Exhibit 99.21
Condensed interim consolidated financial statements of
Prometic Life Sciences Inc.
For the quarter ended March 31, 2018
(unaudited)
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PROMETIC LIFE SCIENCES INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In thousands of Canadian dollars) (Unaudited)
March 31, 2018 | December 31, 2017 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash | $ | 13,869 | $ | 23,166 | ||||
Accounts receivable (note 3) | 7,416 | 6,839 | ||||||
Income tax receivable | 3,034 | 4,116 | ||||||
Inventories (note 4) | 36,152 | 36,013 | ||||||
Prepaids | 3,161 | 2,141 | ||||||
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Total current assets | 63,632 | 72,275 | ||||||
Long-term income tax receivable | 111 | 108 | ||||||
Other long-term assets (note 5) | 9,189 | 8,663 | ||||||
Capital assets (note 6) | 45,523 | 45,254 | ||||||
Intangible assets (note 7) | 162,334 | 156,647 | ||||||
Deferred tax assets | 925 | 926 | ||||||
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Total assets | $ | 281,714 | $ | 283,873 | ||||
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LIABILITIES | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities (note 8) | $ | 28,595 | $ | 29,954 | ||||
Advance on revenues from a supply agreement | 1,541 | 1,901 | ||||||
Current portion of long-term debt (note 9) | 3,106 | 3,336 | ||||||
Deferred revenues | 876 | 829 | ||||||
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Total current liabilities | 34,118 | 36,020 | ||||||
Long-term portion of operating and finance lease inducements and obligations | 2,093 | 2,073 | ||||||
Other long-term liabilities (note 10) | 4,073 | 3,335 | ||||||
Long-term debt (note 9) | 106,911 | 83,684 | ||||||
Deferred tax liabilities | 13,657 | 15,330 | ||||||
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Total liabilities | $ | 160,852 | $ | 140,442 | ||||
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EQUITY | ||||||||
Share capital (note 12a) | $ | 577,547 | $ | 575,150 | ||||
Contributed surplus (note 12b) | 17,136 | 16,193 | ||||||
Warrants and future investment rights (note 12c) | 81,257 | 73,944 | ||||||
Accumulated other comprehensive loss | (307 | ) | (1,622 | ) | ||||
Deficit | (574,929 | ) | (541,681 | ) | ||||
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Equity attributable to owners of the parent | 100,704 | 121,984 | ||||||
Non-controlling interests (note 13) | 20,158 | 21,447 | ||||||
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Total equity | 120,862 | 143,431 | ||||||
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Total liabilities and equity | $ | 281,714 | $ | 283,873 | ||||
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Subsequent events (note 17)
The accompanying notes are an integral part of the condensed interim consolidated financial statements.
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PROMETIC LIFE SCIENCES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of Canadian dollars except for per share amounts) (Unaudited)
Quarters ended March 31, | 2018 | 2017 | ||||||
Revenues (note 14) | $ | 4,292 | $ | 4,866 | ||||
Expenses | ||||||||
Cost of sales and other production expenses (note 4) | 4,766 | 2,390 | ||||||
Research and development expenses | 22,416 | 24,387 | ||||||
Administration, selling and marketing expenses | 7,703 | 6,946 | ||||||
Loss on foreign exchange | 1,111 | 216 | ||||||
Finance costs | 4,243 | 1,374 | ||||||
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Net loss before income taxes | $ | (35,947 | ) | $ | (30,447 | ) | ||
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Income tax recovery: | ||||||||
Current | (1 | ) | (75 | ) | ||||
Deferred | (1,331 | ) | (1,239 | ) | ||||
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(1,332 | ) | (1,314 | ) | |||||
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Net loss | $ | (34,615 | ) | $ | (29,133 | ) | ||
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Net loss attributable to: | ||||||||
Owners of the parent | (31,671 | ) | (26,397 | ) | ||||
Non-controlling interests (note 13) | (2,944 | ) | (2,736 | ) | ||||
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$ | (34,615 | ) | $ | (29,133 | ) | |||
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Loss per share | ||||||||
Attributable to the owners of the parent | ||||||||
Basic and diluted | $ | (0.04 | ) | $ | (0.04 | ) | ||
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Weighted average number of outstanding shares (in thousands) | 711,697 | 651,995 | ||||||
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The accompanying notes are an integral part of the condensed interim consolidated financial statements.
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PROMETIC LIFE SCIENCES INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands of Canadian dollars) (Unaudited)
Quarters ended March 31, | 2018 | 2017 | ||||||
Net loss | $ | (34,615 | ) | $ | (29,133 | ) | ||
Other comprehensive income | ||||||||
Items that may be subsequently reclassified to profit and loss: | ||||||||
Change in unrealized foreign exchange differences on translation of financial statements of foreign subsidiaries | 1,315 | 130 | ||||||
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Total comprehensive loss | $ | (33,300 | ) | $ | (29,003 | ) | ||
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Total comprehensive loss attributable to: | ||||||||
Owners of the parent | (30,356 | ) | (26,267 | ) | ||||
Non-controlling interests | (2,944 | ) | (2,736 | ) | ||||
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$ | (33,300 | ) | $ | (29,003 | ) | |||
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The accompanying notes are an integral part of the condensed interim consolidated financial statements.
