Revised 2021 Annual Audited Financial Statements
Antibe Therapeutics Inc. filed its audited financial statements via SEDAR on June 28, 2021. Due to certain
clerical errors, disclosure items in Note 19 and Note 20 were incorrectly presented.
Attached are the revised 2021 Annual Audited Financial Statements correcting for these clerical errors.
ANTIBE THERAPEUTICS INC.
CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2021 and 2020
(Expressed in Thousands of Canadian Dollars)
INDEPENDENT AUDITOR’S REPORT
To the shareholders of Antibe Therapeutics Inc.
Opinion
We have audited the consolidated financial statements of Antibe Therapeutics Inc. and its subsidiaries (the
“Company”), which comprise the consolidated statements of financial position as at March 31, 2021 and March 31,
2020, and the consolidated statements of loss and comprehensive loss, the consolidated statements of changes in
shareholders’ equity and the consolidated statements of cash flows for the years then ended, and notes to the
consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the
consolidated financial position of the Company as at March 31, 2021 and March 31, 2020, and its consolidated
financial performance and its consolidated cash flows for the years then ended in accordance with International
Financial Reporting Standards (“IFRSs”) as issued by the International Accounting Standards Board.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial
statements section of our report. We are independent of the Company in accordance with the ethical requirements
that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to Note 2(d) in the consolidated financial statements, which indicates that the Company had
working capital of $75.4 million and an accumulated deficit of $86 million as at March 31, 2021 and incurred a net
comprehensive loss of $26.3 million and had negative cash flows from operations of $0.1 million for the year then
ended. These events or conditions, along with other matters as set forth in Note 2(d), indicate that a material
uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. Our
opinion is not modified in respect of this matter.
Key audit matter
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the
consolidated financial statements of the current period. In addition to the matters described in the Material
uncertainty related to going concern section of our report, we have determined the matters described below to be the
key audit matters to be communicated in our report. These matters were addressed in the context of the audit of the
consolidated financial statements as a whole, and in forming the auditor’s opinion thereon, and we do not provide a
separate opinion on these matters. For the matter below, our description of how our audit addressed the matter is
provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated
financial statements section of our report, including in relation to these matters. Accordingly, our audit included the
performance of procedures designed to respond to our assessment of the risks of material misstatement of the
consolidated financial statements. The results of our audit procedures, including the procedures performed to address
the matters below, provide the basis for our audit opinion on the accompanying consolidated financial statements.
Key audit matter
Completeness of the Accrual for Research and
Clinical Trial Expenses
As disclosed in the consolidated financial statements,
the Company has recorded research and development
expenses of $13.4 million for the year ended March 31,
2021 and accounts payable and accrued liabilities of
$3.6 million as at March 31, 2021, which includes an
accrual for estimated research and clinical trial costs
incurred. The Company has contracts with contract
research organizations that conduct and manage
How our audit addressed the key audit matter
The completeness of the accrual was evaluated
through, among other audit procedures, inspection of
the contracts and the amendments to the contracts from
third party providers. We further inquired as to the
progress of the clinical trials and other research and
development projects with the Company’s research and
development personnel that oversee the clinical trials.
We compared management’s listing of trial sites to
government databases and inspected patient
progression schedules obtained from trial
administrators and compared this data to
management’s schedules. We assessed management’s
look-back analysis comparing the estimated accrual
balances of March 31, 2020 to the actual amounts that
were ultimately invoiced. We also evaluated
subsequent invoices received from the trial
administrators and cash disbursements made to the trial
administrators, to the extent such invoices were
received, or payments were made prior to the date that
the consolidated financial statements were issued.
research and clinical studies on its behalf. The financial
terms of these agreements are subject to amendments,
vary from contract to contract and may result in uneven
payment flows. The Company’s determination of
accrued research and clinical trial costs at each
reporting period requires significant judgment by
management, as estimates are based on a number of
factors, including management’s knowledge of the
research and development programs and associated
timelines, invoicing to date from third party vendors,
and the terms and conditions in the contractual
arrangements including amendments or ancillary
agreements. The completeness of research and clinical
trial accruals is subject to risk of estimation uncertainty
related to services having been received where invoices
are not received from third party vendors in a timely
manner prior to the time the consolidated financial
statements are issued.
Auditing the completeness of the Company’s accrual
for research and clinical trial costs is a key audit matter
as it requires significant auditor judgment, subjectivity
and effort in performing appropriate procedures to
evaluate the completeness and accuracy of the
information management utilizes in these estimates.
Other information
Management is responsible for the other information. The other information comprises the information included in
Management’s Discussion and Analysis.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information, and in doing so, consider whether the other information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work
we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact in this auditor’s report. We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with IFRSs, and for such internal control as management determines is necessary to enable the
preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no
realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including
the disclosures, and whether the consolidated financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Company to express an opinion on the consolidated financial statements. We are
responsible for the direction, supervision and performance of the group audit. We remain solely responsible
for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the consolidated financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about
the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our
report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Paula J. Smith.
/s/ Ernst & Young LLP
Chartered Professional Accountants
Licensed Public Accountants
Toronto, Canada
June 25, 2021
ANTIBE THERAPEUTICS INC.
Consolidated Statements of Financial Position
As at March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars)
ASSETS
Current
Cash and cash equivalents
Term deposits
Trade and other receivables [note 6]
Inventory
Prepaid expenses [note 16]
Due from Antibe Holdings Inc. [note 9]
Total current assets
Non-current assets
Property and equipment, net
Loan receivable [note 4]
Deposits
Deferred contract costs [note 24]
Intangible assets, net [note 7]
Total non-current assets
2021
$
71,973
25
2,603
2,157
2,345
-
79,103
309
157
20
1,283
869
2,638
2020
$
6,182
25
1,332
3,424
162
382
11,507
303
-
20
236
1,772
2,331
TOTAL ASSETS
81,741
13,838
LIABILITIES
Current
Bank indebtedness
Accounts payable and accrued liabilities [note 13]
Current portion of loan payable [note 8]
Current portion of lease liability
Total current liabilities
Non-current liabilities
Deferred revenue [note 24]
Lease liability
Total non-current liabilities
TOTAL LIABILITIES
SHAREHOLDERS’ EQUITY
Share capital [note 10(b)]
Common share purchase warrants [note 10(b)]
Contributed surplus
Accumulated other comprehensive income
Deficit
TOTAL SHAREHOLDERS’ EQUITY
-
3,608
-
133
3,741
27,631
105
27,736
4
5,262
2,214
115
7,595
2,399
65
2,464
31,477
10,059
111,574
10,353
14,293
-
(85,956)
50,264
49,666
2,626
11,142
18
(59,673)
3,779
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
81,741
13,838
Commitments and contingencies [note 25]
(Signed) Daniel Legault Daniel Legault, Director
(Signed) John Wallace
John Wallace, Director
See accompanying notes to the consolidated financial statements
2
ANTIBE THERAPEUTICS INC.
Consolidated Statements of Loss and Comprehensive Loss
For the Years Ended March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars, except per share amounts)
REVENUE
Product sales
COST OF SALES
GROSS PROFIT
2021
$
9,713
6,163
2020
$
9,666
5,970
3,550
3,696
EXPENSES
Research and development [note 16]
General and administrative [note 14]
Stock-based compensation [note 17]
Selling and marketing [note 15]
Amortization and depreciation
Impairment of goodwill [note 5]
Impairment of amount due from Antibe Holdings Inc. [note 9]
Total expenses
13,427
7,200
3,988
2,719
478
-
452
28,264
8,077
5,235
3,376
3,772
571
1,283
-
22,314
LOSS FROM CONTINUING OPERATIONS
(24,714)
(18,618)
Finance and related costs [note 18]
Finance income
LOSS BEFORE INCOME TAXES
PROVISION FOR INCOME TAXES
Current [note 19]
Total provision for income taxes
66
(46)
(24,734)
531
(99)
(19,050)
-
-
1
1
NET LOSS FROM CONTINUING OPERATIONS
(24,734)
(19,051)
DISCONTINUED OPERATIONS
Loss from discontinued operations [note 4]
(1,567)
(292)
NET LOSS FOR THE YEAR
(26,301)
(19,343)
OTHER COMPREHENSIVE INCOME
Exchange differences on translation of foreign operations
18
23
NET COMPREHENSIVE LOSS
(26,283)
(19,320)
Basic and diluted loss per share [note 11]
(0.70)
(0.71)
Basic and diluted weighted average number of shares
outstanding [note 11]
37,251,785
27,266,954
See accompanying notes to the consolidated financial statements
3
ANTIBE THERAPEUTICS INC.
