Full Press Release Details
ANHEART THERAPEUTICS LTD.
(Incorporated in the Cayman Islands with limited liability)
Report and Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
| Independent Auditor s Report | F-2-3 | |||
| Consolidated Balance Sheets as of December 31, 2023 and 2022 | F-4 | |||
| Consolidated Statements of Operations and Comprehensive Loss for the Years ended December 31, 2023 and 2022 | F-5 | |||
| Consolidated Statements of Changes in Shareholders Deficit for the Years ended December 31, 2023 and 2022 | F-6 | |||
| Consolidated Statements of Cash Flows for the Years ended December 31, 2023 and 2022 | F-7 | |||
| Notes to the Consolidated Financial Statements | F-8 |
INDEPENDENT AUDITOR S REPORT
TO THE BOARD OF DIRECTORS OF ANHEART THERAPEUTICS LTD.:
We have audited the consolidated financial
statements of AnHeart Therapeutics Ltd. and subsidiaries (the Company ), which comprise the consolidated balance sheets as of December 31, 2023 and 2022, and the related consolidated statements of operations, comprehensive loss,
changes in shareholders deficit and cash flows for the two years in the period ended December 31, 2023, and the related notes to the consolidated financial statements (collectively referred to as the financial statements ).
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of
December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
We conducted our audits in
accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor s Responsibilities for the Audit of the Financial Statements section
of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in
the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise
substantial doubt about the Company s ability to continue as a going concern for one year after the date that the financial statements are available to be issued.
Auditor s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the 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 absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always
detect a material misstatement when it exists. 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. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
INDEPENDENT AUDITOR S REPORT
TO THE BOARD OF DIRECTORS OF ANHEART THERAPEUTICS LTD.:
In performing an audit in accordance with GAAS, we:
communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Deloitte Touche Tohmatsu Certified Public Accountants LLP
Hangzhou, the People s Republic of China
ANHEART THERAPEUTICS LTD.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2023 AND 2022
(Amounts in thousands of U.S. Dollar ( US$ ), except share and per share data)
| December 31, 2023 | December 31, 2022 | |||||||
| US$ | US$ | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | 36,026 | 30,780 | ||||||
| Marketable securities | 4,307 | |||||||
| Accounts receivable, net of allowance for credit loss of nil as of December 31, 2023 and 2022 | 3,472 | 1,721 | ||||||
| Prepaid expenses and other current assets | 1,943 | 1,826 | ||||||
| Total current assets | 41,441 | 38,634 | ||||||
| Property and equipment, net | 206 | 291 | ||||||
| Operating lease right-of-use assets | 457 | 804 | ||||||
| TOTAL ASSETS | 42,104 | 39,729 | ||||||
| LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | 8,778 | 7,625 | ||||||
| Operating lease liability, current portion | 420 | 532 | ||||||
| Contract liabilities, current portion | 11,748 | 8,723 | ||||||
| Short-term borrowings | 11,358 | 9,189 | ||||||
| Accrued expenses and other current liabilities | 4,981 | 2,717 | ||||||
| Total current liabilities | 37,285 | 28,786 | ||||||
| Warrant liabilities | 203 | 278 | ||||||
| Long-term borrowings | 326 | 383 | ||||||
| Contract liabilities, net of current portion | 11,160 | 2,425 | ||||||
| Operating lease liability, net of current portion | 35 | 280 | ||||||
| TOTAL LIABILITIES | 49,009 | 32,152 | ||||||
| Commitments and contingencies (Note 11) | ||||||||
| Mezzanine equity: | ||||||||
| Series A convertible redeemable preferred shares, $.0001 par value; 12,000,000 shares authorized, issued and outstanding as of December 31, 2023 and 2022 | 61,242 | 56,706 | ||||||
| Series A+ convertible redeemable preferred shares, $.0001 par value; 10,784,344 shares authorized, issued and outstanding as of December 31, 2023 and 2022 | 49,113 | 45,475 | ||||||
| Series A-2 convertible redeemable preferred shares, $.0001 par value; 2,704,012 shares authorized, issued and outstanding as of December 31, 2023 and 2022 | 12,141 | 11,242 | ||||||
| Series B convertible redeemable preferred shares, $.0001 par value; 17,259,714 shares authorized, issued and outstanding as of December 31, 2023 and 2022 | 72,387 | 67,025 | ||||||
| TOTAL MEZZANINE EQUITY | 194,883 | 180,448 | ||||||
| Shareholders deficit: | ||||||||
| Ordinary shares, $.0001 par value; 6,400,000 shares authorized, issued and outstanding as of December 31, 2023 and 2022 | 1 | 1 | ||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive income | 853 | 594 | ||||||
| Accumulated deficit | (202,642 | ) | (173,466 | ) | ||||
| TOTAL SHAREHOLDERS DEFICIT | (201,788 | ) | (172,871 | ) | ||||
| TOTAL LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS DEFICIT | 42,104 | 39,729 |
The accompanying notes are an integral part of these consolidated financial statements.