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PROMETIC LIFE SCIENCES INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands of Canadian dollars) (Unaudited)
Equity attributable to owners of the parent | ||||||||||||||||||||||||||||||||
Share capital $ | Contributed surplus $ | Warrants and future investment rights $ | Foreign currency translation reserve $ | Deficit $ | Total $ | Non- controlling interests $ | Total equity $ | |||||||||||||||||||||||||
Balance at January 1, 2017 | 480,237 | 12,919 | 64,201 | (1,964 | ) | (423,026 | ) | 132,367 | 26,976 | 159,343 | ||||||||||||||||||||||
Net loss | — | — | — | — | (26,397 | ) | (26,397 | ) | (2,736 | ) | (29,133 | ) | ||||||||||||||||||||
Foreign currency translation reserve | — | — | — | 130 | — | 130 | — | 130 | ||||||||||||||||||||||||
Share-based payments expense (note 12b) | — | 1,242 | — | — | — | 1,242 | — | 1,242 | ||||||||||||||||||||||||
Exercise of stock options (note 12b) | 161 | (65 | ) | — | — | — | 96 | — | 96 | |||||||||||||||||||||||
Exercise of future investment rights (note 12c) | 27,594 | — | (6,542 | ) | — | — | 21,052 | — | 21,052 | |||||||||||||||||||||||
Effect of funding arrangements on non-controlling interest (note 13) | — | — | — | — | (936 | ) | (936 | ) | 936 | — | ||||||||||||||||||||||
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Balance at March 31, 2017 | 507,992 | 14,096 | 57,659 | (1,834 | ) | (450,359 | ) | 127,554 | 25,176 | 152,730 | ||||||||||||||||||||||
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Balance at January 1, 2018 | 575,150 | 16,193 | 73,944 | (1,622 | ) | (541,681 | ) | 121,984 | 21,447 | 143,431 | ||||||||||||||||||||||
Impact of adopting IFRS 9 (note 2b) | — | — | — | — | 110 | 110 | — | 110 | ||||||||||||||||||||||||
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Balance at January 1, 2018 - restated | 575,150 | 16,193 | 73,944 | (1,622 | ) | (541,571 | ) | 122,094 | 21,447 | 143,541 | ||||||||||||||||||||||
Net loss | — | — | — | — | (31,671 | ) | (31,671 | ) | (2,944 | ) | (34,615 | ) | ||||||||||||||||||||
Foreign currency translation reserve | — | — | — | 1,315 | — | 1,315 | — | 1,315 | ||||||||||||||||||||||||
Issuance of shares (note 12a) | 1,960 | — | — | — | — | 1,960 | — | 1,960 | ||||||||||||||||||||||||
Share-based payments expense (note 12b) | — | 1,120 | — | — | — | 1,120 | — | 1,120 | ||||||||||||||||||||||||
Exercise of stock options (note 12b) | 437 | (177 | ) | — | — | — | 260 | — | 260 | |||||||||||||||||||||||
Issuance of warrants (note 12c) | — | — | 7,313 | — | — | 7,313 | — | 7,313 | ||||||||||||||||||||||||
Share and warrant issuance cost | — | — | — | — | (32 | ) | (32 | ) | — | (32 | ) | |||||||||||||||||||||
Effect of funding arrangements on non-controlling interest (note 13) | — | — | — | — | (1,655 | ) | (1,655 | ) | 1,655 | — | ||||||||||||||||||||||
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Balance at March 31, 2018 | 577,547 | 17,136 | 81,257 | (307 | ) | (574,929 | ) | 100,704 | 20,158 | 120,862 | ||||||||||||||||||||||
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The accompanying notes are an integral part of the condensed interim consolidated financial statements.
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PROMETIC LIFE SCIENCES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of Canadian dollars) (Unaudited)
Quarters ended March 31, | 2018 | 2017 | ||||||
Cash flows used in operating activities | ||||||||
Net loss for the period | $ | (34,615 | ) | $ | (29,133 | ) | ||
Adjustments to reconcile net loss to cash flows used in operating activities: | ||||||||
Finance costs | 4,814 | 1,554 | ||||||
Change in operating lease inducements and obligations | (1,141 | ) | 936 | |||||
Carrying value of capital and intangible assets disposed | 72 | 58 | ||||||
Changes in other long-term assets | (264 | ) | — | |||||
Deferred income taxes | (1,331 | ) | (1,239 | ) | ||||
Share-based payments expense (note 12b) | 1,120 | 1,242 | ||||||
Depreciation of capital assets (note 6) | 1,037 | 795 | ||||||
Amortization of intangible assets (note 7) | 245 | 211 | ||||||
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(30,063 | ) | (25,576 | ) | |||||
Change in non-cash working capital items | (2,417 | ) | (9,812 | ) | ||||
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$ | (32,480 | ) | $ | (35,388 | ) | |||
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Cash flows from financing activities | ||||||||
Proceeds from debt and warrant issuances (notes 9,12c) | 25,155 | — | ||||||
Repayment of principal on long-term debt (note 9) | (1,361 | ) | (1,000 | ) | ||||
Repayment of interest on long-term debt | — | (126 | ) | |||||
Exercise of options (note 12b) | 260 | 96 | ||||||
Exercise of future investment rights (note 12c) | — | 21,052 | ||||||
Payments of principal under finance lease | (46 | ) | — | |||||
Debt, share and warrants issuance costs | (131 | ) | (100 | ) | ||||
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$ | 23,877 | $ | 19,922 | |||||
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Cash flows from (used in) investing activities | ||||||||
Additions to capital assets | (727 | ) | (2,920 | ) | ||||
Additions to intangible assets | (311 | ) | (285 | ) | ||||
Proceeds from the sale of marketable securities and short-term investments | — | 11,063 | ||||||
Interest received | 32 | 76 | ||||||
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$ | (1,006 | ) | $ | 7,934 | ||||
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Net change in cash and cash equivalents during the period | (9,609 | ) | (7,532 | ) | ||||
Net effect of currency exchange rate on cash and cash equivalents | 312 | (156 | ) | |||||
Cash and cash equivalents, beginning of period | 23,166 | 27,806 | ||||||
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Cash end of the period | $ | 13,869 | $ | 20,118 | ||||
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Comprising of: | ||||||||
Cash | 13,869 | 11,115 | ||||||
Cash equivalents | — | 9,003 | ||||||
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$ | 13,869 | $ | 20,118 | |||||
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The accompanying notes are an integral part of the condensed interim consolidated financial statements.
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PROMETIC LIFE SCIENCES INC.
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the quarter ended on March 31, 2018
(In thousands of Canadian dollars, except for per share amounts) (Unaudited)
1. | Nature of operations |
Prometic Life Sciences Inc. (“Prometic” or the “Corporation”), incorporated under the Canada Business Corporations Act, is a publicly traded (TSX symbol: PLI) (OTCQX symbol: PFSCF), biopharmaceutical Corporation with globally recognized expertise in bioseparation, plasma-derived therapeutics and small-molecule drug development. The Corporation is active in developing its own novel small molecule therapeutic products targeting unmet medical needs in the field of fibrosis, autoimmune disease/inflammation and cancer. Prometic’s exclusive technology platform is utilized for large-scale drug purification of biologics, drug development, proteomics and the elimination of pathogens to industry leaders and uses its own affinity technology that provides for efficient extraction and purification of therapeutic proteins from human plasma in order to develop and commercialize plasma-derived therapeutics and orphan drugs.
The Corporation’s head office is located at 440, Boul. Armand-Frappier, suite 300, Laval, Québec, Canada, H7V 4B4. Prometic has Research and Development (“R&D”) facilities in the U.K., the U.S. and Canada, manufacturing facilities in the Isle of Man and Canada and business development activities in Canada, the U.S., Europe and Asia.
2. | Significant accounting policies |
a) | Accounting framework |
These unaudited condensed interim consolidated financial statements (“interim financial statements”) for the quarter ended March 31, 2018 have been prepared in accordance with IAS 34, Interim financial reporting. Accordingly, certain information and footnote disclosure normally included in annual financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”), have been omitted or condensed. These interim financial statements should therefore be read in conjunction with the audited annual consolidated financial statements for the year ended December 31, 2017, which have been prepared in accordance with IFRS and which can be found at www.sedar.com.