Consolidated Statements of Changes in Shareholders’ Equity
For the Years Ended March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars)
Number of
common
shares
Share
capital
Common
share
purchase
warrants
Contributed
surplus
Accumulated
other
comprehensive
income (loss)
Deficit
Total shareholders’
equity
$
$
$
Balance, March 31, 2019
24,339,248
36,986
2,756
8,035
Shares issued
2,683,333
Share issuance costs
Shares issued for exercised
warrants
Shares issued for exercised
options
Shares issued for vested
restricted share units
-
2,133,353
25,576
186,667
5,087
(782)
7,653
118
604
2,963
(455)
-
393
(2,638)
-
-
-
(58)
2,496
$
(5)
-
-
-
-
-
$
(40,330)
-
-
-
-
-
Stock-based compensation
-
-
-
276
-
-
$
7,442
8,050
(844)
5,015
60
3,100
276
Net loss from continuing
operations for the year
Loss from discontinued
operations
Exchange differences on
translation of foreign
operations
-
-
-
-
-
-
-
-
-
-
-
-
-
-
23
(19,051)
(19,051)
(292)
(292)
-
23
Balance, March 31, 2020
29,368,177
49,666
2,626
11,142
18
(59,673)
3,779
Balance, March 31, 2020
29,368,177
49,666
2,626
11,142
18
(59,673)
Shares issued
13,915,000
58,478
10,637
-
Share issuance costs
-
(5,942)
(1,034)
1,589
Shares issued for exercised
warrants
Shares issued for exercised
options
Shares issued for vested
restricted share units
1,553,076
5,663
(1,876)
-
564,600
2,465
321,752
1,244
-
-
(1,183)
2,873
-
-
-
-
-
-
-
-
-
-
Stock-based compensation
-
-
-
(128)
-
-
3,779
69,115
(5,387)
3,787
1,282
4,117
(128)
Net loss from continuing
operations for the year
Loss from discontinued
operations
Exchange differences on
translation of foreign
operations
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(24,734)
(24,734)
(1,567)
(1,567)
(18)
18
-
Balance, March 31, 2021
45,722,605
111,574
10,353
14,293
-
(85,956)
50,264
See accompanying notes to the consolidated financial statements
4
ANTIBE THERAPEUTICS INC.
Consolidated Statements of Cash Flows
For the Years Ended March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars)
CASH FLOWS USED IN OPERATING ACTIVITIES
Net loss from continuing operations
Items not affecting cash:
Stock-based compensation [note 17]
Accretion interest [note 18]
Write-off of license
Depreciation of property and equipment
Amortization of intangible assets
Interest on capitalized lease payments
Impairment of goodwill [note 5]
Impairment of amounts due from Antibe Holdings Inc. [note 9]
Changes in non-cash balances:
Trade and other receivables [note 6]
Inventory
Prepaid expenses
Income taxes recoverable
Deferred contract costs
Accounts payable and accrued liabilities
Deferred revenue
Net change in non-cash balances
2021
$
2020
$
(24,734)
(19,051)
3,988
36
-
189
289
16
-
452
(19,764)
(1,356)
530
(2,186)
(2,186)
-
(1,047)
(1,513)
25,231
19,659
3,376
142
317
225
346
26
1,283
-
(13,336)
(97)
(453)
(6)
3
-
2,541
-
1,988
Cash flows used in operating activities
(105)
(11,348)
CASH FLOWS USED IN INVESTING ACTIVITIES
Sale of Red Rock Regeneration Inc. convertible debenture
Advances to BMT [note 4]
Purchase of equipment
Cash flows used in investing activities
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
Advances to Antibe Holdings Inc. [note 9]
Lease payments
Increase in loan receivable [note 4]
Repayment of loan [note 8]
Issuances:
Gross proceeds from shares and warrant issuance [note 10]
Proceeds from exercised warrants [note 10]
Proceeds from exercised options [note 10]
Share issuance costs [note 10]
Cash flows provided by financing activities
Net increase in cash during the year
Cash, beginning of the year
Cash, end of the year
-
(264)
-
(264)
(70)
(160)
(157)
(2,250)
100
(560)
(1)
(461)
(89)
(190)
-
-
69,115
3,787
1,282
(5,387)
66,160
65,791
6,182
71,973
8,050
5,015
60
(844)
12,002
193
5,989
6,182
See accompanying notes to the consolidated financial statements
5
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars, except per share amounts and where noted)
1. DESCRIPTION OF BUSINESS
Antibe Therapeutics Inc. (the “Company” or “Antibe”) was incorporated under the Business Corporations Act
(Ontario) on May 5, 2009. On June 18, 2013, the Company completed its initial public offering and was listed
on the TSX Venture Exchange (“TSXV”). On September 15, 2014, the Company began trading in the United
States on the OTCQX Exchange. On October 1, 2017, the Company changed trading platforms to the OTCQB
Exchange. On November 12, 2020, the Company completed its graduation to the Toronto Stock Exchange
(“TSX”) and the Company’s common shares (the “Common Shares”) began trading on the TSX under the symbol
“ATE”. In connection with the Company’s graduation to the TSX, concurrently, the Common Shares were
voluntarily delisted from the TSX Venture Exchange. On February 16, 2021 the Company resumed trading on
the OCTQX market under the symbol “ATBPF”.
The Company originates, develops and out-licenses new pharmaceuticals. Antibe’s lead compound,
otenaproxesul (previously known as OTENAPROXESUL), combines hydrogen sulfide with naproxen, an
approved, marketed and off-patent non-steroidal anti-inflammatory drug. The Company’s main objectives are
to develop otenaproxesul by satisfying the requirements of the relevant drug regulatory authorities while also
satisfying the commercial licensing objectives of prospective global partners. The Company has also established
a development plan for its lead compound through to the end of Phase III human clinical studies for regulatory
discussion purposes. Additionally, the Company continues to investigate other research projects as well as
additional development opportunities.
The Company is also, through its wholly owned subsidiary, Citagenix Inc. (“Citagenix”), a seller of tissue
regenerative products servicing the orthopaedic and dental marketplaces. Citagenix’s portfolio consists of
branded biologics and medical devices that promote bone regeneration. Citagenix operates in Canada through its
direct sales force and in the United States, Germany and internationally via a network of distributors.
The address of the Company’s registered head office and principal place of business is 15 Prince Arthur Avenue,
Toronto, Ontario, Canada, M5R 1B2.
The Company was founded with an exclusive intellectual property license from Antibe Holdings Inc. (“AHI”), a
related party, to develop and commercialize the Company’s pipeline drugs. The license obligated the Company
to pay royalties to AHI on future revenues derived from this intellectual property (see note 25). Subsequent to
March 31, 2021, the Company announced that the Board of Directors of Antibe and AHI agreed to combine the
companies in an amalgamation transaction (see note 26). As of the date of the amalgamation on June 3, 2021,
11.4% of the Company’s common shares were held by the former shareholders of AHI.
These consolidated financial statements were authorized for issuance by the Board of Directors on June 25, 2021.
2. BASIS OF PRESENTATION
(a) Statement of compliance –
These consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (“IFRS”), as issued by the International Accounting Standards Board. These consolidated financial
statements have been prepared using the accounting policies in note 3.
(b) Consolidation –
These consolidated financial statements include the accounts of the Company and its wholly owned subsidiary,
Citagenix. On December 3, 2020, the Company sold its wholly owned subsidiary, BMT Medizintechnik GmbH
(“BMT”) (note 4).
Citagenix was acquired on October 15, 2015. It was incorporated under the Business Corporations Act (Quebec)
on December 8, 1997, and operates in Canada and the US.
6
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars, except per share amounts and where noted)
2. BASIS OF PRESENTATION (continued)
All intercompany balances and transactions have been eliminated on consolidation.
(c) Share consolidation –
On December 1, 2020, the Company completed a share consolidation of the Company’s issued and outstanding
common shares on the basis of one (1) new common share for every ten (10) common shares issued and
outstanding. All common shares, options, restricted share units (“RSUs”), warrants and per share amounts have
been restated to give retrospective effect to the share consolidation.
(d) Going concern –
The consolidated financial statements have been prepared assuming that the Company will continue as a going
concern. As at March 31, 2021, the Company had working capital of $75,362 (2020 – $3,912), incurred a net
comprehensive loss for the year then ended of $26,283 (2020 – $19,320), had negative cash flows from operations
of $105 (2020 – $11,348) and an accumulated deficit of $85,956 (2020 – $59,673).
Until such time as the Company’s pharmaceutical products are patented and approved for sale, the Company’s
liquidity requirements are dependent on its ability to raise additional capital by selling additional equity, from
licensing agreements of its lead compound, from proceeds from the exercise of stock options and common share
warrants or by obtaining credit facilities. The Company’s future capital requirements will depend on many
factors, including, but not limited to, the market acceptance of its products and services. No assurance can be
given that any such additional funding will be available or that, if available, it can be obtained on terms favourable
to the Company (see notes 22, 23).
All of the factors above indicate the existence of a material uncertainty that may cast significant doubt about the
Company’s ability to continue as a going concern, which assumes the Company will continue its operations for
the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the
ordinary course of business. Management’s plans to address these issues involve actively seeking capital
investment and generating revenue and profit from the commercialization of its products. The Company’s ability
to continue as a going concern is subject to management’s ability to successfully implement this plan. Failure to
implement this plan could have a material adverse effect on the Company’s financial condition and financial
performance.
If the going concern assumption were not appropriate for these consolidated financial statements, then
adjustments would be necessary to the carrying value of assets and liabilities, the reported revenue and expenses,
and the classifications used in the consolidated statements of financial position. The consolidated financial
statements do not include adjustments that would be necessary if the going concern assumption were not
appropriate.
