Reviewof Operations applications, potential exosomal biomarker in-licensing opportunities, and approaches by organisations to explore the use of INOVIQ’s exosome capture tool in their discovery programs. INOVIQ is progressing discussions with several of these parties. OUTLOOKANDPLANS INOVIQ is driving intelligent innovation in the exosome and diagnostic markets to improve health outcomes for patients with cancer and other diseases. INOVIQ is using its proprietary biomarker isolation and detection technologies and a multiomics approach to develop next-generation precision diagnostics for the screening, diagnosis, treatment selection and monitoring of cancer and other diseases. The Company has unique technologies, in-market products and a strong development pipeline of exosome isolation tools and precision diagnostics intended to improve patient health outcomes in important unmet needs for the earlier detection and monitoring of breast cancer, ovarian cancer and other diseases. INOVIQ continues to strengthen its team across exosome science, clinical development and business development/ licensing, as well as investing in state-of-the art equipment to build capacity and enable it to advance product development towards key milestones, expand applications for its proprietary technologies, and deliver solutions for better patient outcomes. INOVIQ has proprietary technology, a multi-product pipeline and key upcoming milestones over the next 6 to 12 months as we advance development and commercialisation plans for our next-generation exosome capture and precision diagnostics portfolio including: – Expand EXO-NET pipeline for capture of specific exosomes for target diseases – Progress UQ collaboration for exosome-based ovarian cancer screening test – New EXO-NET collaborations for cancer and other diseases – Publication of EXO-NET data – Establish EXO-NET manufacture under GMP conditions at Melbourne facility – Commence SubB2M clinical studies for breast and ovarian cancers – Report data for SubB2M clinical studies for breast and ovarian cancers – Launch SubB2M tests for monitoring breast and ovarian cancers FINANCIAL RESULTS The Group recorded a net loss from operating activities after income tax of $18,195,977 (2021: $11,150,880) and ended the financial year with a cash balance of $15,394,847 (2021: $4,998,564). Cash reserves were boosted by $18,411,450 of new capital, before expenses, raised via a share placement and share purchase plan which completed in August 2021. Stripping out the non-cash impairment charges, the Group’s operating loss was $5,374,575 (2021: $3,829,833). In the view of the Board and management this metric represents fair representation of the Group’s operating result. INOVIQ has undertaken an internal review of intangible asset values acquired via the merger with Sienna Cancer Diagnostics Ltd. The values of the Group’s Molecular Nets and SubB2M intangible assets remained unchanged from the prior financial year following this review. The net loss includes the recognition of a non-cash intangible asset impairment loss of $12,821,402 (2021: $7,321,047) against the hTERT intangible asset and Goodwill. As required by the Accounting Standard AASB 136 – Impairment of Assets, calculations were undertaken to test the carrying values of the identified intangible assets (hTERT, Molecular NETs, and SubB2M) at 30 June 2022. These calculations were based on management’s revised sales forecasts for hTERT andMolecular NETs product revenues. hTERT revenue continues to be impacted by the COVID-19 pandemic, and as a result has not recovered to pre-pandemic levels. Considering the reduction in revenue over the past 24 months the Board has determined that a non-cash impairment loss of $1,790,842 (2021: Nil) be recognised for hTERT. To provide further support for the carrying value of the Molecular NETs asset an independent third party was engaged to provide a report comparing the values of companies who own exosomal extraction assets and operate in the same industry as INOVIQ. This report concluded that the Molecular NETs book value is not unreasonable and the carried amount for the IP is likely to be recoverable. SubB2M, which is in the research phase and therefore pre-revenue, was assessed for impairment using the replacement cost method. Management determined that no impairment indicators were present at balance date. Support for the carrying value of Goodwill relies on the values of the Group’s cash generating assets, collectively the Group’s intangible assets. As both SubB2M and Molecular NETs are either very early stage revenue or pre-revenue, a model predicting future revenue relies on a number of subjective assumptions. These inputs cannot be tested for reasonableness as they rely upon future events. In light of this the Board determined that the value of Goodwill should be removed from INOVIQ’s Statement of Financial Position and an impairment charge of $11,030,560 (2021: $2,889,219) has been recognised. 20 INOVIQ Limited
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