ANTIBE THERAPEUTICS INC.
CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2022 and 2021
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, 2022 and March 31,
2021, 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, 2022 and March 31, 2021, and its consolidated
financial performance and its consolidated cash flows for the years then ended in accordance with International
Financial Reporting Standards (“IFRSs”).
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 an
accumulated deficit of $111.0 million as at March 31, 2022 and incurred a comprehensive loss of $25.1 million and
had negative cash flows from operations of $16.9 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 Matters
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 matter 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 each 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 matters
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 $14.4 million for the year ended March 31,
2022 and accounts payable and accrued liabilities of
$2.8 million as at March 31, 2022, which includes an
accrual for estimated research and clinical trial expenses
incurred. The Company has contracts with contract
research organizations
that conduct and manage
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. As disclosed in note 3, 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 expenses is a key audit matter
as it requires significant auditor judgment, subjectivity
and effort in performing appropriate procedures to
evaluate
the
information management utilizes in these estimates.
the completeness and accuracy of
Valuation of intangible assets not yet subject to
amortization
As disclosed in note 5 to the consolidated financial
statements, the Company acquired intangible assets
consisting of intellectual property as part of its
acquisition of the underlying assets of Antibe Holdings
Inc. The fair value of the intellectual property acquired
amounted to $26.1 million and was determined based on
the relief from royalty method. Management also
capitalized $0.3 million of costs directly relating to the
acquisition. The total intellectual property intangible
asset value is $26.4 million as at March 31, 2022.
The intellectual property acquired is not yet subject to
amortization, and in accordance with the Company’s
accounting policies, is tested for impairment at least
annually, or sooner if there is an indication of
impairment. The cash flows from the intellectual
property acquired are monitored within the Antibe cash-
generating unit (CGU). As disclosed in note 9, when
performing the annual impairment test as at March 31,
2022, the Company determined the recoverable amount
How our audit addressed the key audit matters
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 compared this data to management’s
schedules. We assessed management’s
look-back
analysis comparing the estimated accrual balances of
March 31, 2021 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.
To assess the valuation of the intellectual property
intangible asset, our audit procedures included, among
others, assessing methodologies used and the significant
assumptions and underlying data used by the Company
in its analysis as of the date of acquisition and as at
March 31, 2022. With the assistance of our valuation
specialists, we evaluated
the Company’s models,
valuation methodologies, and certain significant
assumptions,
of
as
commercialization and the discount rate.
probability
such
the
We compared the estimated trial costs to board approved
budgets. We compared future revenue and margin
projections and the probability of commercialization to
current industry, market and economic trends. We
performed sensitivity analysis on
the significant
assumptions to evaluate changes in the recoverable
amount
the
that would result from changes
assumptions.
in
of the Antibe CGU using a value-in-use approach and
prepared a discounted cash flow model.
Auditing management’s assessment of the valuation of
the Antibe CGU was complex, given the degree of
judgment and subjectivity in evaluating management’s
estimates and assumptions. Significant assumptions
included projections for the future costs of clinical trials,
revenue and margin projections, probability of
the discount rate. These
commercialization, and
assumptions are affected by expectations about future
market and economic conditions including the success
of clinical trials, obtaining regulatory approvals, future
product pricing, future productions costs, and the future
demand for these pharmaceutical products.
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.
Chartered Professional Accountants
Licensed Public Accountants
Toronto, Canada
June 29, 2022
ANTIBE THERAPEUTICS INC.
Consolidated Statements of Financial Position
As at March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars)
ASSETS
Current
Cash and cash equivalents
Term deposits [note 7]
Trade and other receivables [note 8]
Inventory
Prepaid expenses [note 14]
Assets held for sale [note 6]
Total current assets
Non-current assets
Property and equipment, net
Loan receivable
Deposits
Deferred contract costs [note 24]