(e) Business uncertainty –
In December 2019, COVID-19 emerged in Wuhan, China. Since then, it has spread to most other countries and
infections have been reported around the world. On March 11, 2020, the World Health Organization declared the
outbreak of COVID-19 a global pandemic. In response to the outbreak, governmental authorities in Canada and
internationally have introduced various recommendations and measures to try to limit the pandemic, including
travel restrictions, border closures, non-essential business closures, quarantines, self-isolation, sheltering-in-place
and social distancing. The COVID-19 outbreak and the response of governmental authorities to try to limit it are
having a significant impact on the private sector and individuals, including unprecedented business, employment
and economic disruptions.
7
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars, except per share amounts and where noted)
2. BASIS OF PRESENTATION (continued)
The COVID-19 pandemic has impacted the Company’s business to some extent. The Company’s Phase 2 trial
took an additional six weeks to complete due to factors such as the COVID-19 related closure of medical clinics,
doctors becoming ill from COVID-19, and staff working from home, all of which slowed the collation of the trial
data. The need to engage the consulting staff responsible for administering the trial for an additional six weeks
increased the costs of the trial correspondingly. COVID-19 particularly impacted the Company’s wholly owned
subsidiary, Citagenix, by causing a significant decrease in sales due to a decline in customer demand in fiscal Q1
2020. COVID-19 could further impact the Company’s expected timelines, operations and the operations of its
third-party suppliers, manufacturers, and Contract Research Organizations as a result of quarantines, facility
closures, travel and logistics restrictions and other limitations in connection with the outbreak. The most
significant risk posed by the COVID-19 pandemic is that it could also significantly impact the progress and
completion of the clinical trials.
The Company did qualify for certain wage subsidy programs in Canada and the US. The Company will recognize
government grants when there is reasonable assurance that it will comply with the conditions required to qualify
for the grant, and that the grant will be received. The Company recognizes government grants as a reduction to
the related expense that the grant is intended to offset. For the year ended March 31, 2021, the Company has
recognized $326, as a reduction to selling and marketing expense incurred by the Company during this period.
Whatever further impact, if any, the COVID-19 pandemic may have on the Company is unpredictable. The
continued spread of COVID-19 nationally and globally could also lead to a deterioration of general economic
conditions including a possible national or global recession. Due to the speed with which the COVID-19 situation
is developing and the uncertainty of its magnitude, outcome and duration, it is not possible to estimate its impact
on the Company’s business, operations or financial results; however, the impact could be material (see note 5).
(f) Use of estimates –
The preparation of consolidated financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, if any, as at
the date of the consolidated financial statements, and the reported amount of expenses during the reporting period.
Actual results may vary from the current estimates. These estimates are reviewed periodically and, as adjustments
become necessary, they are reported in income in the year in which such adjustments become known. Significant
estimates in these consolidated financial statements include determination of eligible expenditures for investment
tax credit purposes, estimation of inventory reserves, impairment of intangible assets, credit losses, R&D expenses
and accruals and inputs related to the calculation of fair value of stock-based compensation and warrants.
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES,
ASSUMPTIONS
JUDGMENTS, and
Significant accounting policies, estimates, judgments, and assumptions –
Cash –
Cash includes cash and liquid investments with a term to maturity of 90 days or less when acquired.
Inventory –
Inventory consists of ready for sale goods. Inventory is valued at the lower of cost and net realizable value. Cost
is determined based on the average cost. Net realizable value is the estimated selling price less the estimated
costs necessary to make the sale. The Company monitors inventory to determine when inventory values are not
recoverable and when a write-down is necessary.
8
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars, except per share amounts and where noted)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES,
ASSUMPTIONS (continued)
JUDGMENTS, and
Property and equipment –
Property and equipment are stated at cost or deemed cost less accumulated depreciation and accumulated
impairment losses. Property and equipment are amortized over their estimated useful life at the following rates
and methods:
Furniture and fixtures
Computer equipment
Leasehold improvements
Vehicles
20% per annum
3 years
10 years
5 years
declining balance method
straight-line method
straight-line method
straight-line method
The Company prorates depreciation for acquisitions made during the year.
The depreciation method, useful life and residual values are assessed annually.
When an item of property and equipment comprises significant components with different useful lives, the
components are accounted for as separate items of property or equipment. Expenditures incurred to replace a
component of an item of property or equipment that is accounted for separately are capitalized.
Gains and losses on disposal of property and equipment are determined by comparing the proceeds from disposal
with the carrying amount of property and equipment, and are recognized within other income in the consolidated
statements of loss and comprehensive loss.
Intangible assets –
Intangible assets with finite lives are stated at cost less accumulated amortization. Amortization is based on the
estimated useful life of the asset and is calculated as follows:
Trademarks and brands
License and customer lists
Patents
10 years
10 years
17 years
straight-line method
straight-line method
straight-line method
Impairment of non-financial assets –
The Company’s property and equipment and intangible assets with finite lives are reviewed for indications of
impairment whenever events or changes in circumstances indicate that their carrying amounts may not be
recoverable. If indication of impairment exists, the asset’s recoverable amount is estimated.
An impairment loss is recognized when the carrying amount of an asset, or its cash-generating unit (“CGU”),
exceeds its recoverable amount. A CGU is the smallest identifiable group of assets that generates cash inflows
that are largely independent of the cash inflows from other assets or groups of assets. Impairment losses are
recognized in profit and loss for the year. Impairment losses recognized in respect of CGUs are allocated first to
reduce the carrying amount of any goodwill allocated to the CGUs and then to reduce the carrying amount of the
other assets in the unit on a pro-rata basis.
The recoverable amount is the greater of the CGU’s fair value less costs of disposal and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset
that does not generate largely independent cash inflows, the recoverable amount is determined for the CGU to
which the asset belongs. The Company has two CGUs: Antibe, the pharmaceutical development and out-licensing
business, and Citagenix, the tissue regenerative products business.
9
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars, except per share amounts and where noted)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES,
ASSUMPTIONS (continued)
JUDGMENTS, and
An impairment loss is reversed if there is an indication that there has been a change in the estimates used to
determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying
amount does not exceed the carrying amount that would have been determined, net of depreciation or
amortization, if no impairment loss had been recognized.
Intangible assets that are not yet available for use are not amortized, but are tested for impairment at least annually
or sooner if there is an indication of impairment.
Goodwill and intangible assets impairment –
Goodwill represents the excess of the purchase price of business acquisitions over the fair value of identifiable
net assets acquired in such acquisitions. Goodwill is determined at the date of the business combination. Goodwill
is not amortized, but is tested for impairment annually, or more frequently if events or changes in circumstances
indicate the asset might be impaired.
For the purpose of impairment testing, goodwill is allocated to each of the Company’s CGUs that is expected to
benefit from the synergies of the combination. An impairment loss for goodwill is recognized directly in profit
or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.
All of the Company’s goodwill on the consolidated statements of financial position has been allocated to the
Citagenix CGU and was written off in the year ended March 31, 2020. The Company reviews the carrying value
of non-financial assets for potential impairment when events or changes in circumstances indicate that the
carrying amount may not be recoverable. However, goodwill is tested for impairment annually at year-end. The
impairment test on Citagenix was carried out by comparing the carrying amount of Citagenix and its recoverable
amount. The recoverable amount has been determined by management using the higher of value in use and fair
value less costs to sell. This complex valuation process entails the use of methods, such as the discounted cash
flow method, which requires numerous assumptions to estimate future cash flows. The recoverable amount is
impacted significantly by the discount rate used in the discounted cash flow model, as well as the quantum and
timing of expected future cash flows and the growth rate used for the extrapolation.
Related party transactions –
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or
exercise significant influence over the other party in making financial and operating decisions. Parties are also
considered to be related if they are subject to common control or common significant influence. Related parties
may be individuals or corporate entities. A transaction is considered to be a related party transaction when there
is a transfer of resources or obligations between related parties.
Leases –
IFRS 16, Leases, sets out the principles for the recognition, measurement, presentation and disclosure of leases
and requires lessees to account for all leases under a single on-balance sheet model, with certain exemptions. The
standard includes two recognition exemptions for lessees – leases of “low-value” assets and short-term leases
with a lease term of 12 months or less. At the commencement date of a lease, a lessee will recognize a liability
to make lease payments and an asset representing the right to use the underlying asset during the lease term.
Lessees will be required to separately recognize the interest expense on the lease liability and the depreciation
expense on the right-of-use asset. Lessees are also required to remeasure the lease liability upon the occurrence
of certain events such as a change in lease term.
10
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars, except per share amounts and where noted)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES,
ASSUMPTIONS (continued)
JUDGMENTS, and
The Company recognizes a right-of-use asset based on the amount equal to the lease liability, adjusted for any
related prepaid and accrued lease payments previously recognized. The lease liability is recognized based on the
present value of remaining lease payments, discounted using the incremental borrowing rate at the date of initial
application of the standard or inception of the lease. The lessee will generally recognize the amount of the
remeasurement of the lease liability as an adjustment to the right-of-use asset.