These interim financial statements were approved for issue on May 14, 2018 by the Corporation’s Board of Directors.
b) | Adoption of new accounting standards |
The accounting policies used in these interim financial statements are consistent with those applied by the Corporation in its December 31, 2017 audited annual consolidated financial statements except for the amendments to certain accounting standards which are relevant to the Corporation and were adopted by the Corporation as of January 1, 2018 as described below.
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PROMETIC LIFE SCIENCES INC.
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the quarter ended on March 31, 2018
(In thousands of Canadian dollars, except for per share amounts) (Unaudited)
IFRS 9, Financial Instruments – Recognition and Measurement (“IFRS 9”)
IFRS 9 replaces the provisions of IAS 39, Financial Instruments – Recognition and Measurement and provides guidance on the recognition, classification and measurement of financial assets and financial liabilities, the derecognition of financial instruments, impairment of financial assets and hedge accounting.
The Corporation adopted IFRS 9 as of January 1, 2018 and the new standard has been applied retrospectively in accordance with the transitional provisions of IFRS 9. The following table presents the carrying amount of financial assets held by Prometic at December 31, 2017 and their measurement category under IAS 39 and the new model under IFRS 9.
IAS 39 | IFRS 9 | |||||||||||||||
Measurement category | Carrying amount | Measurement category | Carrying amount | |||||||||||||
Cash | FVTPL | $ | 23,166 | Amortized cost | $ | 23,166 | ||||||||||
Trade receivables | Amortized cost | 1,796 | Amortized cost | 1,796 | ||||||||||||
Other receivables | Amortized cost | 397 | Amortized cost | 397 | ||||||||||||
Restricted cash | FVTPL | 226 | Amortized cost | 226 | ||||||||||||
Long-term receivables | Amortized cost | 1,856 | Amortized cost | 1,856 | ||||||||||||
Equity Investments | Cost | 1,228 | FVTPL | 1,228 | ||||||||||||
Convertible debt | Cost | 87 | FVTPL | 87 |
There has been no significant impact caused by the new classification of financial assets under IFRS 9. The classification of all financial liabilities as financial liabilities at amortized cost remains unchanged as well as their measurement resulting from their classification.
Under IFRS 9, modifications to financial assets and financial liabilities, shall be accounted for by recalculating the present value of the modified contractual cashflows at the original effective interest rate and the adjustment shall be recognized as a gain on loss in profit or loss. Under IAS 39, the impact of modifications was recognized prospectively over the remaining term of the debt.
The adoption of the accounting for modifications under the new standard has resulted in the restatement of the opening retained earnings and the long-term debt at January 1, 2018 as follows:
Retained earnings | $ | 110 | ||
Long-term debt | (110 | ) |
IFRS 15, Revenue from contracts with customers (“IFRS 15”)
IFRS 15 replaces IAS 11, Construction Contracts, and IAS 18, Revenue and related interpretations and represents a new single model for recognition of revenue from contracts with customers. The model features a five-step analysis of transactions to determine the nature of an entity’s obligation to perform and whether, how much, and when revenue is recognized.
The Corporation adopted IFRS 15 as of January 1, 2018 and the new standard has been applied retrospectively using the modified retrospective approach, where prior periods are not restated and the cumulative effect of initially applying this standard is recognised in the opening retained earnings balance on January 1, 2018. The Corporation has also availed itself of the following practical expedients:
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PROMETIC LIFE SCIENCES INC.
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the quarter ended on March 31, 2018
(In thousands of Canadian dollars, except for per share amounts) (Unaudited)
• | the standard was applied retrospectively only to contracts that were not completed on January 1, 2018; and |
• | for contracts that were modified before January 1, 2018, the Corporation analysed the effects of all modifications when identifying whether performance obligations where satisfied, determining the transaction price and allocating the transaction price to the satisfied or unsatisfied performance obligations. |
There has been no impact of the adoption of IFRS 15 as at January 1, 2018.
IFRIC 22, Foreign Currency Transactions and Advance Consideration (“IFRIC 22”)
IFRIC 22 which addresses how to determine the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income (or part of it) and on the derecognition of a non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration in a foreign currency. IFRIC 22 is effective for annual periods beginning on or after January 1, 2018. The Corporation adopted IFRIC 22 retrospectively on January 1, 2018. The adoption of the standard did not have a significant impact on the financial statements.
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PROMETIC LIFE SCIENCES INC.
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the quarter ended on March 31, 2018
(In thousands of Canadian dollars, except for per share amounts) (Unaudited)
c) | New standards and interpretations not yet adopted |
The IFRS accounting standards and interpretations that the Corporation reasonably expects may have a material impact on the disclosures, the financial position or results of operations of the Corporation when applied at a future date are as follows:
IFRS 16, Leases (“IFRS 16”)
In January 2016, the IASB issued IFRS 16, a new standard that replaces IAS 17, Leases. IFRS 16 is a major revision of the way in which companies account for leases and will no longer permit off balance sheet leases. Adoption of IFRS 16 is mandatory and will be effective for the Corporation’s fiscal year beginning on January 1, 2019. Early application is permitted for companies that also apply IFRS 15. The Corporation is in the process of evaluating the impact of adopting IFRS 16 on its consolidated financial statements.
d) | Significant judgments and critical accounting estimates |
The preparation of the interim consolidated financial statements requires the use of judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the accompanying disclosures. The uncertainty that is often inherent in estimates and assumptions could result in material adjustments to assets or liabilities affected in future periods. As a result of the application of IFRS 15 Revenues, the Corporation has modified its disclosure on significant judgments relating to revenue recognition. The other significant accounting judgments and critical accounting estimates applied by the Corporation, disclosed in the consolidated financial statements for the year ended December 31, 2017, remain unchanged
Revenue recognition – The Corporation does at times enter into revenue agreements which provide, among other payments, up-front and milestone payments in exchange for licenses and other access to intellectual property. It may also enter into several agreements simultaneously that are different in nature such as license agreements, R&D services, supply and manufacturing agreements. In applying the IFRS 15 revenue recognition model, management may be required to apply, depending on the contracts, significant judgment including the identification of the performance obligations.
Determining whether the performance obligations are distinct involves evaluating whether the customer can benefit from the good or service on its own or together with other resources that are readily available to the customer. Once the distinct performance obligations are identified, management must then determine if each performance obligation is satisfied at a point in time or over time. For license agreements, this requires management to assess the level of advancement of the intellectual property being licensed.
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PROMETIC LIFE SCIENCES INC.