Intangible assets, net [note 9]
Total non-current assets
2022
$
2021
$
34,807
20,000
1,157
-
768
4,632
61,364
-
159
-
1,283
26,352
27,794
71,973
25
2,603
2,157
2,345
-
79,103
309
157
20
1,283
869
2,638
TOTAL ASSETS
89,158
81,741
LIABILITIES
Current
Accounts payable and accrued liabilities
Current portion lease obligation
Liabilities directly associated with assets held for sale [note 6]
Total current liabilities
Non-current liabilities
Deferred revenue [note 24]
Lease liability
Total non-current liabilities
TOTAL LIABILITIES
SHAREHOLDERS’ EQUITY
Share capital [note 12(b)]
Common share purchase warrants [note 12(e)]
Contributed surplus
Deficit
TOTAL SHAREHOLDERS’ EQUITY
2,816
-
1,878
4,694
3,608
133
-
3,741
27,631
-
27,631
27,631
105
27,736
32,325
31,477
139,547
10,264
18,038
(111,016)
56,833
111,574
10,353
14,293
(85,956)
50,264
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
89,158
81,741
Commitments and contingencies [note 25]
Subsequent events [note 26]
(Signed) Daniel Legault Daniel Legault, Director
(Signed) Robert Hoffman Robert Hoffman, 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, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and per share amounts)
EXPENSES
Research and development [note 14]
Stock-based compensation [note 15]
General and administrative [note 16]
Selling and marketing [note 17]
Impairment of amounts due from Antibe Holdings Inc
Total expenses
2022
$
14,358
5,521
5,442
208
-
25,529
2021
$
13,427
3,989
6,000
115
452
23,983
LOSS FROM CONTINUING OPERATIONS
(25,529)
(23,983)
Finance and related costs (income) [note 18]
Finance income
LOSS BEFORE INCOME TAXES
PROVISION FOR INCOME TAXES
Current [note 19]
Total provision for income taxes
3
(282)
(25,250)
(84)
(46)
(23,853)
-
-
-
-
NET LOSS FROM CONTINUING OPERATIONS
(25,250)
(23,853)
DISCONTINUED OPERATIONS
Income (loss) from discontinued operations [notes 4 and 6]
NET LOSS
190
(2,448)
(25,060)
(26,301)
OTHER COMPREHENSIVE GAIN
Exchange differences on translation of foreign operations
-
18
COMPREHENSIVE LOSS
(25,060)
(26,283)
Basic and diluted loss per share [note 13]
(0.50)
(0.70)
Basic and diluted weighted average number of shares
outstanding [note 13]
50,774,440
37,251,785
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, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share amounts)
Number of
Common
Shares
Share
capital
Common
Share
purchase
warrants
Contributed
surplus
Accumulated
other
comprehensive
income
Deficit
Total shareholders’
equity
$
$
$
Balance, March 31, 2020
29,368,177
49,666
2,626
11,142
Shares and warrants 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 redeemed
restricted share units
1,553,076
5,663
(1,876)
-
564,600
2,465
321,752
1,244
-
-
(1,183)
(1,244)
Stock-based compensation
-
-
-
3,989
Net loss from continuing
operations for the year
Loss from discontinued
operations
Exchange differences on
translation of foreign
operations
Balance,
March 31, 2021
-
-
-
-
-
-
-
-
-
-
-
-
45,722,605
111,574
10,353
14,293
Balance, March 31, 2021
45,722,605
111,574
10,353
14,293
Shares issued for exercised
warrants
Shares issued for redeemed
restricted share units
Shares issued on
amalgamation with Antibe
Holdings Inc. [notes 5
and 12]
42,640
217
(89)
-
460,939
1,776
-
(1,776)
5,873,092
25,980
-
-
$
18
-
-
-
-
-
-
-
-
(18)
-
-
-
-
-
$
$
(59,673)
3,779
-
-
-
-
-
-
69,115
(5,387)
3,787
1,282
-
3,989
(23,853)
(23,853)
(2,448)
(2,448)
18
-
(85,956)
50,264
(85,956)
50,264
-
-
-
128
-
25,980
5,521
Stock-based compensation
-
-
-
5,521
-
-
Net loss from continuing
operations for the year
Income from discontinued
operations
Balance,
March 31, 2022
-
-
-
-
-
-
-
-
52,099,276
139,547
10,264
18,038
-
-
-
(25,250)
(25,250)
190
190
(111,016)
56,833
See accompanying notes to the consolidated financial statements
4
ANTIBE THERAPEUTICS INC.
Consolidated Statements of Cash Flows
For the Years Ended March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars)
CASH FLOWS USED IN OPERATING ACTIVITIES
Net loss from continuing operations for the year
Income (loss) from discontinued operations [notes 4 and 6]
Items not affecting cash:
Stock-based compensation [notes 12 and 15]
Accretion interest
Depreciation of property and equipment
Amortization of intangible assets
Interest on capitalized lease payments
Loss on disposal of BMT [note 4]
Impairment of amount due from Antibe Holdings Inc.
Changes in non-cash balances:
Trade and other receivables
Inventory
Prepaid expenses
Deferred contract costs
Accounts payable and accrued liabilities
Income taxes payable
Deferred revenue
Net change in non-cash balances
2022
$
2021
$
(25,250)
190
(23,853)
(2,448)
5,521
-
34
65
18
-
-
(19,422)
3,989
35
189
289
16
1,357
452
(19,974)
287
(99)
1,517
-
927
(130)
-
2,502
(1,198)
530
(2,186)
(1,047)
(1,461)
-
25,231
19,869
Cash flows used in operating activities
(16,920)
(105)
CASH FLOWS USED IN INVESTING ACTIVITIES
Purchase of term deposits [note 7]
Transaction costs on acquisition of assets, net of cash acquired [note 5]
Advances to BMT [note 4]
Purchase of equipment
Cash flows used in investing activities
(19,975)
(236)
-
(9)
(20,220)
CASH FLOWS PROVIDED BY (USED IN) FINANCING
ACTIVITIES
Advances to Antibe Holdings Inc.