The carrying amounts of the Company’s right-of-use assets and lease liabilities and movements during the year
were as follows:
Balance, April 1, 2020
Additions
Depreciation expense
Interest expense
Payments
Balance, March 31, 2021
Right-of-use assets
$
174
202
(152)
-
-
224
Lease liabilities
$
180
202
-
16
(160)
238
Income taxes –
Income taxes are accounted for using the liability method. Deferred income tax assets and liabilities are
recognized based on the temporary differences between the assets and liabilities for accounting purposes and the
amounts used for tax purposes and the benefit of unutilized tax losses for which it is probable they will be realized
and carried forward to future years to reduce income taxes. Deferred income tax assets and liabilities are not
recognized if the temporary differences arise from goodwill or from initial recognition of other assets and
liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred income tax
assets and liabilities are measured using tax rates enacted by tax laws or substantively enacted for the years in
which deferred income tax assets are likely to be realized or deferred income tax liabilities settled. The effect of
a change in tax rates on deferred income tax assets and liabilities is included in loss and comprehensive loss in
the period when the change is substantially enacted.
Deferred share issuance costs –
These are costs related directly to the proposed issuance of shares by the Company pursuant to private placements
and public share offerings. Upon completion of the share issuance, these costs are charged against share capital.
Such costs are recognized as an expense in the event that it is determined that such transaction will not be
completed.
Government grants and investment tax credits –
Amounts received or receivable resulting from government assistance programs are recognized when 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, it is recognized into income as reduction to the
costs that it is intended to compensate. When the amount 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.
11
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars, except per share amounts and where noted)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES,
ASSUMPTIONS (continued)
JUDGMENTS, and
Investment tax credits (“ITCs”) receivable are amounts refundable from the Canadian federal and provincial
governments under the Scientific Research & Experimental Development (“SR&ED”) incentive program. The
amounts claimed under the program represent the amounts submitted by management based on research and
development costs paid during the year and included a number of estimates and assumptions made by
management in determining the eligible expenditures. ITCs are recorded when there is reasonable assurance that
the Company will realize the ITCs. Recorded ITCs are subject to review and approval by tax authorities and,
therefore, could be different from the amounts recorded.
Research and development expense –
Research costs are expensed as incurred. Development costs are expensed in the year incurred unless they meet
certain criteria for capitalization. No development costs have been capitalized to date.
Revenue recognition –
Product sales
Revenue from product sales is recognized when control of the goods is transferred to the customer at an amount
that reflects the consideration to which the Company expects to be entitled in exchange for those goods. In certain
circumstances, returns or exchange of products are allowed under the Company’s policy or the Company may
provide discounts or allowances, which gives rise to variable consideration. The variable consideration is
estimated using the expected value method as this best predicts the amount of variable consideration to which the
Company is entitled.
License revenue
The Company may enter into license agreements for the development and/or commercialization of products in
certain territories. IFRS 15, Revenue from Contracts with Customers, includes specific guidance for accounting
for license of intellectual property (“IP”), which requires revenue to be recorded either over time or at a point in
time, depending on whether the customer has the “right to access” or the “right to use” the IP. For licenses that
provide the customer with the right to access the IP, revenue is recognized throughout the license period. For
licenses that provide the customer with the right to use the IP, revenue is deferred and amortized to the
consolidated statements of loss and comprehensive loss at a point in time where the customer can first use and
benefit from the license.
Costs to obtain a contract – Incremental costs incurred to obtain a contract are capitalized as a contract asset on
the consolidated statements of financial position. These costs are deferred and amortized to the consolidated
statements of loss and comprehensive loss at a point in time where the customer can first use and benefit from
the license. The contract assets are tested for impairment annually, or if there are indicators of impairment.
Financing component – Agreements entered into with licensing partners often include an upfront fee upon
execution of the agreement. If considered significant in the context of the arrangement, these upfront fees are
accounted for as a financing component.
12
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars, except per share amounts and where noted)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES,
ASSUMPTIONS (continued)
JUDGMENTS, and
Stock-based compensation –
The Company accounts for options and warrants using the fair value-based method of accounting for stock-based
compensation. Fair values are determined using the Black-Scholes-Merton option-pricing model (“BSM”).
Management exercises judgment in determining the underlying share price volatility, expected life of the option,
expected forfeitures and other parameters of the calculations. Compensation costs are recognized over the vesting
period as an increase to stock-based compensation expense and contributed surplus. If, and when, stock options
and warrants are ultimately exercised, the applicable amounts of contributed surplus and common share purchase
warrants are transferred to share capital.
Broker warrants –
Warrants issued in a public or private placement to brokers are accounted for under IFRS 2, Share-based
Payments, and are classified as equity. Warrants issued to brokers are valued at the fair value of the services
received.
Loss per share –
Basic loss per share is calculated on the basis of loss attributable to the holders of common shares divided by the
weighted average number of common shares outstanding during the year. Diluted per share amounts are
calculated giving effect to the potential dilution that would occur if securities or other contracts to issue common
shares were exercised or converted to common shares. The treasury stock method assumes that proceeds received
from the exercise of in-the-money stock options and common share purchase warrants are used to repurchase
common shares at the prevailing market rate. Diluted loss per share is equal to basic loss per share when the
effect of otherwise dilutive securities is anti-dilutive.
Provisions –
The Company recognizes a provision when it has a present obligation (legal or constructive) as a result of a past
event, it is probable it will be required to settle the obligation, and it can make a reliable estimate of its amount.
The amount it recognizes as a provision is its best estimate of the consideration required to settle the present
obligation at the end of the reporting period, taking into account the surrounding risks and uncertainties. Where
it measures a provision using the cash flows estimated to settle the present obligation, the carrying amount is the
present value of those cash flows, calculated using a pre-tax discount rate reflecting the risks specific to the
liability. The Company adjusts the liability at the end of each reporting period for the unwinding of the discount
rate and for changes to the discount rate or to the amount or timing of the estimated cash flows underlying the
obligation.
Measurement of financial instruments –
Classification and measurement
Except for certain trade receivables, under IFRS 9, Financial Instruments (“IFRS 9”), the Company initially
measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or
loss (“FVTPL”), transaction costs. Under IFRS 9, financial liabilities are subsequently measured at FVTPL,
amortized cost, or fair value through other comprehensive income (“FVOCI”).
The classification is based on two criteria: the Company’s business model for managing the assets; and whether
the instruments’ contractual cash flows represent “solely payments of principal and interest” on the principal
amount outstanding.
13
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars, except per share amounts and where noted)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES,
ASSUMPTIONS (continued)
JUDGMENTS, and
The financial instruments of the Company are classified as follows:
Financial assets
Cash
Term deposits
Accounts receivable
Due from AHI
Deposits
Financial liabilities
Bank indebtedness
Accounts payable and accrued liabilities
Loan payable
Financial instruments
IFRS 9
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions
of the instrument. Financial assets are derecognized when the rights to receive cash flows from the assets have
expired or have been transferred and the Company has transferred substantially all risks and rewards of
ownership.
The purchase and sale of financial assets are recognized using trade date accounting. Financial liabilities are
derecognized when the obligation is discharged, cancelled or expires.
Financial assets and liabilities are offset and the net amount reported when there is a legally enforceable right to
offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the
liability simultaneously.
There are three measurement categories in which the Company classifies its financial assets:
• Amortized cost: Financial instruments that are held for collection of contractual cash flows, where those
cash flows represent solely payments of principal and interest, are measured at amortized cost. Interest
income from these financial instruments is recorded in net income (loss) using the effective interest rate
method.
• FVOCI: Debt instruments that are held for collection of contractual cash flows and for selling the
financial instruments, where the financial instruments’ cash flows represent solely payments of
principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through
OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange
gains and losses that are recognized in net income (loss). When the financial instrument is derecognized,
the cumulative gain or loss previously recognized in OCI is reclassified from equity to net income (loss)
and recognized in other gains (losses). Interest income from these financial instruments is included in
interest using the effective interest rate method. Foreign exchange gains (losses) are presented in other
gains (losses) and impairment expenses in other expenses.
• FVTPL: Financial instruments that do not meet the criteria for amortized cost or FVOCI are measured
at FVTPL. A gain or loss on a financial instrument that is subsequently measured at FVTPL and is not
part of a hedging relationship is recognized in net income (loss) and presented net in comprehensive
income (loss) within other gains (losses) in the period in which it arises.
14
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars, except per share amounts and where noted)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES,
ASSUMPTIONS (continued)
JUDGMENTS, and
Financial liabilities are either classified as amortized cost or FVTPL. For financial liabilities held at amortized
cost, when the Company revises its estimates of the amount and timing of payments, it will adjust the gross
carrying amount of the amortized cost of a financial liability to reflect actual and revised estimated contractual
cash flows. The Company recalculates the gross carrying amount of the amortized cost of the financial liability
as the present value of the estimated future contractual cash flows that are discounted at the financial instrument's
original effective interest rate. The adjustment is recognized in net income (loss).
