in the foreseeable future. |
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT MARCH 31, 2022 AND FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021
(amounts in thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)
During the three-month period ended March 31, 2021, certain warrant holders exercised their warrants as follows:
Disclosure of Warrants Exercise Transactions Explanatory
| | | Warrants exercised (number of underlying common shares) | | | Exercise Price | | | Aggregate proceeds to the Company | |
| September 2019 Investor warrants | | | 2,000,000 | | | $ | 1.65 | | | $ | 3,300 | |
| February 2020 Investor warrants | | | 1,739,130 | | | | 1.20 | | | | 2,087 | |
| July 2020 Investor warrants | | | 20,823,333 | | | | 0.45 | | | | 9,371 | |
| July 2020 Placement Agent warrants | | | 1,866,667 | | | | 0.5625 | | | | 1,050 | |
| August 2020 Investor warrants | | | 7,589,883 | | | | 0.47 | | | | 3,567 | |
| August 2020 Placement Agent warrants | | | 869,952 | | | | 0.7040625 | | | | 612 | |
| | | | 34,888,965 | | | | | | | $ | 19,987 | |
Other capital
Disclosure of Detailed Information About Warrants Activity Reclassified Into Equity Explanatory
| | | Three months ended March 31, 2022 | |
| | | Stock options | | | Weighted average exercise price | | | DSUs | |
| | | (Number) | | | ($) | | | (Number) | |
| Balance – January 1, 2022 | | | 1,086,368 | | | | 0.88 | | | | 423,000 | |
| Granted | | | 50,000 | | | | 0.36 | | | | — | |
| Expired | | | — | | | | — | | | | — | |
| Exercised | | | — | | | | — | | | | — | |
| Balance – March 31, 2022 | | | 1,136,368 | | | | 0.85 | | | | 423,000 | |
| | | Year ended December 31, 2021 | |
| | | Stock options | | | Weighted average exercise price | | | DSUs | |
| | | (Number) | | | ($) | | | (Number) | |
| Balance – January 1, 2021 | | | 506,400 | | | | 1.44 | | | | 173,000 | |
| Granted | | | 580,000 | | | | 0.42 | | | | 280,000 | |
| Expired | | | (32 | ) | | | 590.25 | | | | — | |
| Exercised | | | — | | | | — | | | | (30,000 | ) |
| Balance – December 31, 2021 | | | 1,086,368 | | | | 0.88 | | | | 423,000 | |
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT MARCH 31, 2022 AND FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021
(amounts in thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)
Fair value input assumptions for US dollar stock option grants
The table below shows the assumptions, or weighted average parameters, applied to the Black-Scholes option pricing model in order to determine share-based compensation costs over the life of the awards.
Disclosure of Number and Weighted Average Exercise Prices of Share Options
| | | | | Three Months Ended | | | Year Ended | |
| | | | | March 31, | | | December 31 | |
| | | | | 2022 | | | 2021 | |
| Expected dividend yield | | (a) | | | 0.00 | % | | | 0.00 | % |
| Expected volatility | | (b) | | | 115.80 | % | | | 115.80 | % |
| Risk-free annual interest rate | | (c) | | | 1.23 | % | | | 1.23 | % |
| Expected life (years) | | (d) | | | 5.71 | | | | 5.71 | |
| Weighted average share price | | | | $ | 0.42 | | | $ | 0.42 | |
| Weighted average exercise price | | | | $ | 0.42 | | | $ | 0.42 | |
| Weighted average grant date fair value | | | | $ | 0.35 | | | $ | 0.35 | |
| | (a) | The Company has not paid dividends and it does not intend to pay dividends in the foreseeable future. |
| | | |
| | (b) | Based on the historical volatility of the Company’s stock price over the most recent period consistent with the expected life of the stock options, as well as on future expectations. |
| | | |
| | (c) | Based on United States Treasury Government Bond interest rates with a term that is consistent with the expected life of the stock options. |
| | | |
| | (d) | Based upon historical data related to the exercise of stock options, on post-vesting employment terminations and on future expectations related to exercise behavior. |
The nature of the Company’s operating expenses from operations include the following:
Disclosure of Detailed Information About Operating Expenses Explanatory
| | | | | | | | | |
| | | Three months ended March 31, | |
| | | 2022 | | | 2021 | |
| | | | $ | | | | $ | |
| Key management personnel: | | | | | | | | |
| Salaries and short-term employee benefits | | | 355 | | | | 219 | |
| Consultant fees | | | 17 | | | | 48 | |
| Share-based compensation costs | | | 16 | | | | 10 | |
| Post-employment benefits | | | 18 | | | | 12 | |
| Key management personnel compensation | | | 406 | | | | 289 | |
| Other employees: | | | | | | | | |
| Salaries and short-term employee benefits | | | 415 | | | | 310 | |
| Post-employment benefits | | | 85 | | | | 38 | |
| Share-based compensation costs | | | 11 | | | | 3 | |
| Other employees compensation | | | 511 | | | | 351 | |
| Cost of inventory used and services provided | | | 79 | | | | 29 | |
| Professional fees | | | 647 | | | | 580 | |
| Consulting fees | | | 260 | | | | 130 | |
| Insurance | | | 422 | | | | 227 | |
| Third-party research and development | | | 1,975 | | | | 1,147 | |
| Grants (note 4) | | | (146 | ) | | | — | |
| Travel | | | 43 | | | | 22 | |
| Marketing services | | | 5 | | | | 97 | |
| Laboratory supplies | | | 87 | | | | 15 | |
| Other goods and services | | | 45 | | | | 19 | |
| Leasing costs | | | (40 | ) | | | 34 | |
| Depreciation and amortization | | | 36 | | | | 36 | |
| Operating foreign exchange loss | | | — | | | | 21 | |
| Total operating expenses | | | 4,330 | | | | 2,997 | |
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT MARCH 31, 2022 AND FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021
(amounts in thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)
| 10. | Supplemental disclosure of cash flow information |
Disclosure of Changes in Operating Assets and Liabilities Explanatory
| | | | | | | | | |
| | | Three months ended | |
| | | March 31, | |
| | | 2022 | | | 2021 | |
| | | | $ | | | | $ | |
| Changes in operating assets and liabilities: | | | | | | | | |
| Trade and other receivables | | | 474 | | | | 650 | |
| Inventory | | | (206 | ) | | | (40 | ) |
| Prepaid expenses and other current assets | | | 711 | | | | (93 | ) |
| Payables and accrued liabilities | | | 159 | | | | 115 | |
| Taxes payable | | | — | | | | (129 | ) |
| Deferred revenues | | | 8 | | | | 1,227 | |
| Employee future benefits | | | (20 | ) | | | (83 | ) |
| Changes in operating assets and liabilities | | | 1,126 | | | | 1,647 | |
The Company operates in a single operating segment, being the biopharmaceutical segment.