Lease payments
Increase in loan receivable
Repayment of credit facility [note 10]
Issuances:
Gross proceeds from shares and warrant issuance [note 12]
Proceeds from exercised warrants [note 12]
Proceeds from exercised options [note 12]
Share issuance costs [note 12]
Cash flows provided by (used in) financing activities
-
(152)
(2)
-
-
128
-
-
(26)
Net increase (decrease) in cash during the year
Cash and cash equivalents, beginning of the year
Cash and cash equivalents, end of the year
(37,166)
71,973
34,807
-
-
(264)
-
(264)
(69)
(161)
(157)
(2,250)
69,115
3,787
1,282
(5,387)
66,160
65,791
6,182
71,973
See accompanying notes to the consolidated financial statements
5
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and 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. 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 OTCQX
market under the symbol “ATBPF.”
The Company originates, develops and out-licenses new pharmaceuticals. Antibe’s lead compound,
otenaproxesul (previously known as OTENAPROXESUL), combines a moiety that releases 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 and internationally via a network of distributors (see note 26,
Subsequent Events).
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.
(“Holdings”), a related party, to develop and commercialize the Company’s pipeline drugs. The license obligated
the Company to pay royalties to Holdings on future revenues derived from this intellectual property. On
May 7, 2021, the Board of Directors of Antibe and Holdings agreed to combine the companies in an
amalgamation transaction. Under the terms of the agreement, the Company acquired full ownership of Holdings’
patent portfolio, eliminating the royalty liability on future revenues (note 5). 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 Holdings.
These consolidated financial statements were authorized for issuance by the Board of Directors on June 29, 2022.
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.
6
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and per share amounts and where noted)
2. BASIS OF PRESENTATION (continued)
(b) Consolidation –
These consolidated financial statements reflect the accounts of the Company and its wholly owned subsidiary,
Citagenix.
The Company operates as two operating segments: Antibe (research and development of new pharmaceuticals)
and Citagenix (a seller of tissue regenerative products servicing the orthopaedic and dental marketplaces).
The assets and liabilities of Citagenix are recorded as held for sale on the March 31, 2022 consolidated statements
of financial position (note 6). The results of the operations of Citagenix and BMT Medizintechnik GmbH
(“BMT”) are recorded within income (loss) from discontinued operations in the statements of loss and
comprehensive loss (notes 4 and 6). On December 3, 2020, the Company sold its wholly owned subsidiary, BMT.
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.
All intercompany balances and transactions have been eliminated on consolidation.
For the purposes of effecting a three-cornered amalgamation with Holdings, a company incorporated in the
Province of Alberta, the Company established a wholly owned subsidiary, 2831094 Ontario Inc. On June 2, 2021,
Holdings and 2831094 Ontario Inc. amalgamated into the resulting entity, Antibe Amalco Inc. (“Amalco”). On
June 3, 2021, Amalco was vertically amalgamated into the Company (note 5).
(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, 2022, the Company had working capital of $56,670, incurred a comprehensive loss for
the year then ended of $25,060, had negative cash flows from operations of $16,920 and an accumulated deficit
of $111,016.
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.
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.
7
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and per share amounts and where noted)
2. BASIS OF PRESENTATION (continued)
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.
The COVID-19 pandemic has impacted the Company’s business to some extent. The Company’s Phase 2 trial in
calendar 2020 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. 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.
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. While the Company believes the current conditions
related to the COVID-19 pandemic to be improving, the situation is dynamic and the impact of COVID-19 on its
future results of operations and financial condition cannot be reasonably estimated at this time. The Company
continues to evaluate the situation and monitor any impacts or potential impacts to its business.
In the normal course of business, the Company could be the subject of litigation or other potential claims; any
matters related to potential legal proceedings are disclosed in the Company’s Annual Information Form. While
management assesses the merits of each lawsuit and defends itself accordingly, the Company may be required to
incur significant expenses or devote significant resources to defending itself against litigation.
(f) Use of estimates –
The preparation of these 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 amounts 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 the
determination of the valuation of intangible assets, completeness of the accrual for research and clinical trial
expenses, and accruals and inputs related to the calculation of stock-based compensation.
8
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and per share amounts and where noted)
2. BASIS OF PRESENTATION (continued)
(g) Comparative figures –
BMT and Citagenix operations were reclassified into discontinued operations in the consolidated statements of
loss and comprehensive loss, in accordance with IFRS 5, Non-current Assets held for Sale and Discontinued
Operations (notes 4 and 6).
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES, JUDGMENTS and
ASSUMPTIONS
Cash and cash equivalents –
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.
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 (loss) 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
9
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and per share amounts and where noted)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES, JUDGMENTS and
ASSUMPTIONS (continued)
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.
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.
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, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and per share amounts and where noted)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES, JUDGMENTS and
ASSUMPTIONS (continued)
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.
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.
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.
11
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and per share amounts and where noted)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES, JUDGMENTS and
ASSUMPTIONS (continued)
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, 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 intellectual property. For
licenses that provide the customer with the right to access the intellectual property, revenue is recognized
throughout the license period. For licenses that provide the customer with the right to use the intellectual property,
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.
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.