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the quarter ended on March 31, 2018
(In thousands of Canadian dollars, except for per share amounts) (Unaudited)
3. | Accounts receivable |
March 31, 2018 | December 31, 2017 | |||||||
Trade receivables | $ | 2,188 | $ | 1,796 | ||||
Tax credits and government grants receivable | 3,394 | 3,883 | ||||||
Sales taxes receivable | 1,275 | 763 | ||||||
Other receivables | 559 | 397 | ||||||
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$ | 7,416 | $ | 6,839 | |||||
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4. | Inventories |
March 31, 2018 | December 31, 2017 | |||||||
Raw materials | $ | 25,015 | $ | 24,075 | ||||
Work in progress | 9,047 | 10,090 | ||||||
Finished goods | 2,090 | 1,848 | ||||||
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$ | 36,152 | $ | 36,013 | |||||
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Inventories in the amount of $2,315 were recognized as cost of sales and other production expenses during the quarter ended March 31, 2018, ($1,638 for the quarter ended March 31, 2017). Inventory write-downs of $1,695 were recorded during the quarter ended March 31, 2018 ($nil for the quarter ended March 31, 2017). Of this amount, $1,522 pertains to a net realizable value write-down taken on raw materials as the Corporation sold some plasma during the second quarter of 2018 for $14,049 which was below the carrying cost of the inventory.
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PROMETIC LIFE SCIENCES INC.
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the quarter ended on March 31, 2018
(In thousands of Canadian dollars, except for per share amounts) (Unaudited)
5. | Other long-term assets |
March 31, 2018 | December 31, 2017 | |||||||
Restricted cash | $ | 232 | $ | 226 | ||||
Long-term receivables | 1,859 | 1,856 | ||||||
Deferred financing costs | 4,797 | 5,266 | ||||||
Option to acquire tangible assets (note 12a) | 653 | — | ||||||
Equity investments in scope of IFRS 9 | 1,229 | 1,228 | ||||||
Convertible debt | 419 | 87 | ||||||
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$ | 9,189 | $ | 8,663 | |||||
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PROMETIC LIFE SCIENCES INC.
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the quarter ended on March 31, 2018
(In thousands of Canadian dollars, except for per share amounts) (Unaudited)
6. | Capital assets |
Land and Buildings | Leasehold improvements | Production and laboratory equipment | Furniture and computer equipment | Total | ||||||||||||||||
Cost | ||||||||||||||||||||
Balance at January 1, 2018 | $ | 4,539 | $ | 12,824 | $ | 36,787 | $ | 3,555 | $ | 57,705 | ||||||||||
Additions | 9 | 201 | 470 | 110 | 790 | |||||||||||||||
Disposals | — | — | (63 | ) | (16 | ) | (79 | ) | ||||||||||||
Effect of foreign exchange differences | — | 433 | 347 | 40 | 820 | |||||||||||||||
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Balance at March 31, 2018 | $ | 4,548 | $ | 13,458 | $ | 37,541 | $ | 3,689 | $ | 59,236 | ||||||||||
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Accumulated depreciation | ||||||||||||||||||||
Balance at January 1, 2018 | $ | 219 | $ | 3,726 | $ | 6,962 | $ | 1,544 | $ | 12,451 | ||||||||||
Depreciation expense | 48 | 163 | 635 | 191 | 1,037 | |||||||||||||||
Disposals | — | — | (32 | ) | (18 | ) | (50 | ) | ||||||||||||
Effect of foreign exchange differences | — | 136 | 124 | 15 | 275 | |||||||||||||||
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Balance at March 31, 2018 | $ | 267 | $ | 4,025 | $ | 7,689 | $ | 1,732 | $ | 13,713 | ||||||||||
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Carrying amounts | ||||||||||||||||||||
At March 31, 2018 | $ | 4,281 | $ | 9,433 | $ | 29,852 | $ | 1,957 | $ | 45,523 | ||||||||||
At December 31, 2017 | 4,320 | 9,098 | 29,825 | 2,011 | 45,254 |
As at March 31, 2018, there are $10,303 and $3,949 of production and laboratory equipment and leasehold improvements, respectively, net of government grants, that are not yet available for use and for which depreciation has not started ($10,219 and $3,524 as of December 31, 2017).
As at March 31, 2018, production and laboratory equipment includes assets under finance leases with a net carrying amount of $1,110 ($1,131 as at December 31, 2017).
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PROMETIC LIFE SCIENCES INC.
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the quarter ended on March 31, 2018
(In thousands of Canadian dollars, except for per share amounts) (Unaudited)
7. | Intangible assets |
Licenses and other rights | Patents | Software | Total | |||||||||||||
Cost | ||||||||||||||||
Balance at January 1, 2018 | $ | 154,572 | $ | 6,346 | $ | 2,213 | $ | 163,131 | ||||||||
Additions | 5,512 | 97 | 286 | 5,895 | ||||||||||||
Disposals | — | (18 | ) | (34 | ) | (52 | ) | |||||||||
Effect of foreign exchange differences | 31 | 270 | 2 | 303 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Balance at March 31, 2018 | $ | 160,115 | $ | 6,695 | $ | 2,467 | $ | 169,277 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Accumulated amortization | ||||||||||||||||
Balance at January 1, 2018 | $ | 3,497 | $ | 2,250 | $ | 737 | $ | 6,484 | ||||||||
Amortization expense | 57 | 118 | 70 | 245 | ||||||||||||
Disposals | — | (2 | ) | (8 | ) | (10 | ) | |||||||||
Effect of foreign exchange differences | 23 | 198 | 3 | 224 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Balance at March 31, 2018 | $ | 3,577 | $ | 2,564 | $ | 802 | $ | 6,943 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Carrying amounts | ||||||||||||||||
At March 31, 2018 | $ | 156,538 | $ | 4,131 | $ | 1,665 | $ | 162,334 | ||||||||
At December 31, 2017 | 151,075 | 4,096 | 1,476 | 156,647 |
On January 29, 2018, the Corporation acquired two licenses. The first license, valued at $1,743, was paid for by the issuance of warrants (note 12c). In consideration of the second license, the Corporation agreed to pay an equivalent of US$3 million, US$1 million on the date of the transaction, and its first and second anniversary, to be settled in common shares of the Corporation (see note 10 for the license acquisition payment obligation and note 12a for the shares issued on the transaction date). The value attributed to the second license, based on the value recorded for the initial equity issued and the value of the payment obligation at the date of the transaction is $3,769. The estimated useful lives of the licenses is 10 years and 20 years for the first and second license, respectively.
14 of 29
PROMETIC LIFE SCIENCES INC.