The following table sets forth pertinent data relating to the computation of basic and diluted net loss per share attributable to common shareholders.
Disclosure of Earnings Per Share
| | | | | | | | | |
| | | Three months ended | |
| | | March 31, | |
| | | 2022 | | | 2021 | |
| | | | $ | | | | $ | |
| Net loss | | | (2,640 | ) | | | (1,458 | ) |
| Basic weighted average number of shares outstanding | | | 121,397,007 | | | | 95,444,990 | |
| Net loss income per share (basic) | | | (0.02 | ) | | | (0.02 | ) |
| | | | | | | | | |
| Dilutive effect of stock options and DSUs | | | — | | | | — | |
| Dilutive effect of warrants | | | — | | | | — | |
| Diluted weighted average number of shares outstanding | | | 121,397,007 | | | | 95,444,990 | |
| Net loss per share (diluted) | | | (0.02 | ) | | | (0.02 | ) |
| | | | | | | | | |
| Items excluded from the calculation of diluted net loss per share because the exercise price was greater than the average market price of the common shares or due to their anti-dilutive effect | | | | | | | | |
| Stock options and DSUs | | | 1,559,368 | | | | 679,400 | |
| Warrants | | | 11,441,213 | | | | 11,663,435 | |
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT MARCH 31, 2022 AND FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021
(amounts in thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)
Net loss per share is calculated by dividing net loss by the weighted average number of shares outstanding during the relevant period. Diluted weighted average number of shares reflects the dilutive effect of equity instruments, such as any “in the money” stock options, DSUs and warrants. In periods with reported net losses, all stock options and warrants are deemed anti-dilutive such that basic net loss per share and diluted net loss per share are equal, and thus “in the money” stock options and warrants have not been included in the computation of net loss per share because to do so would be anti-dilutive.
Disclosure of Finance Lease and Operating Lease by Lessee Explanatory
| | | Service and manufacturing | | | R&D contracts | | | TOTAL | |
| | | | $ | | | | $ | | | | $ | |
| Less than 1 year | | | 518 | | | | 2,056 | | | | 2,574 | |
| 1 - 3 years | | �� | 638 | | | | 630 | | | | 1,268 | |
| 4 - 5 years | | | 1 | | | | — | | | | 1 | |
| More than 5 years | | | — | | | | — | | | | — | |
| Total | | | 1,157 | | | | 2,686 | | | | 3,843 | |
The Company executed various agreements including in-licensing and similar arrangements with development partners. Such agreements may require the Company to make payments on achievement of stages of development, launch or revenue milestones, although the Company generally has the right to terminate these agreements at no penalty. The Company recognizes research and development milestones as an intangible asset once it is committed to the payment, which is generally when the Company reaches a set point in the development cycle.
Based on the closing exchange rates at March 31, 2022, the Company expects to pay $2,686, including $2,548 (€2.3 million), and $138 (£0.1 million), in R&D contracts and up to $8,757, including $7,248 (€6.5 million) and $1,509 (£1.2 million), in R&D milestone payments and up to $32,309, including $30,669 (€27.6 million) and $1,640 (£1.3 million), in revenue related milestone payments. The table below contains all potential R&D and revenue-related milestone payments that the Company may be required to make under such agreements:
Disclosure of Research and Development and Revenue Related Milestone Payments Explanatory
| | | Future potential R&D milestone payments | | | Future potential revenue milestone payments | | | TOTAL | |
| | | | $ | | | | $ | | | | $ | |
| Less than 1 year | | | 28 | | | | — | | | | 28 | |
| 1 - 3 years | | | 111 | | | | — | | | | 111 | |
| 4 - 5 years | | | 909 | | | | — | | | | 909 | |
| More than 5 years | | | 7,709 | | | | 32,309 | | | | 40,018 | |
| Total | | | 8,757 | | | | 32,309 | | | | 41,066 | |
The future payments that are disclosed represent contract payments and are not discounted and are not risk-adjusted. The development of any pharmaceutical product candidates is a complex and risky process that may fail at any stage in the development process due to a number of factors. The timing of the payments is based on the Company’s current best estimate of achievement of the relevant milestone.