The Company accounts for restricted share units (“RSUs”) using the fair market value on the date of the grant.
Compensation costs are recognized over the vesting period as an increase to stock-based compensation expense
and contributed surplus. When RSUs are redeemed, the applicable amount of contributed surplus is 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.
12
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and per share amounts and where noted)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES, JUDGMENTS and
ASSUMPTIONS (continued)
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.
The financial instruments of the Company are classified as follows:
Financial assets
Cash and cash equivalents
Term deposits
Trade and other receivables
Due from Antibe Holdings Inc
Deposits
Financial liabilities
Bank indebtedness
Accounts payable and accrued liabilities
Loan payable
IFRS 9
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
13
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and per share amounts and where noted)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES, JUDGMENTS and
ASSUMPTIONS (continued)
Financial instruments
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
other comprehensive income (loss) (“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.
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).
14
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and per share amounts and where noted)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES, JUDGMENTS and
ASSUMPTIONS (continued)
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.
Significant estimates, judgments and assumptions
Completeness of the accrual for research and clinical trial expenses
The Company’s determination of accrued research and clinical trial costs at each reporting period requires
significant judgment, 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.
Valuation of intangible assets not yet subject to amortization
The Company acquired intangible assets consisting of intellectual property as part of its acquisition of the
underlying assets of Holdings. The fair value of the intellectual property acquired was determined based on the
relief from royalty method.
The intellectual property acquired is not yet subject to amortization, and in accordance with the Company’s
accounting policies, is tested for impairment at least annually, or sooner if there is an indication of impairment.
The cash flows from the intellectual property acquired are monitored within the Antibe CGU. When performing
the annual impairment test as at March 31, 2022, the Company determined the recoverable amount of the Antibe
CGU using a value-in-use approach and prepared a discounted cash flow model. Significant assumptions used
within the discounted cash flow model are disclosed within note 9.
Vesting period for performance-based restricted share units
The Company issues certain RSUs which vest depending on specified operational performance conditions. The
RSUs are to be settled with the Company’s shares. Details of the RSU grants are disclosed within note 12. When
calculating the share-based compensation expense for the period, the Company estimates the likelihood and
timing of achieving the performance conditions.
15
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and per share amounts and where noted)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES, JUDGMENTS and
ASSUMPTIONS (continued)
New and amended standards and interpretations
A number of amendments to standards have been issued but are not yet effective for the financial year ended
March 31, 2022, and accordingly, have not been applied in preparing these consolidated financial statements.
The Company reviewed these amendments and concluded that there would be no impact on adoption given their
nature and applicability.
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).
The results of BMT are presented in the consolidated statements of loss and comprehensive loss within loss from
discontinued operations for the year ended March 31, 2021.
The results of BMT for the year ended March 31, 2021 are presented below:
Revenue
Cost of goods sold
Gross profit
Expenses
Loss on sale of BMT
Loss from discontinued operations
2021
$
228
136
92
302
1,357
(1,567)
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
734
9
6
5
613
(83)
(14)
$1,357
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 and are presented
within the Company’s consolidated statements of cash flows.
16
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and per share amounts and where noted)
4. SALE OF BMT (continues)
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. AMALGAMATION WITH RELATED PARTY
On May 7, 2021, the Company announced that the Boards of Directors of Antibe and Holdings agreed to combine
the companies in an amalgamation transaction pursuant to which shareholders of Holdings would receive
Common Shares of the Company in exchange for their shares of Holdings. The companies were combined in a
three-cornered amalgamation transaction pursuant to which Holdings amalgamated with a newly incorporated
subsidiary of the Company. This related party transaction closed on June 3, 2021.
On June 3, 2021, 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 Holdings, following which Holdings ceased to
exist. The amalgamation was accounted for as an acquisition of the underlying assets of Holdings.
The fair value of the assets acquired include $26,051 in intangible assets related to intellectual property, $65 in
cash, net of amounts owed to Antibe for advances made in the quarter prior to the amalgamation, $28 in other
assets, $130 in income taxes payable and $34 in other current liabilities. The fair value of the intellectual property
was determined based on the relief from royalty method. The Company has also capitalized $301 of costs directly
related to the amalgamation to the intellectual property acquired. The intellectual property acquired is not yet
subject to amortization as it is classified as not yet available for use in accordance with the Company’s accounting
policies.
At the time of acquisition, these new shares accounted 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 Holdings, are subject to lock-up agreements, with half of them released 120 days after
closing and the balance released 240 days after closing.
6. ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS
On May 2, 2022, the Company announced the signing of a binding agreement to sell its Citagenix subsidiary (see
note 26, Subsequent Events). The $6.5 million transaction involves a guaranteed $3.5 million, divided into four
equal payments over three years, the first of which will be received at closing. The remaining $3 million is subject
to Citagenix achieving sales milestones over the three-year period following closing. The transaction will close
no later than 180 days following the signing of this binding agreement. Under the terms of the agreement, Antibe
will also receive a $250 deposit from the purchaser to be held in escrow and released at closing.
