MAYNARD, Mass., March 16, 2017 /PRNewswire/ -- AquaBounty
Technologies, Inc. (NASDAQ: AQB; AIM: ABTU) ("AquaBounty" or the
"Company"), a biotechnology company focused on enhancing
productivity in the aquaculture market and a majority-owned
subsidiary of Intrexon Corporation (NYSE: XON), announces the
Company's financial results for the year ended December 31,
2016.
Financial and Operational Summary:
- Received regulatory approval from Health Canada and the
Canadian Food Inspection Agency for the production, sale and
consumption of the Company's AquAdvantage® Salmon
("AAS")
- Received a favorable decision from the Canadian Federal Court
of Appeal dismissing the appeal brought before it by the Ecology
Action Centre and Living Oceans Society, ruling that the decision
by the Ministers of Environment and Health to allow production of
AAS in Canada was reasonable and
made in the prescribed manner
- Commenced field trials of AAS in Argentina and Brazil
- Purchased the former Atlantic Sea Smolt hatchery site on
Prince Edward Island for
broodstock expansion and egg production
- Completed a US$10.0 million
convertible debt facility with Intrexon Corporation ("Intrexon")
and, post period, raised a further US$25.0
million from Intrexon via an equity subscription
- Registered the Company's common shares under the U.S.
Securities Exchange Act of 1934, which was a necessary step to
listing the Company's common shares on the NASDAQ Capital
Market, with trading commencing post period on January 19,
2017
- Cash used during the year, net of new equity provided,
increased to US$8.0 million
(2015: US$6.8 million)
Ronald Stotish, Chief Executive
Officer of AquaBounty, stated: "This was a highly successful year
in which we continued to advance both our regulatory and commercial
goals. We achieved a major milestone in receiving regulatory
approval from Health Canada, making it the second major
regulatory organization, alongside the FDA, to approve
the production, sale, and consumption of our AquAdvantage
Salmon. We also took steps towards progressing our
commercial plan by purchasing a salmon hatchery site in
Canada for broodstock expansion
and egg production. We now eagerly look forward
to working to bring our nutritious, safe, and more
sustainably produced salmon to consumers."
Chairman's Statement:
Following the historic regulatory clearance by the United States
Food and Drug Administration ("FDA") in 2015 of AAS, the Company
received a second approval for AAS, in Canada, in May 2016. Based on these
events, AquaBounty began the initial stages of its plans to
commercialize AAS and to further its progress with regulators in
several other countries. The strong support and financial
backing of the Company's majority shareholder, Intrexon, have been
crucial to this endeavour and have put AquaBounty on a solid
footing.
Regulatory Approval
Health Canada, the department
of the government of Canada with
responsibility for national public health, conducted a
comprehensive assessment of AAS according to the Codex Alimentarius
Guideline for the Conduct of Food Safety Assessment of Foods
Derived from Recombinant-DNA Animals. The Health Canada
review concluded that AAS does not raise concerns related to food
safety. Health Canada also noted its opinion that
fillets derived from AAS are as safe and nutritious as fillets from
currently available farmed Atlantic salmon.
Commercial Developments
In July, the purchase of the former Atlantic Sea
Smolt hatchery in Rollo Bay
West on Prince Edward
Island was completed for the purpose of broodstock expansion
to increase production of Atlantic salmon eggs. Renovations
to the site are proceeding, and, when completed, it is expected to
provide sufficient egg production to meet the Company's
requirements for the next several years.
The plan to expand commercial development outside North America was advanced with approval for
the importation of AAS eggs for local field trials in Argentina and Brazil. These trials
commenced in April and, although the timescales involved in this
are outside of AquaBounty's control, the Company is encouraged by
the progress that has been made to date.
In Panama, the Company received
approval for the commercial production and export of fish produced
from its most recent batch of AAS eggs delivered to the farm in
2016. These fish are expected to be ready for harvest and
export to North America in early
2018. AquaBounty continues to seek full regulatory approval for the
production and local sale of AAS in Panama, but we do not currently have a
timescale for receipt of this approval.
Additionally, the Company has begun an active search
in both the United States and
Canada for either an existing
land-based recirculating aquaculture system facility or a site on
which to build a new facility for the commercial production of
AAS.
Update on Legal Actions
During 2016, a coalition of Non-Governmental Organizations
("NGOs") filed a complaint against the FDA for the approval of AAS
in the United States, claiming
that the agency did not have the authority to regulate genetically
modified animals. The Company believes this action, which
remains ongoing, lacks legal merit, but it may have the effect of
prolonging the commercialization process in the United States.