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the quarter ended on March 31, 2018
(In thousands of Canadian dollars, except for per share amounts) (Unaudited)
8. | Accounts payable and accrued liabilities |
March 31, 2018 | December 31, 2017 | |||||||
Trade payables | $ | 18,178 | $ | 19,333 | ||||
Wages and benefits payable | 6,151 | 6,839 | ||||||
Current portion of operating and finance lease inducements and obligations | 2,185 | 3,301 | ||||||
Current portion of settlement fee payable (note 10) | 106 | 102 | ||||||
Current portion of royalty payment obligation (note 10) | 307 | — | ||||||
Current portion of license acquisition payment obligation (note 10) | 1,289 | — | ||||||
Current portion of other employee benefit liabilities (note 10) | 379 | 379 | ||||||
|
|
|
| |||||
$ | 28,595 | $ | 29,954 | |||||
|
|
|
|
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PROMETIC LIFE SCIENCES INC.
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the quarter ended on March 31, 2018
(In thousands of Canadian dollars, except for per share amounts) (Unaudited)
9. | Long-term debt |
Changes in the carrying value of the long-term debt during the quarter ended March 31, 2018 were as follows:
Balance at January 31, 2018 | $ | 87,020 | ||
Impact of adoption of IFRS 9 (note 2b) | (110 | ) | ||
Interest accretion | 3,783 | |||
Repayment of principal on long-term debt | (1,361 | ) | ||
Drawdown on non-revolving credit facility | 19,585 | |||
Foreign exchange revaluation on credit facility balance | 1,100 | |||
|
| |||
Balance at March 31, 2018 | $ | 110,017 | ||
|
| |||
Comprised of the following loans: | ||||
OID loan having a face value of $61,704 maturing on July 31, 2022 with an effective interest rate of 14.8% 1) | $ | 33,857 | ||
OID loan having a face value of $21,172 maturing on July 31, 2022 with an effective interest rate of 10.6% 1) | 13,690 | |||
OID loan having a face value of $30,593 maturing on July 31, 2022 with an effective interest rate of 14.4% 1) | 16,387 | |||
Non-revolving US dollars credit facility draws, expiring on November 30, 2019 bearing stated interest of 8.5% per annum (effective interest rate of 16.4%)1) | 43,237 | |||
Government term loan having a principal amount of $1,000 full repayable on August 31, 2018 with an effective interest rate of 9.2% and a stated interest of 3.2%2) | 994 | |||
Non-interest bearing government term loan having a principal amount of $2,306 repayable in equal monthly installments of $82 until January 31, 2020 with an effective interest rate of 2.8% | 1,852 | |||
|
| |||
$ | 110,017 | |||
Less current portion of long-term debt | (3,106 | ) | ||
|
| |||
Long-term portion of long-term debt | $ | 106,911 | ||
|
|
1) | The loans are secured by all the assets of the Corporation excluding patents and require that certain covenants be respected including maintaining an adjusted working capital ratio. |
2) | The loan is secured by the land, the manufacturing facility and the equipment located in Belleville. At March 31, 2018, the net carrying value of the secured assets is $8,615. |
The Corporation has a non-revolving credit facility agreement bearing interest of 8.5% per annum which expires November 30, 2019. The credit facility comprises two tranches of US$40 million which become available to draw upon once certain conditions are met. The drawdowns on the available tranches are limited to US$10 million per month.
16 of 29
PROMETIC LIFE SCIENCES INC.
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the quarter ended on March 31, 2018
(In thousands of Canadian dollars, except for per share amounts) (Unaudited)
As part of the agreement, the Corporation issued 54 million warrants on November 30, 3017 (“Seventh Warrants”) to the holder of the long-term debt in consideration for the non-revolving credit facility. Further details concerning the warrants are provided in note 12c. At each drawdown, the value of the proceeds drawn are allocated to the debt and equity based on their fair value.
The Corporation drew on the credit facility on January 22, 2018 and on February 23, 2018 respectively. The total cash proceeds received of $25,155 were allocated to the debt and warrants based on their fair values. The proceeds allocated to the debt upon the two drawdowns in 2018 was $19,585. The fair value of the debt was determined using a discounted cash flow model for the debt instrument with a market interest rate of 17.0%.
The fees incurred in regards of the credit facility, which comprise legal fees and also the 10 million warrants issued upon signature of the credit facility, for a total of $5,558 have been recorded in the consolidated statement of financial position as other long-term assets and are being amortized and recognized into the consolidated statement of operations over the term of the credit facility.
17 of 29
PROMETIC LIFE SCIENCES INC.
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the quarter ended on March 31, 2018
(In thousands of Canadian dollars, except for per share amounts) (Unaudited)
10. | Other long-term liabilities |
March 31, 2018 | December 31, 2017 | |||||||
Settlement fee payable | $ | 197 | $ | 190 | ||||
Royalty payment obligation | 2,796 | 2,963 | ||||||
License acquisition payment obligation | 2,578 | — | ||||||
Other employee benefit liabilities | 514 | 593 | ||||||
Other long-term liabilities | 69 | 70 | ||||||
|
|
|
| |||||
$ | 6,154 | $ | 3,816 | |||||
Less: | ||||||||
Current portion of settlement fee payable (note 8) | (106 | ) | (102 | ) | ||||
Current portion of royalty payment obligation (note 8) | (307 | ) | — | |||||
Current portion of license acquisition payment obligation (note 8) | (1,289 | ) | — | |||||
Current portion of employee benefit liabilities (note 8) | (379 | ) | (379 | ) | ||||
|
|
|
| |||||
$ | 4,073 | $ | 3,335 | |||||
|
|
|
|
In consideration for acquiring a license (note 7), the Corporation agreed to pay an equivalent of US$3 million, US$1 million on the date of the transaction, and its first and second anniversary, to be settled in common shares of the Corporation. A financial liability of $2,578 has been recognised for the second and third payments.
11. | Contractual obligations |
The following table presents the contractual maturities of the financial liabilities, excluding operating and finance leases as of March 31, 2018:
Contractual Cash flows | ||||||||||||||||||||
At March 31, 2018 | Carrying amount | Payable within 1 year | 2 - 3 years | Later than 4 years | Total | |||||||||||||||
Accounts payable and accrued liabilities1) | $ | 26,410 | $ | 26,410 | $ | — | $ | — | $ | 26,410 | ||||||||||
Advance on revenues from a supply agreement | 1,541 | 1,541 | — | — | 1,541 | |||||||||||||||
Long-term portion of settlement fee payable | 91 | — | 115 | — | 115 | |||||||||||||||
Long-term portion of royalty payment obligation | 2,489 | — | 2,887 | — | 2,887 | |||||||||||||||
License acquisition payment obligation | 1,289 | — | 1,289 | — | 1,289 | |||||||||||||||
Long-term portion of other employee benefit liabilities | 135 | — | 149 | — | 149 | |||||||||||||||
Long-term debt 2) | 110,017 | 7,603 | 55,340 | 113,469 | 176,412 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
$ | 141,972 | $ | 35,554 | $ | 59,780 | $ | 113,469 | $ | 208,803 | |||||||||||
|
|
|
|
|
|
|
|
|
|
1) | Excluding $2,185 for current portion of operating and finance lease inducement and obligations. |
2) | Under the terms of the OID loans and the non-revolving line of credit (note 9), the holder of Second, Third, Fourth, Fifth, Sixth and Seventh Warrants may decide to cancel a portion of the face values of these loans as payment upon the exercise of these warrants. The maximum repayment due on these loans has been included in the above table. |
18 of 29
PROMETIC LIFE SCIENCES INC.