As at March 31, 2022, the Company met the requirements to record Citagenix as Held for Sale and a Discontinued
Operation, in accordance with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations. Citagenix
is not a fit with the Company’s core business of developing new drugs as a clinical stage biotechnology company.
The results of Citagenix for the years ended March 31, 2022 and 2021 are presented below:
Revenue
Cost of goods sold
Gross profit
Expenses
Income (loss) from discontinued operations
2022
$
13,511
8,145
5,366
5,176
190
2021
$
9,714
6,164
3,550
4,431
(881)
17
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and per share amounts and where noted)
6. ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS (continued)
Revenue by geographic region for the year ended March 31, 2022 is as follows:
Canada – 37%
USA – 30%
Europe – 3%
ROW - 30%
Within the March 31, 2022 consolidated statement of financial position, following the classification of Citagenix
as a discontinued operation, assets held for sale were as follows:
Accounts receivable, net of allowances
Inventory
Prepaid expenses
Intangible assets
Property and equipment
Deposits
Assets held for sale
2022
$
1,176
2,259
64
804
305
24
4,632
The major classes of liabilities classified as held for sale presented within the March 31, 2022 consolidated
statement of financial position are presented below:
Accounts payable and accrued liabilities
Lease liability
Liabilities associated with assets held for sale
2022
$
1,753
125
1,878
Cash flow provided by Citagenix operating activities for the year ended March 31, 2022 was $437 (2021– ($441).
7. TERM DEPOSITS
On March 28, 2022, the Company invested $20,000 in four separate GICs having expiry dates of three, six, nine
and twelve months. The principal amount invested in each GIC is $5,000 and the interest rates range from 1.4%
to 2.35%.
18
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and per share amounts and where noted)
8. TRADE AND OTHER RECEIVABLES
2022
$
Scientific Research and Experimental
Development (“SR&ED”) tax credits receivable
Interest receivable
Trade receivables, net of allowances
Harmonized Sales Tax receivable
774
3
-
344
1,121
Employee advances [note 11]
36
1,157
2021
$
1,131
-
1,061
392
2,584
19
2,603
9.
INTANGIBLE ASSETS
Intangible assets consist of the following:
Trademarks
and brands
$
Intellectual
Property
$
Customer lists
$
Patents
$
Cost
As at March 31, 2020
Disposals
As at March 31, 2021
As at April 1, 2021
Additions [note 5]
As at March 31, 2022
Amortization
As at March 31, 2020
Disposals
Charge for the year
As at March 31, 2021
As at April 1, 2021
Charge for the year
3,094
(1,217)
1,877
1,877
-
1,877
1,381
(604)
249
1,026
1,026
47
-
-
-
-
26,352
26,352
-
-
-
-
-
-
As at March 31, 2022
1,073
-
Transferred to assets held for
sale [note 6]
Carrying amount
As at March 31, 2021
As at March 31, 2022
804
851
-
-
-
26,352
177
-
177
177
-
177
123
-
36
159
159
18
177
-
18
-
19
-
19
19
-
19
15
-
4
19
19
-
19
-
-
-
Total
$
3,290
(1,217)
2,073
2,073
26,352
28,425
1,519
(604)
289
1,204
1,204
65
1,269
804
869
26,352
19
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and per share amounts and where noted)
9.
INTANGIBLE ASSETS (continued)
The intellectual property is not yet subject to amortization and is tested for impairment at least annually, or sooner
if there is an indication of impairment. The cash flows from the intellectual property acquired are monitored
within the Antibe cash-generating unit (CGU).
The Company performed its annual impairment test on March 31, 2022 and concluded that the recoverable
amount of the Antibe CGU was not less than its carrying value. The Company determined the recoverable amount
of the Antibe CGU using a value-in-use approach through a discounted cash flow analysis. Significant
assumptions used in the discounted cash flow analysis included: projections for the future costs of clinical trials,
revenue and margin projections, probability of commercialization, and the discount rate. These assumptions are
affected by expectations about future market and economic conditions including the success of clinical trials,
obtaining regulatory approvals, future product pricing, future production costs, and the future demand for these
pharmaceutical products.
10. 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.
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.
11. RELATED PARTY TRANSACTIONS
Refer to note 5 for information regarding the amalgamation with Antibe Holdings Inc.
Employee cash advances as at March 31, 2022, totalled $36. Currently, the Company has one officer receiving
cash advances.
12. SHARE CAPITAL
(a) Authorized –
The Company has an unlimited number of authorized Common Shares without par value.