The Company classifies its financial instruments as follows:
• Cash, cash equivalents, accounts receivable, due from related parties, accounts payable and accrued
liabilities, due to related parties and long-term debt are measured at amortized cost. Interest income and
interest expense are recorded in net income (loss), as applicable.
Impairment of financial assets
At each reporting date, the Company assesses on a forward-looking basis the expected credit losses (“ECLs”)
associated with its financial instruments carried at amortized cost and whether there is objective evidence that a
financial asset is impaired. Trade and other receivables are subject to lifetime ECLs, which are measured as the
difference in the present value of the contractual cash flows that are due under the contract, and the cash flows
that are expected to be received. The Company applies the simplified approach at each reporting date on its trade
and other receivables and considers current and forward-looking macro-economic factors that may affect
historical default rates when estimating ECL.
Financial assets, together with the associated allowance, are written off when there is no realistic prospect of
future recovery and all collateral has been realized or has been transferred to the Company. If, in a subsequent
year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the
impairment was recognized, the previously recognized impairment loss is increased or decreased by adjusting
the carrying value of the loan or receivable. If a past write-off is later recovered, the recovery is recognized in the
consolidated statements of loss and comprehensive loss.
New and amended standards and interpretations
The Company has not early adopted any standards, interpretations or amendments that have been issued but not
yet effective.
4.
SALE OF BMT
On December 3, 2020, the Company completed the sale of 100% of the shares of its wholly owned subsidiary,
BMT, for cash consideration of €1 (one Euro). BMT is a German manufacturer and distributor of surgical
instruments and, prior to the sale, accounted for less than 10% of Citagenix’s consolidated revenue. BMT
struggled to reach profitability and in recent years had borne significant costs related to enhanced regulations in
Germany. The COVID-19 crisis had a severe impact on the sale of surgical instruments. Given these
circumstances, the Company agreed to sell BMT for nominal value to its Managing Director as a preferred
alternative to the time and expense involved in winding up the business.
The business of BMT was historically presented within the Citagenix operating segment. With BMT classified
as a discontinued operation, the Citagenix segment will no longer include BMT results.
The results of BMT up to December 3, 2020 are presented in the consolidated statement of loss and
comprehensive loss as a loss from discontinued operations for the years ended March 31, 2021 and 2020. The
Company has also derecognized the related assets, liabilities and components of equity, with the resultant loss
recognized within the loss from discontinued operations.
15
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars, except per share amounts and where noted)
4.
SALE OF BMT (continued)
The results of BMT for the years ended March 31, 2021 and 2020 are presented below.
Revenue
Cost of goods sold
Gross profit
Expenses
Loss on sale of BMT
Loss from discontinued operations
2021
$
228
136
92
301
1,358
(1,567)
2020
$
325
133
192
484
-
(292)
The loss on the sale of BMT, $1,358, is the result of the derecognition of BMT’s assets and liabilities for
consideration of 1 Euro. The major classes of assets and liabilities on the day of sale are presented below.
Accounts receivable
Inventory
Prepaid expenses
Property, plant and equipment
Government remittances receivable
Trademarks
Accounts payable and accrued liabilities
Bank indebtedness
Loss on sale of BMT
2021
$
87
735
9
6
5
613
(83)
(14)
$1,358
As part of the sale agreement, Antibe wrote off a net intercompany loan receivable from BMT of $1,863.
Cash flows from operations incurred by BMT for the year ended March 31, 2021, were negative $264 (2020 –
negative $560) and are presented within the Company’s consolidated statement of cash flows.
Antibe has also provided a loan to the purchaser in the amount of $157 (€100 thousand) for working capital
purposes. This loan matures on December 3, 2022 and bears interest at an annual rate of 5%, payable quarterly.
5.
IMPAIRMENT OF GOODWILL
The Company conducted its annual test for goodwill impairment of the Citagenix CGU in fiscal 2020. Based on
this assessment, the recoverable amount of Citagenix using fair value less costs to sell did not exceed its carrying
value. Therefore, the Company recorded a goodwill impairment charge of $1.28 million as at March 31, 2020 to
fully impair the carrying value of goodwill recorded on the Citagenix acquisition. The goodwill impairment was
primarily driven by changes to the Company’s forecasted performance, which resulted in a lower fair value for
the Citagenix business. The performance of Citagenix in fiscal 2021 was adversely affected by the COVID-19
crisis. Any adverse changes in assumptions may result in additional impairment of other assets in the CGU.
16
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars, except per share amounts and where noted)
6. TRADE AND OTHER RECEIVABLES
SR&ED tax credits receivable
Trade receivables, net of allowances
Warrant exercise receivable
Value-added taxes receivable
Harmonized Sales Tax receivable
Employee advances [note 9]
7.
INTANGIBLE ASSETS
Intangible assets consist of the following:
2021
$
1,131
1,061
-
-
392
2,584
19
2,603
2020
$
67
1,043
50
5
147
1,312
20
1,332
Trademarks
and brands
$
License
$
Customer lists
$
Patents
$
Cost
As at March 31, 2019
Write-off of license
As at March 31, 2020
As at April 1, 2020
Disposals
As at March 31, 2021
Amortization
As at March 31, 2019
Charge for the year
As at March 31, 2020
As at April 1, 2020
Disposals
3,094
-
3,094
3,094
(1,217)
1,877
1,071
310
1,381
1,381
(604)
Charge for the year
249
317
(317)
-
-
-
-
-
-
-
-
-
-
As at March 31, 2021
1,026
-
Carrying amount
As at March 31, 2020
As at March 31, 2021
1,713
851
-
-
Total
$
3,607
(317)
3,290
3,290
(1,217)
2,073
177
-
177
177
-
177
19
-
19
19
-
19
88
35
14
1
1,173
346
123
123
-
36
159
54
18
15
15
-
4
19
4
-
1,519
1,519
(604)
289
1,204
1,771
869
The $317 write-off, which occurred in the year ended March 31, 2020, relates to impairment of licensed intangible
assets. The first commercial sale from these licenses is likely many years in the future and, as a result, the
Company has decided to write off the value of this license. The disposal relates to the sale of BMT and the
trademarks and brands of BMT previously held by the Company.
17
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars, except per share amounts and where noted)
8. CREDIT FACILITY INDEBTEDNESS
On June 29, 2018, Citagenix replaced its bank operating line facility with a $2.25 million secured revolving credit
facility (the “Credit Facility”) provided by Bloom Burton Healthcare Lending Trust (“BBHLT”). Amounts
outstanding under the Credit Facility bear interest at a rate of 7% compounded monthly, payable quarterly.
The Credit Facility has been accounted for at amortized cost. Transaction costs directly attributable to the Credit
Facility totalled $284. These costs were proportionally allocated based on the relative fair value of the
components of the Credit Facility and were amortized over the two-year term of the facility.
On June 29, 2020, the maturity date of the BBHLT Credit Facility, the Company paid in full the principal amount
of $2,250, plus outstanding interest of $40.
9. RELATED PARTY TRANSACTIONS
As part of the prospectus offering during the year ended March 31, 2020, one director and one officer of the
Company purchased a total of 201,667 Units, such investment being a “related party transaction” for purposes of
Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions.
During the year ended March 31, 2021, the Company advanced $70 (2020 – $89) to AHI. As at March 31, 2021,
the amount owing by AHI to the Company, $452 (2020 – $382) was written off as AHI and the Company
completed a three-cornered amalgamation on June 3, 2021(see note 26, Subsequent Events).
Employee advances for the year ended March 31, 2021, consisted of cash advances, payments to the Company’s
cell phone plan on behalf of employees, use of Company courier services and petty cash in foreign currencies.
Cash advances were provided to one employee of the Company.
10. SHARE CAPITAL
(a) Authorized –
The Company has an unlimited number of authorized common shares without par value.
(b) Common shares –
2021
Shares
Balance, beginning of the year
Warrants exercised
Options exercised
Restricted share units vested and shares issued
Prospectus August 13, 2019 (“P2019B”)
Prospectus June 30, 2020 (“P2020”)
Prospectus February 24, 2021 (“P2021”)
Share issuance costs – P2019
Share issuance costs – P2020
Share issuance costs – P2021
Shelf prospectus costs
29,368,177
1,553,076
564,600
321,752
-
7,187,500
6,727,500
-
-
-
-
2020
Amount
$
49,666
5,663
2,465
1,244
-
26,041
32,437
-
(2,918)
(2,988)
(36)
Shares
24,339,248
2,133,353
25,576
186,667
2,683,333
-
-
-
-
-
-
Amount
$
36,986
7,653
118
604
5,087
-
-
(782)
-
-
-
Balance, end of the year
45,722,605
111,574
29,368,177
49,666
18
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars, except per share amounts and where noted)
10. SHARE CAPITAL (continued)
On June 30, 2020, the Company closed a bought deal public offering of 6,250,000 units of the Company (the
“June Units”) at a price of $4.00 per Unit (the “June Offering Price”) plus the exercise in full of the Underwriters’
over-allotment option of 937,500 Units for aggregate gross proceeds of $28,750 (the “June Offering”). The June
Offering was made pursuant to an underwriting agreement dated June 15, 2020 with a syndicate of underwriters.