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the quarter ended on March 31, 2018
(In thousands of Canadian dollars, except for per share amounts) (Unaudited)
12. | Share capital and other equity instruments |
a) | Share capital |
March 31, 2018 | March 31, 2017 | |||||||||||||||
Number | Amount | Number | Amount | |||||||||||||
Issued common shares | 712,329,990 | $ | 577,947 | 668,691,694 | $ | 508,392 | ||||||||||
Share purchase loan to an officer | — | (400 | ) | — | (400 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Issued and fully paid common shares | 712,329,990 | $ | 577,547 | 668,691,694 | $ | 507,992 | ||||||||||
|
|
|
|
|
|
|
|
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PROMETIC LIFE SCIENCES INC.
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the quarter ended on March 31, 2018
(In thousands of Canadian dollars, except for per share amounts) (Unaudited)
Changes in the issued and outstanding common shares during the quarters ended March 31, 2018 and 2017 were as follows:
March 31, 2018 | March 31, 2017 | |||||||||||||||
Number | Amount | Number | Amount | |||||||||||||
Balance - beginning of period | 710,593,273 | $ | 575,150 | 623,229,331 | $ | 480,237 | ||||||||||
Issued to acquire assets | 1,113,342 | 1,960 | — | — | ||||||||||||
Exercise of future investment rights (note 12c) | — | — | 44,791,488 | 27,594 | ||||||||||||
Exercise of stock options (note 12b) | 623,375 | 437 | 670,875 | 161 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Balance - end of period | 712,329,990 | $ | 577,547 | 668,691,694 | $ | 507,992 | ||||||||||
|
|
|
|
|
|
|
|
On January 29, 2018, the Corporation issued 742,228 common shares in partial payment for the acquisition of a license (note 7) and 371,114 common shares to acquire an option to buy production equipment (note 5). Based on the $1.76 share price on that date, the values attributed to the shares issued were $1,960.
b) | Contributed surplus (Share-based payments) |
Stock options
Changes in the number of stock options outstanding during quarters ended March 31, 2018 and 2017 were as follows:
March 31, 2018 | March 31, 2017 | |||||||||||||||
Number | Weighted average exercise price | Number | Weighted average exercise price | |||||||||||||
Balance - beginning of period | 14,463,270 | $ | 1.79 | 14,372,640 | $ | 1.41 | ||||||||||
Granted | — | — | 40,000 | 2.22 | ||||||||||||
Forfeited | (155,784 | ) | 1.99 | (33,107 | ) | 2.30 | ||||||||||
Exercised | (623,375 | ) | 0.42 | (670,875 | ) | 0.14 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Balance - end of period | 13,684,111 | $ | 1.85 | 13,708,658 | $ | 1.48 | ||||||||||
|
|
|
|
|
|
|
|
During the quarter ended March 31, 2018, 623,375 options were exercised resulting in cash proceeds of $260 and a transfer from contributed surplus to share capital of $177. The weighted average share price on the date of exercise of the options during the quarter ended March 31, 2018 was $1.55.
During the quarter ended March 31, 2017, 670,875 options were exercised resulting in cash proceeds of $96 and a transfer from contributed surplus to share capital of $65. The weighted average share price on the date of exercise of the options during the quarter ended March 31, 2017 was $2.17.
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PROMETIC LIFE SCIENCES INC.
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the quarter ended on March 31, 2018
(In thousands of Canadian dollars, except for per share amounts) (Unaudited)
The Corporation uses the Black-Scholes option pricing model to calculate the fair value of options at the date of grant. The weighted average inputs into the model and the resulting grant date fair values during the quarter ended March 31, 2017 was as follows:
2017 | ||||
Expected dividend rate | — | |||
Expected volatility of share price | 63.0 | % | ||
Risk-free interest rate | 1.0 | % | ||
Expected life in years | 4.1 | |||
Weighted average grant date fair value | $ | 1.03 |
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PROMETIC LIFE SCIENCES INC.
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the quarter ended on March 31, 2018
(In thousands of Canadian dollars, except for per share amounts) (Unaudited)
At March 31, 2018, options issued and outstanding by range of exercise price are as follows:
Range of exercise price | Number outstanding | Weighted average remaining contractual life (in years) | Weighted average exercise price | Number exercisable | Weighted average exercise price | |||||||||||||||
$0.34 - $ 0.88 | 2,479,249 | 0.2 | $ | 0.39 | 2,479,249 | $ | 0.39 | |||||||||||||
$1.10 - $ 2.02 | 2,813,911 | 2.6 | 1.28 | 1,839,967 | 1.20 | |||||||||||||||
$2.07 - $ 2.44 | 5,703,951 | 5.8 | 2.23 | 2,224,453 | 2.33 | |||||||||||||||
$2.55 - $ 3.19 | 2,687,000 | 3.1 | 2.98 | 1,200,159 | 2.98 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
13,684,111 | 3.6 | $ | 1.85 | 7,743,828 | $ | 1.54 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
A share-based payment compensation expense of $725 was recorded for the options for the quarter ended March 31, 2018 ($693 for the quarter ended March 31, 2017).
Restricted share units (“RSU”)
Changes in the number of RSU outstanding during the quarter ended March 31, 2018 and 2017 were as follows:
March 31, 2018 | March 31, 2017 | |||||||
Balance - beginning of period | 10,561,283 | 9,999,251 | ||||||
Expired | (817,279 | ) | (3,157,311 | ) | ||||
Forfeited | (53,330 | ) | — | |||||
|
|
|
| |||||
Balance - end of period | 9,690,674 | 6,841,940 | ||||||
|
|
|
|
At March 31, 2018, 1,895,224 vested RSU and 7,795,450 unvested RSU were outstanding. At March 31, 2017, 1,252,103 vested RSU and 5,589,837 unvested RSU were outstanding. A share-based payment compensation expense of $395 was recorded during the quarter ended March 31, 2018 ($549 for the quarter ended March 31, 2017).