(b) Common Shares –
Balance, beginning of the year
Amalgamation with Holdings
Warrants exercised
Options exercised
Restricted share units redeemed
Prospectus June 30, 2020 (“P2020”)
Prospectus February 24, 2021 (“P2021”)
Share issuance costs – P2020
Share issuance costs – P2021
Shelf prospectus costs
2022
2021
Shares
45,722,605
5,873,092
42,640
-
460,939
-
-
-
-
-
Amount
$
111,574
25,980
217
-
1,776
-
-
-
-
-
Shares
29,368,177
-
1,553,076
564,600
321,752
7,187,500
6,727,500
-
-
-
Amount
$
49,666
-
5,663
2,465
1,244
26,041
32,437
(2,918)
(2,988)
(36)
Balance, end of the year
52,099,276
139,547
45,722,605
111,574
20
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and per share amounts and where noted)
12. SHARE CAPITAL (continued)
On June 3, 2021, the Company completed a three-cornered amalgamation transaction with Holdings. In
consideration, the Company issued an aggregate of 5,873,092 Common Shares (see note 5).
The following provides additional information on the prospectus financing completed during the year ended
March 31, 2021:
Closing date
Prospectus
Number of
units/
shares issued
Number of
warrants
issued
June 30, 2020
February 24, 2021
P2020
P2021
7,187,5001
6,727,5002
2,395,833
3,363,750
Price
per
unit
$
4.00
6.00
Gross
proceeds3
$
28,750
40,365
Warrant
exercise
price
$
6.00
7.50
Warrant expiry
date
June 30, 2022
February 24, 2024
1Each 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.
2Each 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.
3Gross proceeds have been allocated to share capital and warrants based on the residual method. Warrants were
valued using the BSM.
With respect to the prospectus financing completed during the year ended March 31, 2021, the Company issued
the following warrants to brokers:
Closing date
Prospectus
Number of
broker
warrants
issued
June 30, 2020
February 24, 2021
P2020
P2021
503,125
403,650
Total
issuance
costs
$
2,131
2,529
Non-cash cost
from issuance of
warrants to
brokers
$
821
768
Broker
warrant
exercise
price
$
4.00
6.00
Broker warrant
expiry date
June 30, 2022
February 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, 2022 and 2021:
2022
2021
Exercise price
$
1.50
2.50
3.00
3.50
4.00
6.00
Number of
warrants
exercised
-
-
42,640
-
-
-
42,640
Gross
proceeds
$
-
-
128
-
-
-
128
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
21
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and per share amounts and where noted)
12. SHARE CAPITAL (continued)
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 received shareholder approval at the Company’s last 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.
On March 16, 2022, the TSX approved a request by the Company to amend the exercise price of 232,423 common
share purchase options which were awarded pursuant to the Company’s Stock Option Plan.
The following table provides details on the options which were amended:
Grant date
March 9, 2016
January 18, 2017
March 31, 2017
August 27, 2019
January 11, 2021
Previous exercise
price
$
1.40
1.90
2.00
3.00
4.00
Number of
options
2,300
10,000
119,123
35,000
66,000
New exercise
price
$
0.68
0.68
0.68
0.68
0.68
None of the options are held by insiders of the Company and the new exercise price was at or above the market
price (based on the five-day volume-weighted average price) immediately preceding February 11, 2022, the date
when the Board of Directors granted approval for the stock option price amendment.
The following is a summary of all options to purchase Common Shares that are outstanding as at March 31, 2022
and 2021, as well as details on exercise prices and expiry dates:
2022
2021
Options
1,269,035
20,000
-
(14,600)
1,274,435
Weighted
average price
$
2.95
0.91
-
1.96
Options
1,814,735
66,000
(564,600)
(47,100)
Weighted
average price
$
2.71
4.00
2.27
3.24
2.93
1,269,035
2.95
Balance, beginning of the year
Granted during the year
Exercised during the year
Forfeited during the year
Balance, end of the year
22
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and per share amounts and where noted)
12. SHARE CAPITAL (continued)
Number of options
20,000
35,000
15,000
66,000
80,500
20,000
36,000
2,000
156,271
10,000
117,323
687,001
15,152
4,188
10,000
1,274,435
Exercise price
$
3.40
0.68
5.50
0.68
6.60
0.91
1.40
0.68
1.45
1.90
0.68
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
November 15, 2024
July 13, 2025
March 9, 2026
March 9, 2026
January 18, 2027
March 31, 2027
March 31, 2027
April 11, 2028
May 8, 2028
March 11, 2029
The number of options exercisable as at March 31, 2022, is 1,264,435 and the weighted average exercise price
of these options is $2.07.
The total fair value of options not yet recognized as an expense is $5.
The following assumptions were used in the BSM to determine the fair value of stock options granted in the years
ended March 31, 2022 and 2021:
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
2022
1.13%
98%
-
3 years
$0.88
$0.91
2021
0.24%
80%
-
3 years
$4.00
$4.00
(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 RSU Plan involving the calculation of fair market
value have been put into effect. These changes received shareholder approval at the Company’s last 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.
23
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and per share amounts and where noted)
12. SHARE CAPITAL (continued)
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, 2022, it was determined that the probability and timing of achieving the performance crite ria
was greater than 50%, and as such, these performance RSUs were expensed 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.
On May 1, 2021, and August 16, 2021, the Company granted 24,000 and 21,779 RSUs, respectively, to two
consultants in exchange for consulting services. The RSUs vest quarterly beginning on the grant date. The fair
values of the May 1, 2021 RSUs and the August 16, 2021 RSUs were $102 and $31, respectively.