Each June Unit was composed of one Common Share and one-third of one common share purchase warrant. Each
full warrant is exercisable to purchase one Common Share at any time prior to June 30, 2022 at a price of $6.00
per Common Share.
As consideration for the services rendered by the Underwriters in connection with the June Offering, the
Company has paid the Underwriters a cash commission equal to 7% of the gross proceeds raised under the June
Offering and has granted the Underwriters non-transferable broker warrants equal to 7% of the number of June
Units sold under the June Offering, exercisable at any time prior to June 30, 2022 at an exercise price equal to
the June Offering Price.
On February 24, 2021, the Company closed a bought deal public offering of 6,727,500 units in the capital of the
Company (the “February Units”) at a price of $6.00 per Unit (the “February Offering Price”) for aggregate gross
proceeds of $40,365 (the “February Offering”), which included the full exercise of the over-allotment option by
the underwriters.
Each February Unit consisted of one Common Share and one-half of one common share purchase warrant. Each
full warrant is exercisable to purchase one Common Share at any time prior to February 24, 2024 at a price of
$7.50 per Common Share.
As consideration for the services rendered by the Underwriters in connection with the February Offering, the
Company has paid the Underwriters a cash commission equal to 6% of the gross proceeds raised under the
February Offering and has granted the Underwriters non-transferable broker warrants equal to 6% of the number
of February Units sold under the February Offering, exercisable at any time prior to February 24, 2023 at an
exercise price equal to the February Offering Price.
On June 3, 2021, the Company completed a three-cornered amalgamation transaction with AHI. In consideration,
the Company issued an aggregate of 5,873,092 Common Shares (see note 26).
The following provides additional information on the prospectus raises completed during the years ended
March 31, 2021 and 2020:
Closing date
Prospectus
Number of
units /
shares issued
Number of
warrants
issued
Aug. 13, 2019
Jun. 30, 2020
Feb. 24, 2021
P2019B
P2020
P2021
2,683,3331
7,187,5002
6,727,5001
1,341,667
2,395,833
3,363,750
Price
per
unit
$
3.00
4.00
6.00
Gross
proceeds3
$
8,050
28,750
40,365
Warrant
exercise
price
$
4.00
6.00
7.50
Warrant
expiry date
Aug. 13, 2022
Jun. 30, 2022
Feb. 24, 2024
1Each unit was composed of one Common Share and one-half of one common share purchase warrant. Each
whole warrant entitles the holder to purchase one common share.
2Each unit was composed of one Common Share and one-third of one common share purchase warrant. Each
whole warrant entitles the holder to purchase one common share.
3Gross proceeds have been allocated to share capital and warrants based on the residual method. Warrants were
valued using the BSM.
19
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars, except per share amounts and where noted)
10. SHARE CAPITAL (continued)
With respect to the prospectus raises completed during the years ended March 31, 2021 and 2020, the Company
issued the following warrants to brokers:
Closing date
Prospectus
Number of
broker
warrants
issued
Aug. 13, 2019
Jun. 30, 2020
Feb. 24, 2021
P2019B
P2020
P2021
187,833
503,125
403,650
Total
issuance
costs
$
1,237
2,131
2,529
Non-cash cost
from issuance of
warrants to
brokers
$
393
821
768
Broker
warrant
exercise
price
$
3.00
4.00
6.00
Broker warrant
expiry date
Aug. 13, 2021
Jun. 30, 2022
Feb. 24, 2023
All issuance costs were offset against share capital and common share purchase warrants in proportion to the
allocation of proceeds.
The following is a summary of all warrants exercised during the years ended March 31, 2021 and 2020:
2021
2020
Exercise price
$
1.00
1.50
2.50
3.00
3.50
4.00
6.00
Number of
warrants
exercised
-
915,650
12,800
23,208
277,650
301,336
22,432
1,553,076
Gross
proceeds
$
-
1,373
32
70
972
1,205
135
3,787
Number of
warrants
exercised
128,968
1,041,068
148,200
92,600
427,425
295,092
-
2,133,353
Gross
proceeds
$
129
1,562
370
278
1,496
1,180
-
5,015
Each of the warrants entitled the bearer to purchase one Common Share of the Company.
(c) Stock options –
In connection with the Company’s graduation to the TSX on November 12, 2020, and to fulfill the Exchange’s
compliance requirements, minor changes to the Company’s Stock Option Plan involving the calculation of fair
market value have been put into effect. These changes require shareholder approval at the Company’s next annual
general meeting.
On January 11, 2021, the Company granted a consultant options in exchange for investor relations services. The
options give the consultant the right to purchase a total of 66,000 common shares pursuant to the Company’s
stock option plan. Each option has an exercise price of $4.00, vests quarterly starting on the date of the grant, and
will expire January 11, 2024. The estimated fair value of the options, which approximates the value of the services
to be received, and calculated using the BSM, is $136.
20
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars, except per share amounts and where noted)
10. SHARE CAPITAL (continued)
The following is a summary of all options to purchase common shares that are outstanding as at March 31, 2021
and 2020, as well as details on exercise prices and expiry dates:
2021
2020
Options
Weighted
average price
Options
Weighted
average price
Balance, beginning of the year
Granted during the year
Exercised during the year
Forfeited during the year
Balance, end of the year
1,814,735
66,000
(564,600)
(47,100)
1,269,035
$
2.71
4.00
2.27
3.24
2.95
1,789,062
55,000
(25,576)
(3,751)
1,814,735
$
2.69
3.15
2.30
3.70
2.71
Number of options
20,000
35,000
15,000
66,000
80,500
36,000
159,271
10,000
817,924
15,152
4,188
10,000
1,269,035
Exercise price
$
3.40
3.00
5.50
4.00
6.60
1.40
1.45
1.90
2.00
4.95
4.00
2.90
Expiry date
April 26, 2022
August 27, 2022
October 21, 2023
January 11, 2024
March 4, 2024
July 13, 2025
March 9, 2026
January 18, 2027
March 31, 2027
April 11, 2028
May 8, 2028
March 11, 2029
The number of options exercisable as at March 31, 2021, is 1,219,535 and the weighted average exercise price
of these options is $2.39.
The total fair value of options not yet recognized as an expense is $102.
The following assumptions were used in the BSM to determine the fair value of stock options granted in the years
ended March 31, 2021 and 2020:
Weighted average risk-free interest rate
Weighted average expected volatility
Expected dividend yield
Weighted average expected life of options
Weighted average share price
Weighted average exercise price
2021
0.24%
80%
0.00%
3 years
$4.00
$4.00
2020
1.37%
95%
0.00%
3 years
$3.50
$3.15
21
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars, except per share amounts and where noted)
10. SHARE CAPITAL (continued)
(d) Restricted share unit plan –
In connection with the Company’s graduation to the TSX on November 12, 2020, and to fulfill the Exchange’s
compliance requirements, minor changes to the Company’s Restricted Share Unit Plan involving the calculation
of fair market value have been put into effect. These changes require shareholder approval at the Company’s next
annual general meeting.
On June 11, 2020, the Company granted 50,000 restricted share units (“RSUs”) in connection with the appointment
of a new Chief Medical Officer. The RSUs are subject to time-based vesting; one-third of the RSUs granted will
vest on each of the first, second and third anniversaries of the grant date. The fair value of the RSUs was $235,
determined based on the share price on the grant date.
On July 23, 2020, and September 17, 2020, the Company granted 5,000 and 3,000 RSUs, respectively, to two
consultants in exchange for public relations services. The RSUs vest quarterly starting on the date of the grant.
The fair values of the July 23, 2020 RSUs and the September 17, 2020 RSUs were $20 and $11, respectively.
On January 11, 2021, the Board of Directors awarded 2,092,000 RSUs to directors, officers, employees and
consultants pursuant to the Company’s RSU plan. The vesting of 50% of the RSUs granted to key executives is
subject to specific performance goals that reflect the successful execution of the Company’s business plan. All
RSUs are subject to time-based vesting; one third of the RSUs granted will vest on each of the first, second and
third anniversaries of the grant date. The total fair value of the RSUs was $8,369, determined based on the share
price on the grant date.
Included in the RSUs granted on January 11, 2021, are 731,000 performance RSUs granted to key senior
executives of Antibe and Citagenix. Vesting of these RSUs is subject to the successful achievement of certain
goals that are designed to reflect the successful execution of the Company’s business plan and strategy. The
estimated fair value of these RSUs calculated using the share price on the grant date is $2,924. As at
March 31, 2021, it was determined that the probability and timing of achieving the performance criteria
was greater than 50%, and as such, $285 was expensed during the year ended March 31, 2021, and included
in contributed surplus.
On March 3, 2021, the Company granted a total of 80,000 RSUs to two employees in connection with their
employment agreements, and two consultants in exchange for their services. The RSUs are subject to time-based
vesting; one-third of the RSUs granted will vest on each of the first, second and third anniversaries of the grant
date. The fair value of the RSUs was $412, determined based on the share price on the grant date.
For the year ended March 31, 2021, $3,988 ($3,935 related to RSUs and $53 related to options) has been
included within stock-based compensation in the consolidated statements of loss and comprehensive loss.