In Canada, a legal challenge
was filed in 2014 by a group of NGOs against the decision by the
Ministers of Environment and Health (the "Ministers") to allow
production of AAS in Canada for
commercial use. In December 2015, the Federal Court in
Canada ruled that the decision of
the Ministers was reasonable and dismissed the entire application
brought before it. The petitioners then appealed the Court's
ruling, but the Federal Court of Appeal in Canada dismissed the appeal in
October 2016.
Congressional Developments
In January 2016, as part of the 2016 Omnibus Appropriations
Act (the "Act") passed by the United States Congress, an amendment
was added that directed the FDA to issue final guidance for the
labeling of AAS. Given this directive, the FDA issued an
Import Alert on AAS and stated that a temporary hold was being
implemented to comply with language in the Act, which was extended
beyond its initial end date to April
2017 by a continuing resolution. The temporary hold
has no current impact on the Company's operations as AquaBounty is
not currently importing AAS into the United States. At this
time, the Company cannot predict when or if the Import Alert might
be lifted or when the FDA might finalize its labeling guidance.
Funding
In February 2016, AquaBounty obtained an unsecured,
convertible bridge loan of US$10.0 million from Intrexon to cover the
Company's immediate working capital requirements. In
December, Intrexon converted the US$10.4
million of outstanding principal and accrued interest on
this loan into common shares. The Company also executed a
share purchase agreement with Intrexon in November 2016 for
US$25.0 million in new equity
funding. This transaction closed, post period, in
January 2017 and was accompanied by a distribution of
AquaBounty common shares by Intrexon to its shareholders. In
connection with the listing of the Company's common shares on
NASDAQ, the Company effected a 1-for-30 reverse share split in
January 2017.
Financial Review
Operating expenses for the year amounted to US$8.1 million (2015: US$7.0 million). The increase was due
primarily to headcount additions in the Company's research group
and legal fees for the SEC registration and FDA legal
challenge. Sales and marketing expenses were US$0.9 million (2015: US$1.0 million); research and development
expenses were US$3.4 million
(2015: US$3.3 million); and
general and administrative expenses were US$3.8 million (2015: US$2.7 million). Including
US$0.4 million of non-cash
interest expense for the convertible loan, the net loss for the
year increased to US$8.5 million
(2015: US$7.0 million), and cash
used for the year, net of new equity received, was US$8.0 million (2015: US$6.8 million). Funds available at
the year-end amounted to US$3.3 million, not including the
US$25.0 million of new equity
funding that closed in January 2017.
Outlook
The Board continues to carefully consider its commercial options
and expects to make meaningful progress with the
implementation of the Company's near-term development plan in 2017.
With the support of Intrexon, the recent infusion of new
funding allows the Company to move forward with the completion of
renovations at Rollo Bay and the
construction of a pilot-scale grow-out unit for commercial
production. It is expected that this will be followed by the
establishment of a site suitable for the larger scale commercial
grow-out of AAS in North America. As a result, whilst there
remains uncertainty over the timing of commercialization, the Board
remains confident in the market need for AAS as a sustainable
alternative to imported sea cage produced Atlantic salmon and looks
forward to updating shareholders on progress in due course.
Forward-Looking Statements:
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of
1934, as amended. All statements other than statements of
historical fact contained in this press release are forward-looking
statements, including statements regarding management's
expectations for future financial and operational performance and
operating expenditures, expected growth, and business outlook; the
nature of and progress toward the Company's commercialization plan;
the future introduction of AAS to consumers; the countries in which
the Company may obtain regulatory approval and the progress toward
such approvals; any continued backing of the Company by Intrexon;
the volume of eggs the Company may be able to produce; the timeline
for production of saleable fish; the expected advantages of
land-based systems over sea cage production; the validity and
impact of legal actions; the potential for lifting of the FDA
Import Alert and the issuance of labeling guidance; the anticipated
progress to be made by the Company during 2017; the completion of
the Rollo Bay renovations and the
construction of a pilot-scale grow-out unit; and the establishment
of a larger-scale grow-out facility. Forward-looking
statements may be identified with words such as "will," "may,"
"expect," "plan," "anticipate," "upcoming," "believe," "estimate",
or similar terminology, and the negative of these terms.
Forward-looking statements are not promises or guarantees of future
performance, and are subject to a variety of risks and
uncertainties, many of which are beyond our control, which could
cause actual results to differ materially from those contemplated
in these forward-looking statements. Forward-looking
statements speak only as of the date hereof, and, except as
required by law, we undertake no obligation to update or revise
these forward-looking statements. For additional information
regarding these and other risks faced by us, refer to our public
filings with the Securities and Exchange Commission ("SEC"),
available on the Investors section of our website at
www.aquabounty.com and on the SEC's website at
www.sec.gov.