On May 1, 2021, the Company granted 10,000 RSUs in connection with the appointment of a new Director of
Clinical Operations. 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 $43 determined based
on the share price on the grant date.
On November 15, 2021, the Company granted 380,000 RSUs to directors, officers, employees and consultants.
The total fair value of these RSUs, determined using a five-day volume weighted average share price, is $346.
All RSUs are subject to a service condition: one third (1/3) of the RSUs granted will vest on each of the first,
second and third anniversaries of the grant date. In the case of RSUs granted to one consultant, all RSUs vested on
the grant date.
Included in the RSUs granted on November 15, 2021, are 140,000 performance RSUs granted to key senior
executives. 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
performance RSUs, calculated as of the grant date, is $127. As at March 31, 2022, it was determined that the
probability and timing of achieving the performance criteria was greater than 50%, and as such, these performance
RSUs were expensed and included in contributed surplus.
For the year ended March 31, 2022, $5,521 ($5,414 related to RSUs and $107 related to options) has been
included within stock-based compensation in the statements of loss and comprehensive loss.
24
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and per share amounts and where noted)
12. SHARE CAPITAL (continued)
The following is a summary of all RSUs for Common Shares that are outstanding as at March 31, 2022 and 2021:
2022
RSUs
Balance, beginning of the year
Granted during the year
Vested during the year
Forfeited during the year
Balance, end of the year
3,625,574
435,779
(1,566,907)
(423,320)
(56,001)
2,438,445
2021
RSUs
2,155,158
2,230,000
(625,000)
(134,584)
3,625,574
The number of RSUs vested and redeemed during the year was 460,939 (2021 – 321,752. The number of RSUs
vested and not redeemed during the year was 1,105,968 (2021 – 303,250). Based on the share price on the date
of granting, the total fair value of RSUs not yet recognized as an expense is $4,080.
(e) Common share purchase warrants –
The following is a summary of all warrants to purchase Common Shares that are outstanding as at
March 31, 2022 and 2021, as well as details on exercise prices and expiry dates:
Balance, beginning of the year
Issued during the year
Exercised during the year
Expired during the year
Balance, end of the year
2022
2021
Warrants
7,906,117
-
(42,640)
(474,311)
7,389,166
Weighted
average price
$
6.12
-
3.00
3.47
Warrants
2,838,785
6,666,358
(1,553,076)
(45,950)
Weighted average
price
$
2.90
6.61
2.44
1.50
6.31
7,906,117
6.12
Number of warrants
489,726
2,373,401
758,639
403,650
3,363,750
7,389,166
Exercise
price
$
4.00
6.00
4.00
6.00
7.50
Expiry date
June 30, 2022
June 30, 2022
August 13, 2022
February 24, 2023
February 24, 2024
25
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and per share amounts and where noted)
12. SHARE CAPITAL (continued)
The following assumptions were used in the BSM to determine the fair value of warrants issued during the year
ended March 31, 2021:
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
13. 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 period. All unexercised share options and warrants
were excluded from calculating diluted loss per share as the effect of their issuance would be anti-dilutive.
14. RESEARCH AND DEVELOPMENT EXPENSES
The nature of the research and development expenses for the years ended March 31, 2022 and 2021, is
summarized as follows:
Salaries and wages
Professional and consulting fees
Research and clinical trial costs
SR&ED rebate
Total research and development expenses
2022
$
2,399
412
11,633
(86)
14,358
2021
$
1,672
1,428
11,334
(1,007)
13,427
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 and clinical trial costs” in the period that the related goods are consumed, or services are
performed. As at March 31, 2022, $569 (2021 – $2,115) was recorded as a prepaid expense.
15. STOCK-BASED COMPENSATION
The function of the stock-based compensation expense for the years ended March 31, 2022 and 2021, is
summarized as follows:
General and administrative
Research and development
Total stock-based compensation
2022
$
3,642
1,879
5,521
2021
$
2,691
1,298
3,989
26
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and per share amounts and where noted)
16. GENERAL AND ADMINISTRATIVE EXPENSES
The nature of the general and administrative expenses for the years ended March 31, 2022 and 2021, is
summarized as follows:
Salaries and wages
Professional and consulting fees
Office expenses
Other expenses
Total general and administrative expenses
2022
$
1,799
2,903
442
298
5,442
2021
$
1,410
3,732
402
456
6,000
17. SELLING AND MARKETING EXPENSES
The nature of the selling and marketing expenses for the years ended March 31, 2022 and 2021, is
summarized as follows:
Advertising and promotion
Travel and entertainment
Total selling and marketing expenses
2022
$
140
68
208
2021
$
62
53
115
18. FINANCE AND RELATED COSTS (INCOME)
The components of the finance and related costs (income) for the years ended March 31, 2022 and 2021,
are as follows:
Interest and bank charges
Foreign currency transactions
Total finance and related costs
2022
$
8
(5)
3
2021
$
8
(92)
(84)
27
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and 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% (2021 – 26.50%) to the loss before income taxes for the year, and is reconciled as
follows:
Loss before income taxes from continuing operations
Expected income tax recovery at the combined basic federal
and provincial tax rate:
Decrease (increase) resulting from:
Non-deductible expenses
Tax losses on BMT
Book write-down of receivable
Others
Amount related to unrecognized deferred tax assets
Provision for (recovery of) income taxes
2022
$
(25,250)
2021
$
(23,853)
(6,691)
(6,321)
1,452
-
-
(101)
5,340
-
1,064
(379)
120
(398)
5,914
-
The Company has incurred non-capital losses of $31,681 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,
2037
2038
2039
2040
2041
$
-
1,079
9,216
-
21,386
31,681
As at March 31, 2022, the Company has incurred capital losses of $11,587 which is applicable to future years
and has no expiry date.