The following is a summary of all RSUs that are outstanding as at March 31, 2021:
2021
RSUs
Balance, beginning of the year
Granted during the year
Vested during the year
Forfeited during the year
Balance, end of the year
2,155,158
2,230,000
(625,000)
(134,584)
3,625,574
2020
RSUs
1,728,992
802,000
(375,834)
-
2,155,158
22
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars, except per share amounts and where noted)
10. SHARE CAPITAL (continued)
Based upon the share price on the date of granting, the total fair value of RSUs not yet recognized as an expense
is $9,173.
(e) Common share purchase warrants –
The following is a summary of all warrants to purchase common shares that are outstanding as at March 31, 2021
and 2020, as well as details on exercise prices and expiry dates:
2021
2020
Warrants
Weighted
average price
Warrants
Weighted
average price
Balance, beginning of the year
Issued during the year
Exercised during the year
Expired during the year
Balance, end of the year
2,838,785
6,666,358
(1,553,076)
(45,950)
7,906,117
$
2.90
6.61
2.44
1.50
6.12
3,468,904
1,593,984
(2,133,353)
(90,750)
2,838,785
$
2.30
3.78
2.35
8.30
2.90
Number of warrants
72,026
444,925
489,725
2,373,402
758,639
403,650
3,363,750
7,906,117
Exercise
price
$
3.00
3.50
4.00
6.00
4.00
6.00
7.50
Expiry date
August 13, 2021
February 27, 2022
June 30, 2022
June 30, 2022
August 13, 2022
February 24, 2023
February 24, 2024
The following assumptions were used in the BSM to determine the fair value of warrants during the years ended
March 31, 2021 and 2020:
Weighted average risk-free interest rate
Weighted average expected volatility
Expected dividend yield
Weighted average expected life of warrants
Weighted average share price
Weighted average exercise price
2021
0.30%
75%
0.00%
2.5 years
$4.87
$6.61
2020
1.29%
91%
0.00%
2.9 years
$3.85
$3.88
23
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars, except per share amounts and where noted)
11. LOSS PER SHARE
Basic loss per share is calculated by dividing the net loss attributable to common shareholders by the weighted
average number of common shares outstanding during the year. All unexercised share options and warrants were
excluded from calculating diluted loss per share.
12. SEGMENTED RESULTS
The Company has two primary business segments: Antibe Therapeutics, a pharmaceutical development
company, and Citagenix, a marketer and distributor of regenerative medicines serving the dental and
orthopaedic market places.
The segmented performance of these two businesses for the years ended March 31, 2021 and 2020, is as follows:
Antibe
$
-
-
-
(24,100)
2021
Citagenix
$
9,713
(6,163)
3,550
(4,184)
Consolidated
$
9,713
(6,163)
3,550
(28,284)
Antibe
$
-
-
-
-
(17,361)
2020
Citagenix
$
9,666
(5,970)
3,696
(5,385)
Consolidated
$
9,666
(5,970)
3,696
(22,746)
(24,100)
(634)
(24,734)
(17,361)
(1,689)
(19,050)
Revenue
Cost of sales
Gross profit
Expenses
Loss before
income taxes
There is no single customer who constitutes more than 10% of revenue.
Revenue by geographic region for the year ended March 31, 2021, is as follows:
Canada – 45%
United States – 36%
Europe – 3%
Rest of World – 16%
The Company’s assets and liabilities by each business as at March 31, 2021 and 2020 are as follows:
2021
2020
Antibe
Citagenix Consolidated
Antibe
Citagenix Consolidated
$
$
$
$
$
$
75,073
1,440
76,513
4,030
1,198
5,228
79,103
2,638
81,741
6,319
236
6,555
5,188
2,095
7,283
11,507
2,331
13,838
2,226
27,631
29,857
1,515
105
1,620
3,741
27,736
31,477
3,133
2,399
5,532
4,462
65
4,527
7,595
2,464
10,059
Assets
Current
Non-current
Total assets
Liabilities
Current
Non-current
Total liabilities
24
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars, except per share amounts and where noted)
13. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The following table summarizes accounts payable and accrued liabilities as at March 31, 2021 and 2020:
Accounts payable
Antibe
Citagenix
BMT
Accrued liabilities
Antibe
Citagenix
BMT
Total accounts payable and accrued liabilities
14. GENERAL AND ADMINISTRATIVE EXPENSES
2021
$
1,079
1,251
-
2,330
1,146
132
-
1,278
3,608
2020
$
2,112
1,793
73
3,978
1,022
196
66
1,284
5,262
The nature of the general and administrative expenses for the years ended March 31, 2021 and 2020, is
summarized as follows:
Salaries and wages
Professional and consulting fees
Office expenses
Other expenses
Total general and administrative expenses
15. SELLING AND MARKETING EXPENSES
2021
$
2,237
3,785
661
517
7,200
2020
$
1,510
2,639
562
524
5,235
The nature of the selling and marketing expenses for the years ended March 31, 2021 and 2020, is
summarized as follows:
Salaries and wages
Commissions
Advertising and promotion
Travel and entertainment
Total selling and marketing expenses
2021
$
1,694
586
222
217
2,719
2020
$
2,089
698
411
574
3,772
25
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars, except per share amounts and where noted)
16. RESEARCH AND DEVELOPMENT EXPENSES
The nature of the research and development expenses for the years ended March 31, 2021 and 2020, is
summarized as follows:
Salaries and wages
Professional and consulting fees
Research & clinical trial costs
SR&ED rebate
2021
$
1,672
1,428
11,334
(1,007)
Total research and development expenses
13,427
2020
$
655
169
7,399
(146)
8,077
Non-refundable advance payments for goods and services that will be used or rendered in future research
and development activities are recorded as a prepaid expense and recognized as an expense within
“research & clinical trial costs” in the period that the related goods are consumed or services are performed.
As at March 31, 2021, $2,115 was recorded as a prepaid expense.
17. STOCK-BASED COMPENSATION
The function of the stock-based compensation expense for the years ended March 31, 2021 and 2020, is
summarized as follows:
General and administrative
Research and development
Total stock-based compensation
18. FINANCE AND RELATED COSTS
2021
$
2,690
1,298
3,988
2020
$
2,505
871
3,376
The components of the finance and related costs for the years ended March 31, 2021 and 2020, are as
follows:
Interest on loan payable
Accretion interest
Interest and bank charges
Foreign currency transactions
Total finance and related costs
2021
$
55
(6)
181
(164)
66
2020
$
185
142
173
31
531
26
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars, except per share amounts and where noted)
19. INCOME TAXES
The income tax provision recorded differs from the income tax obtained by applying the statutory income
tax rate of 26.50% (2020 – 26.50%) to the loss before income taxes for the year, and is reconciled as
follows:
Loss before income taxes
Expected income tax recovery at the combined basic federal
and provincial tax rate:
Decrease (increase) resulting from:
Non-deductible expenses
Tax loss on sale of BMT
Book write-down of receivable
Others
Amount related to unrecognized deferred tax assets
Provision for (recovery of) income taxes
2021
$
(24,734)
2020
$
(19,050)
(6,555)
(5,048)
1,064
(379)
120
(164)
5,914
-
921
-
-
(528)
4,656
1
The Company has incurred non-capital losses of $23,961 for tax purposes, which are available to reduce
future taxable income. Such benefits will be recorded as an adjustment to the tax provision in the year
realized. The losses expire as follows:
In the year ending March 31,
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
$
-
-
-
-
-
-
-
113
832
3,388
4,798
14,283
547
23,961
The Company has incurred capital losses of as at March 31, 2021, applicable to future years, with no expiry
date, is $2,378.
The cumulative carry-forward pool of SR&ED expenditures as at March 31, 2021, applicable to future years,
with no expiry date, is $19,417.
27
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars, except per share amounts and where noted)
20. DEFERRED INCOME TAXES
The recognized temporary differences and tax losses are attributable to the following:
2021
2020
Amount related to tax loss
Amount related to intangible assets on business combination
Amount related to foreign exchange translation gains
Amount related to transaction costs
Amount related to capital property
Amount related to deferred contract costs
Amounts related to other
Net deferred income tax liabilities
$
503
(226)
-
3
56
(340)
4
-
$
454
(454)
(14)
6
70
-
(62)
-
Deferred tax expense of $15 (2020 – recover $8) related to the foreign exchange translation gains was
recognized in other comprehensive loss for the year.
Deferred tax assets have not been recognized in respect of the following temporary differences:
Amount related to tax loss carryforwards
Amount related to eligible capital property
Amount related to SR&ED expenditures
Amount related to donations
Amount related to ITC, net of tax
Amount related to ORDTC, net of tax
Amount related to share issuance costs
Amount related to capital losses
Amount related to deferred revenue
2021
$
5,471
296
5,146
21
1,731
394
1,415
315
7,322
22,111
2020
$
7,990
311
3,621
34
1,301
217
432
-
636
14,542
Deferred income tax assets have not been recognized in respect of these items because it is not probable
that future taxable profit will be available against which the Company will be able to use these benefits.