This announcement contains inside information. The person
responsible for arranging for the release of this announcement on
behalf of the Company is David
Frank, Chief Financial Officer.
Consolidated
balance sheet
|
|
|
|
|
|
|
|
As
of
December
31,
|
|
|
|
2016
|
2015
|
|
|
|
|
|
Assets
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
3,324,609
|
$
1,313,421
|
|
Certificate of
deposit
|
10,666
|
10,339
|
|
Other
receivables
|
164,743
|
41,897
|
|
Prepaid expenses and
other current assets
|
72,983
|
109,898
|
|
Total current
assets
|
3,573,001
|
1,475,555
|
|
|
|
|
|
Property, plant and
equipment, net
|
1,723,707
|
741,340
|
Definite-lived
intangible assets, net
|
198,698
|
206,381
|
Indefinite-lived
intangible assets
|
191,800
|
191,800
|
Other
assets
|
21,628
|
21,628
|
Total
assets
|
$
5,708,834
|
$
2,636,704
|
|
|
|
|
|
Liabilities and
stockholders' equity (deficit)
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued liabilities
|
$
1,017,851
|
$
621,909
|
|
Current
debt
|
17,913
|
-0
|
|
Total current
liabilities
|
1,035,764
|
621,909
|
|
|
|
|
|
Long-term
debt
|
2,645,015
|
2,070,366
|
|
Total
liabilities
|
3,680,779
|
2,692,275
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Stockholders' equity
(deficit):
|
|
|
|
Common stock, $0.001
par value, 200,000,000 shares authorized;
|
|
|
|
|
6,463,935 (2015:
5,247,604) shares outstanding
|
6,464
|
5,248
|
|
Additional paid-in
capital
|
101,581,724
|
90,968,813
|
|
Accumulated other
comprehensive loss
|
(286,272)
|
(226,432)
|
|
Accumulated
deficit
|
(99,273,861)
|
(90,803,200)
|
Total stockholders'
equity (deficit)
|
2,028,055
|
(55,571)
|
|
|
|
|
|
Total liabilities and
stockholders' equity (deficit)
|
$
5,708,834
|
$
2,636,704
|
|
|
|
|
|
Consolidated
statements of operations and comprehensive loss
|
|
|
|
|
|
|
|
Years ended
December 31,
|
|
|
|
2016
|
2015
|
2014
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
Sales and
marketing
|
$
860,365
|
$
993,706
|
$
729,655
|
|
Research and
development
|
3,429,400
|
3,338,411
|
3,212,908
|
|
General and
administrative
|
3,775,289
|
2,696,369
|
3,192,716
|
|
Total costs and
expenses
|
8,065,054
|
7,028,486
|
7,135,279
|
|
|
|
|
|
|
Operating
loss
|
(8,065,054)
|
(7,028,486)
|
(7,135,279)
|
|
|
|
|
|
|
Other income
(expense)
|
|
|
|
|
Interest
expense
|
(402,554)
|
(10)
|
(62)
|
|
Gain on disposal of
equipment
|
2,861
|
1,912
|
-
|
|
Other income
(expense), net
|
(5,914)
|
(4,928)
|
7,966
|
|
Total other income
(expense)
|
(405,607)
|
(3,026)
|
7,904
|
|
|
|
|
|
|
Net
loss
|
$
(8,470,661)
|
$
(7,031,512)
|
$
(7,127,375)
|
|
|
|
|
|
|
Other
comprehensive income (loss):
|
|
|
|
|
Foreign currency
translation gain (loss)
|
(59,840)
|
228,740
|
111,138
|
|
Total other
comprehensive income (loss)
|
(59,840)
|
228,740
|
111,138
|
|
|
|
|
|
|
Comprehensive
loss
|
$
(8,530,501)
|
$
(6,802,772)
|
$
(7,016,237)
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net
loss per share
|
$
(1.60)
|
$
(1.40)
|
$
(1.52)
|
Weighted average
number of common shares -
|
|
|
|
|
basic and
diluted
|
5,303,113
|
5,037,367
|
4,679,737
|
|
|
|
|
|
|
Consolidated statements of changes in stockholders' equity
(deficit)
|
Common
stock issued
and
outstanding
|
Par
value
|
Additional
paid-in capital
|
Accumulated
other
comprehensive
loss
|
Accumulated
deficit
|
Total
|
Balance at December
31, 2013
|
4,176,941
|
$
4,177
|
$
77,703,338
|
$
(566,310)
|
$
(76,644,313)
|
$
496,892
|
Net loss
|
|
|
|
|
(7,127,375)
|
(7,127,375)
|
Other comprehensive
income
|
|
|
|
111,138
|
|
111,138
|
Issuance of common
stock, net of