The cumulative carry-forward pool of SR&ED expenditures as at March 31, 2022, applicable to future years,
with no expiry date, is $22,426.
28
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and per share amounts and where noted)
20. DEFERRED INCOME TAXES
The recognized temporary differences and tax losses are attributable to the following:
Amount related to tax loss
Amount related to intangible assets on business combination
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
2022
$
123
-
-
217
(340)
-
-
2021
$
503
(226)
3
56
(340)
4
-
Deferred tax expense of nil (2021 – $15) 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 tempora ry 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
2022
$
8,272
-
5,943
21
2,065
291
984
1,535
7,322
2021
$
5,471
296
5,146
21
1,731
394
1,415
315
7,322
26,433
22,111
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, bank indebtedness and 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.
29
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and per share amounts and where noted)
21. FINANCIAL INSTRUMENTS (continued)
Financial instruments classified as Level 1 include cash and cash equivalents, 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. 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 deficit, which, for the year ended March 31, 2022 total
$56,833 (March 31, 2021 – $50,264). 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 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 (note 2(d)).
30
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and per share amounts and where noted)
23. FINANCIAL RISK MANAGEMENT (continued)
As at March 31, 2022 the Company’s financial obligations, including applicable interest, are due as follows:
Accounts payable and accrued liabilities
Liabilities directly associated with
assets held for sale
Foreign currency risk
Less than 1 year
$
2,816
1–2 years
$
-
After 2 years
$
-
1,878
4,694
-
-
-
-
Total
$
2,816
1,878
4,694
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 statements of financial position in the amount of
$236 as at March 31, 2022 (2021 - $236).
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 statements of financial position
in the amount of $1,047 as at March 31, 2022 (2021 - $1,047).
31
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and per share amounts and where noted)
24. DEFERRED REVENUE (continued)
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.
25. COMMITMENTS AND CONTINGENCIES
(a) Royalty and milestone commitment –
On December 22, 2009, the Company entered into a License Agreement with Holdings 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 sublicensed the patents, the Company would pay a 15% royalty on royalty revenue earned.
Additionally, the Company was required to make milestone payments to Holdings at various stages of
development.
On June 3, 2021, the Company completed an amalgamation with Holdings whereby the Company issued
5,873,092 Antibe Common Shares to Holdings’ shareholders and the Company obtained all the assets and
liabilities of Holdings, effectively ending this License Agreement (note 5).
(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, 2022.
26. SUBSEQUENT EVENTS
(a) On May 2, 2022, the Company announced the signing of a binding agreement to sell its subsidiary,
Citagenix. The $6.5 million transaction involves a guaranteed $3.5 million, divided into four equal payments
over three years, the first of which will be received at closing. The remaining $3 million is subject to Citagenix
achieving sales milestones over the three-year period following closing. The transaction will close no later than
180 days following the signing of the binding agreement. Under the terms of the agreement, Antibe will also
receive a $250 deposit from the purchaser to be held in escrow and released at closing.
(b) On June 15, 2022, the Company announced that it is extending the expiry date (the “Warrant Extension”) and
amending the exercise price (the “Amended Exercise Price”) of 3,117,957 Common Share purchase warrants
(“Warrants”) of the Company.
The Warrants, pursuant to the Warrant Extension, will expire on December 31, 2023 and, pursuant to the
Amended Exercise Price, be exercisable into a Common Share of the Company at $1.80 per Common Share, as
depicted in the table below:
32
ANTIBE THERAPEUTICS INC.
Notes to the Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in thousands of Canadian dollars, except share and per share amounts and where noted)
26. SUBSEQUENT EVENTS (continued)
Issue Date
Number of
Warrants
Issued
Exercise
Price
Amended
Exercise
Price
Original Expiry
Date
Amended Expiry
Date
Effective
Date
June 30, 2020
2,373,401
$6.00
$1.80
June 30, 2022
December 31, 2023
June 30, 2022
August 13, 2019
744,556
$4.00
$1.80
August 13, 2022 December 31, 2023
June 30, 2022
None of the Warrants are held by insiders of the Company.
The Toronto Stock Exchange has provided conditional approval for the Warrant Extension and Amended
Exercise Price with an effective date for the amendments of June 30, 2022.
33