21. FINANCIAL INSTRUMENTS
The carrying values of cash, term deposits, accounts receivable, due from AHI, bank indebtedness, accounts
payable and accrued liabilities approximate fair values due to the relatively short-term maturities of these
instruments.
Financial instruments that are measured subsequent to initial recognition at fair value are grouped into a hierarchy
based on the degree to which the fair value is observable. Level 1 fair value measurements are derived from
unadjusted, quoted prices in active markets for identical assets or liabilities. Level 2 fair value measurements are
derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability
directly or indirectly. Level 3 fair value measurements are derived from valuation techniques that include inputs
for the assets or liabilities that are not based on observable market data.
28
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars, except per share amounts and where noted)
21. FINANCIAL INSTRUMENTS (continued)
Financial instruments classified as Level 1 include cash, term deposits and bank indebtedness. At the current
time, the Company does not have financial instruments classified in Level 2 or Level 3.
22. CAPITAL RISK MANAGEMENT
The Company’s primary objective with respect to its capital management is to ensure that it has sufficient
cash resources to fund the research, development and patent of drugs and the growth objectives of
Citagenix. To secure the additional capital necessary to pursue these plans, the Company may attempt to
raise additional funds through the issuance of equity.
The Company includes the following in its definition of capital: share capital, common share purchase
warrants, contributed surplus and accumulated other comprehensive income (loss), which total $136,220
(2020 – $63,452). The Company is not subject to externally imposed capital requirements.
23. FINANCIAL RISK MANAGEMENT
The Company is exposed to a variety of financial risks by virtue of its activities: credit risk, liquidity risk, foreign
currency risk and interest rate risk. The overall risk management program focuses on the unpredictability of
financial markets and seeks to minimize potential adverse effects on financial performance.
Risk management is carried out by the officers of the Company as discussed with the Board of Directors. The
officers of the Company are charged with the responsibility of establishing controls and procedures to ensure that
financial risks are mitigated in accordance with the expectation of the Board of Directors as follows:
Credit risk
The Company’s credit risk is primarily attributable to trade and other receivables, amounts due from AHI and
the excess of cash held in one financial institution over the deposit insurance by Canadian Deposit Insurance
Corporation. The Company, in the normal course of operations, monitors the financial condition of its customers.
The Company establishes an allowance for doubtful accounts that corresponds to the specific credit risk of its
customers, historical trends and economic conditions.
Liquidity risk
Liquidity risk is the risk that the Company is not able to meet its financial obligations as they become due or can
do so only at excessive cost. The Company manages its liquidity risk by forecasting cash flows and anticipated
investing and financing activities. Officers of the Company are actively involved in the review and approval of
planned expenditures, including actively seeking capital investment and generating revenue and profit from the
commercialization of its products (see note 2(d)).
As at March 31, 2021, the Company’s financial obligations, including applicable interest, are due as follows:
Accounts payable and accrued liabilities
Lease liability
Less than 1 year
$
3,608
133
3,741
1 – 2 years After 2 years
$
-
105
105
$
-
-
-
Total
$
3,608
238
3,846
29
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars, except per share amounts and where noted)
23. FINANCIAL RISK MANAGEMENT (continued)
Foreign currency risk
The functional and reporting currency of the Company is the Canadian dollar. The Company undertakes
transactions denominated in foreign currencies, including US dollars and euros, and, as such, is exposed to
currency risk due to fluctuations in foreign exchange rates against the Canadian dollar. The Company does not
use derivative instruments to reduce exposure to foreign currency risk.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in market interest rates. Financial assets and financial liabilities with variable interest rates expose the
Company to cash flow interest rate risk.
24. DEFERRED REVENUE
On February 24, 2017, Antibe entered into an exclusive long-term license and distribution agreement (“License
Agreement 1”) with Laboratoires Acbel SA (“Acbel”) for otenaproxesul in Albania, Algeria, Bulgaria, Greece,
Jordan, Romania and Serbia (the “Territory”). Acbel is an affiliated holding company of Galenica SA in Greece.
Under the terms of License Agreement 1, Antibe was issued an upfront payment of €800 (CAD$1,142) and is
entitled to receive a 5% royalty on net sales of otenaproxesul in the Territory. The upfront revenue is reflected in
deferred revenue until the point that Acbel can benefit from the license.
On September 4, 2018, Antibe entered into an exclusive licensing agreement (“License Agreement 2”) with
Kwangdong Pharmaceutical Co., Ltd (“Kwangdong”) for the development and commercialization of
otenaproxesul in the Republic of Korea (“Region”). Under the terms of License Agreement 2, Antibe was issued
an upfront payment of US$1,000 (CAD$1,316), which is reflected in deferred revenue until the point that
Kwangdong can benefit from the license. Under the terms of License Agreement 2, Antibe will be entitled to
receive US$9 million in milestone payments. Fees paid to an agent used in obtaining License Agreement 2 have
been recorded as deferred contract costs on the consolidated statement of financial position in the amount of $236
as at March 31, 2021.
On February 9, 2021, Antibe entered into an exclusive licensing agreement (“License Agreement 3”) with Nuance
Pharma (“Nuance”) for the development and commercialization of otenaproxesul in the Greater China region.
The license provides Nuance with exclusive rights to commercialize otenaproxesul in China, Hong Kong, Macau,
and Taiwan (the “Sector”). Under the terms of the agreement, Antibe was issued an upfront payment of
US$20 million (CAD$25,231), which is reflected in deferred revenue until the point at which Nuance can benefit
from the license. Additionally, Antibe will receive a double-digit royalty on net sales in the Sector and is entitled
to receive US$80 million in development and sales milestones. Fees paid to an agent used in obtaining License
Agreement 3 have been recorded as deferred contract costs on the consolidated statement of financial position in
the amount of $1,047 as at March 31, 2021.
The amount of the upfront payments for all licenses is included on the consolidated statements of financial
position as deferred revenue and will be recorded through the consolidated statements of loss and comprehensive
loss at the same point when the license revenue is recognized.
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ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2021 and 2020
(Expressed in thousands of Canadian Dollars, except per share amounts and where noted)
25. COMMITMENTS AND CONTINGENCIES
(a) Royalty and milestone commitment
On December 22, 2009, the Company entered into a License Agreement with AHI that provided for the exclusive
right and license to research, develop and commercialize various patents. Pursuant to the agreement, the Company
paid an upfront non-refundable license fee of $150 to obtain exclusive right to the patents. The agreement required
the Company to pay royalties of 4% of all net sales upon the first commercial sale or, if the Company sublicenses
the patents, the Company would pay a 15% royalty on royalty revenue earned. Additionally, the Company was
required to make milestone payments to AHI at various stages of development.
On June 3, 2021, the Company completed an amalgamation with AHI whereby the Company issued 5,873,092
Antibe common shares to AHI’s shareholders and the Company obtained all the assets and liabilities of AHI,
effectively ending this License Agreement (see note 26, Subsequent Events).
(b) Royalty agreement
On November 16, 2015, the Company announced the signing of an exclusive long-term license and distribution
agreement with Knight Therapeutics Inc. (“Knight”), a leading Canadian specialty pharmaceutical company, for
the Company’s anti-inflammatory and pain drugs, otenaproxesul, ATB-352 and ATB-340, as well as the rights
to other, future prescription drugs. Under the terms of the license agreement, the Company has granted Knight
the exclusive commercial rights for the Company’s drug candidates and other future prescription drugs in Canada,
Israel, Russia and sub-Saharan Africa. The Company is entitled to royalties on annual sales, along with the
potential for $10 million in payments for sales-based milestones.
The Company received no royalties from Knight in the year ended March 31, 2021.
26. SUBSEQUENT EVENTS
On May 7, 2021, the Company announced that the Boards of Directors of Antibe and AHI agreed to combine the
companies in an amalgamation transaction pursuant to which shareholders of AHI will receive common shares
of the Company in exchange for their shares of AHI.
The Company was founded with an exclusive IP license from AHI to develop and commercialize the Company’s
pipeline drugs. The license obligated the Company to pay royalties to AHI on future revenues derived from this
IP (see note 25). Under the terms of the agreement, the Company acquired full ownership of AHI’s patent
portfolio, eliminating the royalty liability on future revenues. The companies were combined in a three-cornered
amalgamation transaction pursuant to which AHI amalgamated with a newly incorporated subsidiary of the
Company.
The Company issued an aggregate of 5,873,092 Common Shares for a total consideration of $25,980, to acquire
all of the issued and outstanding shares of AHI, following which AHI ceased to exist. The amalgamation was
accounted for as an acquisition by the Company of the underlying assets of AHI. The Company acquired $25,941
in intangible assets relating to patents previously licensed to the Company along with $381 in other assets and
$342 in liabilities. The fair value of the patents was determined based on the relief from royalty method.
These new shares account for approximately 11.4% of the ownership of Antibe on a post-transaction basis. Shares
issued to Company insiders, who collectively owned approximately 37.5% of the outstanding shares of AHI, are
subject to lock-up agreements, with half of them to be released 120 days after closing and the balance to be
released 240 days after closing.
The transaction closed on June 3, 2021.
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