expenses
|
634,679
|
635
|
9,742,851
|
|
|
9,743,486
|
Exercise of options
for common
stock
|
4,000
|
4
|
12,296
|
|
|
12,300
|
Share based
compensation
|
2,381
|
2
|
272,936
|
|
|
272,938
|
Balance at December
31, 2014
|
4,818,001
|
$
4,818
|
$
87,731,421
|
$
(455,172)
|
$
(83,771,688)
|
$
3,509,379
|
Net loss
|
|
|
|
|
(7,031,512)
|
(7,031,512)
|
Other comprehensive
income
|
|
|
|
228,740
|
|
228,740
|
Issuance of common
stock, net of
expenses
|
424,269
|
425
|
2,999,575
|
|
|
3,000,000
|
Share based
compensation
|
5,334
|
5
|
237,817
|
|
|
237,822
|
Balance at December
31, 2015
|
5,247,604
|
$
5,248
|
$
90,968,813
|
$
(226,432)
|
$
(90,803,200)
|
$
(55,571)
|
Net
loss
|
|
|
|
|
(8,470,661)
|
(8,470,661)
|
Other
comprehensive loss
|
|
|
|
(59,840)
|
|
(59,840)
|
Conversion of debt
and accrued
interest to common stock
|
1,212,908
|
1,213
|
10,394,620
|
|
|
10,395,833
|
Cashless exercise
of options for
common stock
|
524
|
-
|
-
|
|
|
-
|
Share based
compensation
|
2,899
|
3
|
218,291
|
|
|
218,294
|
Balance at
December 31, 2016
|
6,463,935
|
$
6,464
|
$
101,581,724
|
$
(286,272)
|
$
(99,273,861)
|
$
2,028,055
|
Consolidated
statements of cash flows
|
|
|
|
|
|
|
|
Years ended
December 31,
|
|
|
|
2016
|
2015
|
2014
|
|
|
|
|
|
|
Operating
activities
|
|
|
|
Net loss
|
$
(8,470,661)
|
$
(7,031,512)
|
$
(7,127,375)
|
Adjustment to
reconcile net loss to net cash used in
|
|
|
|
|
operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
153,996
|
105,952
|
140,742
|
|
|
Share-based
compensation
|
218,294
|
237,822
|
272,938
|
|
|
Gain on disposal of
equipment
|
(2,861)
|
(1,912)
|
-
|
|
|
Non-cash interest
expense
|
395,833
|
-
|
-
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Other
receivables
|
(121,640)
|
(21,195)
|
48,054
|
|
|
Prepaid expenses and
other assets
|
38,054
|
(12,421)
|
117,876
|
|
|
Accounts payable and
accrued liabilities
|
340,092
|
(25,032)
|
(13,135)
|
Net cash used in
operating activities
|
(7,448,893)
|
(6,748,298)
|
(6,560,900)
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
Purchase of property,
plant and equipment
|
(934,495)
|
(74,113)
|
(116,911)
|
Deposits on equipment
purchases
|
(156,982)
|
-
|
-
|
Proceeds from sale of
equipment
|
23,844
|
-
|
-
|
Payment of patent
costs
|
(5,664)
|
(30,372)
|
(35,340)
|
Net cash used in
investing activities
|
(1,073,297)
|
(104,485)
|
(152,251)
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
Proceeds from
issuance of debt
|
547,142
|
44,004
|
268,491
|
Repayment of term
debt
|
(6,268)
|
-
|
-
|
Proceeds from the
issuance of convertible debt
|
10,000,000
|
-
|
-
|
Proceeds from the
issuance of common stock, net
|
-
|
3,000,000
|
9,743,486
|
Proceeds from
exercise of stock options
|
-
|
-
|
12,300
|
Net cash provided by
financing activities
|
10,540,874
|
3,044,004
|
10,024,277
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(7,496)
|
(41,062)
|
(23,613)
|
Net change in cash
and cash equivalents
|
2,011,188
|
(3,849,841)
|
3,287,513
|
Cash and cash
equivalents at beginning of period
|
1,313,421
|
5,163,262
|
1,875,749
|
Cash and cash
equivalents at end of period
|
$
3,324,609
|
$
1,313,421
|
$
5,163,262
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information and
|
|
|
|
non-cash transactions:
|
|
|
|
Interest paid in
cash
|
$
6,721
|
$
10
|
$
62
|
Conversion of
convertible debt and accrued interest to
|
|
|
|
common stock
|
$
10,395,833
|
$
-
|
$
-
|
Acquisition of
equipment through vendor payable
|
$
50,132
|
$
-
|
$
-
|
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SOURCE AquaBounty Technologies, Inc.