During the quarter ended March 31, 2017, the Board decided to replace 1,220,623 of the expired RSU with an equivalent number of RSU keeping the same vesting conditions but extending the evaluation period for the attainment of the objectives by one year to December 31, 2017. The replacement RSU were issued shortly thereafter in April 2017 and are not included in the number of outstanding RSU as of March 31, 2017 in the above table. This transaction was accounted for as a modification of the existing RSU that did not have an impact on the value of the RSU.
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PROMETIC LIFE SCIENCES INC.
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the quarter ended on March 31, 2018
(In thousands of Canadian dollars, except for per share amounts) (Unaudited)
Share-based payment expense
The total share-based payment expense, comprising the above mentioned expenses for stock options and RSU, has been included in the consolidated statements of operations for the quarters ended March 31, 2018 and 2017 as indicated in the following table:
Quarter ended March 31, | ||||||||
2018 | 2017 | |||||||
Cost of sales and other production expenses | $ | 54 | $ | 64 | ||||
Research and development expenses | 470 | 602 | ||||||
Administration, selling and marketing expenses | 596 | 576 | ||||||
|
|
|
| |||||
$ | 1,120 | $ | 1,242 | |||||
|
|
|
|
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PROMETIC LIFE SCIENCES INC.
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the quarter ended on March 31, 2018
(In thousands of Canadian dollars, except for per share amounts) (Unaudited)
c) | Warrants and future investment rights (“rights”) |
The following table summarizes the changes in the number of warrants and rights outstanding during the quarters ended March 31, 2018 and 2017:
March 31, 2018 | March 31, 2017 | |||||||||||||||
Number | Weighted average exercise price | Number | Weighted average exercise price | |||||||||||||
Balance of warrants and rights - beginning of period | 121,672,099 | $ | 2.11 | 101,863,180 | $ | 1.44 | ||||||||||
Issued to acquire assets | 4,000,000 | 3.00 | — | — | ||||||||||||
Exercise of future investment rights | — | — | (44,791,488 | ) | 0.47 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Balance of warrants - end of period | 125,672,099 | $ | 2.14 | 57,071,692 | $ | 2.20 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Balance of warrants exercisable - end of period | 97,672,099 | $ | 2.21 | 57,071,692 | $ | 2.20 | ||||||||||
|
|
|
|
|
|
|
|
2018
On January 29, 2018, the Corporation issued four million warrants to acquire common shares in consideration of a license. The warrants have an exercise price of $3.00 per share and expire after five years. The first two million warrants become exercisable after one year while the second two million warrants become exercisable after two year. The fair value of the warrants and consequently the value of the license is $1,743 and was determined using a Black-Scholes option pricing model.
On November 30, 2017, pursuant to entering into a non-revolving credit facility agreement, the Corporation issued the Seventh Warrants to the holder of the long-term debt. Further details concerning the credit facility are provided in note 9. The Seventh Warrants consist of 54 million warrants from which 10 million warrants were exercisable as of the date of the agreement and the remaining 44 million warrants become exercisable as and if the Corporation draws upon the credit facility in increments of US$10 million; five million warrants become exercisable for each US$10 million drawn on the first US$40 million tranche of the credit facility and six million warrants become exercisable for each US$10 million drawn on the second US$40 million tranche of the credit facility. Each warrant gives the holder the right to acquire one common share at an exercise price of $1.70. The warrants expire on June 30, 2026. Although the warrants are issued and outstanding in the warrant table above, for accounting purposes, these warrants will be recognized and measured at the time they become exercisable.
As the Corporation drew an amount of US$10 million on the non-revolving credit facility on each of January 22 and February 23, 2018, the amounts received were allocated to the debt and the warrants based on their fair value at the time of the drawdown. The value of the proceeds attributed to the warrants that became exercisable on those dates was $2,925 and $2,645 respectively, which was recorded in equity.
24 of 29
PROMETIC LIFE SCIENCES INC.
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the quarter ended on March 31, 2018
(In thousands of Canadian dollars, except for per share amounts) (Unaudited)
2017
During the quarter ended March 31, 2017, all of the 44,791,488 rights were exercised resulting in cash proceeds of $21,052 and a transfer from warrants and future investment rights to share capital of $6,542.
As at March 31, 2018, the following warrants were outstanding:
Number | Expiry date | Exercise price | ||||||||||
277,910 | September 2019 | $ | 6.39 | |||||||||
1,000,000 | September 2021 | 0.52 | ||||||||||
20,276,595 | September 2021 | 0.77 | ||||||||||
16,723,807 | July 2022 | 1.87 | ||||||||||
7,000,000 | July 2022 | 3.00 | ||||||||||
11,793,380 | July 2022 | 4.70 | ||||||||||
10,600,407 | October 2023 | 3.70 | ||||||||||
4,000,000 | January 2023 | 3.00 | ||||||||||
54,000,000 | June 2026 | 1.70 | ||||||||||
|
|
|
| |||||||||
125,672,099 | $ | 2.14 | ||||||||||
|
|
|
|
13. | Non-controlling interests |
The interest in the subsidiaries for which the Corporation holds less than 100 % interest are as follows:
Name of subsidiary | Segment activity | Place of incorporation and operation | Proportion of ownership interest held by the group | |||||||||||||
2018 | 2017 | |||||||||||||||
Prometic Bioproduction Inc. | Plasma-derived therapeutics | Quebec, Canada | 87 | % | 87 | % | ||||||||||
Pathogen Removal and Diagnostic Technologies Inc. | Bioseparations | Delaware, U.S. | 77 | % | 77 | % | ||||||||||
NantPro Biosciences, LLC | Plasma-derived therapeutics | Delaware, U.S. | 73 | % | 73 | % |
The non-controlling interests balance on the consolidated statements of financial position and the losses allocated to non-controlling interests in the consolidated statements of operations, per subsidiary are as follows:
March 31, 2018 | December 31, 2017 | |||||||
Consolidated statements of financial position: | ||||||||
Prometic Bioproduction Inc. | $ | (11,472 | ) | $ | (10,722 | ) | ||
Pathogen Removal and Diagnostic Technologies Inc. | (6,440 | ) | (5,901 | ) | ||||
NantPro Biosciences, LLC | 38,070 | 38,070 | ||||||
|
|
|
| |||||
Total non-controlling interests | $ | 20,158 | $ | 21,447 | ||||
|
|
|
|
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PROMETIC LIFE SCIENCES INC.
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the quarter ended on March 31, 2018
(In thousands of Canadian dollars, except for per share amounts) (Unaudited)
Quarter ended March 31, | ||||||||
2018 | 2017 | |||||||
Consolidated statements of operations: | ||||||||
Prometic Bioproduction Inc. | $ | (749 | ) | $ | (1,210 | ) | ||
Pathogen Removal and Diagnostic Technologies Inc. | (540 | ) | (590 | ) | ||||
NantPro Biosciences, LLC | (1,655 | ) | (936 | ) | ||||
|
|
|
| |||||
Total non-controlling interests | $ | (2,944 | ) | $ | (2,736 | ) | ||
|
|
|
|
The NantPro Biosciences, LLC non-controlling interest’s share in the funding of the subsidiary by Prometic was $1,655 for the quarter ended March 31, 2018 ($936 for the quarter ended March 31, 2017) and has been presented in the consolidated statements of changes in equity.
26 of 29
PROMETIC LIFE SCIENCES INC.
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the quarter ended on March 31, 2018
(In thousands of Canadian dollars, except for per share amounts) (Unaudited)
14. | Revenues |
Quarter ended March 31, | ||||||||
2018 | 2017 | |||||||
Revenues from the sale of goods | $ | 3,789 | $ | 4,424 | ||||
Revenues from the rendering of services | 250 | 201 | ||||||
Rental revenue | 253 | 241 | ||||||
|
|
|
| |||||
$ | 4,292 | $ | 4,866 | |||||
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|
|
15. | Segmented information |
The Corporation’s three operating segments are Bioseparations, Plasma-derived therapeutics and Small molecule therapeutics.
a) Revenues and expenses by operating segments:
For the quarter ended March 31, 2018 | Bioseparations | Plasma-derived therapeutics | Small molecule therapeutics | Reconciliation to statement of operations | Total | |||||||||||||||
External revenues | $ | 3,734 | $ | 523 | $ | — | $ | 35 | $ | 4,292 | ||||||||||
Intersegment revenues | 117 | 14 | — | (131 | ) | — | ||||||||||||||
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|
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|
| |||||||||||
Total revenues | 3,851 | 537 | — | (96 | ) | 4,292 | ||||||||||||||
Cost of sales and other production expenses | 2,732 | 2,104 | — | (70 | ) | 4,766 | ||||||||||||||
R&D - Manufacturing and purchase cost of therapeutics to be used in clinical trials | — | 6,331 | 2 | (31 | ) | 6,302 | ||||||||||||||
R&D - Other expenses | 1,781 | 9,385 | 4,948 | — | 16,114 | |||||||||||||||
Administration, selling and marketing expenses | 753 | 2,908 | 897 | 3,145 | 7,703 | |||||||||||||||
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|
|
|
| |||||||||||
Segment loss | $ | (1,415 | ) | $ | (20,191 | ) | $ | (5,847 | ) | $ | (3,140 | ) | $ | (30,593 | ) | |||||
Loss on foreign exchange | 1,111 | |||||||||||||||||||
Finance costs | 4,243 | |||||||||||||||||||
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Net loss before income taxes | $ | (35,947 | ) | |||||||||||||||||
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Other information | ||||||||||||||||||||
Depreciation and amortization | $ | 243 | $ | 827 | $ | 131 | $ | 81 | $ | 1,282 | ||||||||||
Share-based payment expense | 68 | 303 | 171 | 578 | 1,120 |
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PROMETIC LIFE SCIENCES INC.
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the quarter ended on March 31, 2018
(In thousands of Canadian dollars, except for per share amounts) (Unaudited)
For the quarter ended March 31, 2017 (restated) | Bioseparations | Plasma-derived therapeutics | Small molecule therapeutics | Reconciliation to statement of operations | Total | |||||||||||||||
External revenues | $ | 4,143 | $ | 723 | $ | — | $ | — | $ | 4,866 | ||||||||||
Intersegment revenues | 479 | 5 | — | (484 | ) | — | ||||||||||||||
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Total revenues | 4,622 | 728 | — | (484 | ) | 4,866 | ||||||||||||||
Cost of sales and other production expenses | 2,029 | 801 | — | (440 | ) | 2,390 | ||||||||||||||
R&D - Manufacturing and purchase cost of therapeutics to be used in clinical trials | — | 8,404 | 866 | (39 | ) | 9,231 | ||||||||||||||
R&D - Other expenses | 1,501 | 10,446 | 3,207 | 2 | 15,156 | |||||||||||||||
Administration, selling and marketing expenses | 642 | 2,284 | 550 | 3,470 | 6,946 | |||||||||||||||
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Segment profit (loss) | $ | 450 | $ | (21,207 | ) | $ | (4,623 | ) | $ | (3,477 | ) | $ | (28,857 | ) | ||||||
Loss on foreign exchange | 216 | |||||||||||||||||||
Finance costs | 1,374 | |||||||||||||||||||
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Net loss before income taxes | $ | (30,447 | ) | |||||||||||||||||
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Other information | ||||||||||||||||||||
Depreciation and amortization | $ | 215 | $ | 615 | $ | 100 | $ | 76 | $ | 1,006 | ||||||||||
Share-based payment expense | 76 | 332 | 200 | 634 | 1,242 |
During the second quarter of 2017, the Corporation modified its operating segments (see note 4c in the audited annual consolidated financial statements for the year ended December 31, 2017). The first quarter of 2017 segment profit (loss) has been restated to conform to the new presentation.
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PROMETIC LIFE SCIENCES INC.
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the quarter ended on March 31, 2018
(In thousands of Canadian dollars, except for per share amounts) (Unaudited)
b) Revenues by location
Quarter ended March 31, | ||||||||
2018 | 2017 | |||||||
Austria | $ | 1,976 | $ | 47 | ||||
Switzerland | 916 | 1,851 | ||||||
Netherlands | 604 | 1,359 | ||||||
Canada | 558 | 613 | ||||||
United Kingdom | 214 | 731 | ||||||
Other countries | 24 | 265 | ||||||
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$ | 4,292 | $ | 4,866 | |||||
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Revenues are attributed to countries based on the location of customers.
The Corporation derives significant revenues from certain customers. During the quarter ended March 31, 2018, there were three customers in the Bioseparations segment who accounted for 81% (46%, 21% and 14% respectively) of total revenues. For the quarter ended March 31, 2017, three customers who accounted for 81% (38%, 28% and 15% respectively) of total revenues in the Bioseparations segment.
16. | Comparative information |
Certain of the prior period figures have been reclassified to conform to the current presentation.
17. | Subsequent events |
In April 2018, the Corporation and the non-controlling shareholders of Prometic Bioproduction Inc. entered into an agreement whereby Prometic would acquire their 13% interest in the subsidiary in exchange for 4,712,422 common shares of the Corporation. Consequently, the value of the total net liabilities attributed to the NCI at the date of the transaction will be derecognized from the statement of financial position, the equity issued in payment of the 13% ownership acquired will be recorded at the fair value of the equity issued and a loss on acquisition of the non-controlling interest in Prometic Bioproduction Inc. will be recognized in the consolidated statement of operations. The Corporation has not yet finalized the amounts to be recorded for this transaction.
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