ANHEART THERAPEUTICS LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
(Amounts in thousands of U.S. Dollar ( US$ ), except share and per share data)
| Years Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| US$ | US$ | |||||||
| Revenue | 47,313 | 10,211 | ||||||
| Cost of revenue | 9,851 | 9,022 | ||||||
| Gross profit | 37,462 | 1,189 | ||||||
| Operating expenses: | ||||||||
| Research and development | 43,882 | 36,591 | ||||||
| Selling, general and administrative | 10,389 | 6,708 | ||||||
| Total operating expenses | 54,271 | 43,299 | ||||||
| Loss from operations | (16,809 | ) | (42,110 | ) | ||||
| Other income (expense), net: | ||||||||
| Government subsidy income | 1,103 | 966 | ||||||
| Foreign exchange loss | (426 | ) | (436 | ) | ||||
| Interest income | 426 | 406 | ||||||
| Interest expense | (543 | ) | (428 | ) | ||||
| Other expenses | (111 | ) | ||||||
| Change in fair value of warrant liabilities | 28 | 13 | ||||||
| Total other income, net | 477 | 521 | ||||||
| Loss before provision for income taxes | (16,332 | ) | (41,589 | ) | ||||
| Income tax expense | (325 | ) | (10 | ) | ||||
| Net loss | (16,657 | ) | (41,599 | ) | ||||
| Accretion of convertible redeemable preferred shares to redemption value | (14,435 | ) | (13,368 | ) | ||||
| Net loss attributable to ordinary shareholders of the Company | (31,092 | ) | (54,967 | ) | ||||
| Net loss | (16,657 | ) | (41,599 | ) | ||||
| Other comprehensive income: | ||||||||
| Exchange difference arising on translation of foreign operations | 259 | 27 | ||||||
| Total comprehensive loss attributable to the Company | (16,398 | ) | (41,572 | ) | ||||
| Accretion of convertible redeemable preferred shares to redemption value | (14,435 | ) | (13,368 | ) | ||||
| Total comprehensive loss attributable to ordinary shareholders of the Company | (30,833 | ) | (54,940 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
ANHEART THERAPEUTICS LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS SHAREHOLDERS DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
(Amounts in thousands of U.S. Dollar ( US$ ), except share and per share data)
| Ordinary shares | Additional Paid-in Capital | Accumulated other comprehensive income | Accumulated deficit | Total Shareholders Deficit | ||||||||||||||||||||
| Issued and Outstanding Shares | Amount | |||||||||||||||||||||||
| US$ | US$ | US$ | US$ | US$ | ||||||||||||||||||||
| Balances at December 31, 2021 | 6,400,000 | 1 | 567 | (119,807 | ) | (119,239 | ) | |||||||||||||||||
| Share-based compensation | 1,308 | 1,308 | ||||||||||||||||||||||
| Foreign currency translation gain | 27 | 27 | ||||||||||||||||||||||
| Accretion of convertible redeemable preferred shares to redemption value | (1,308 | ) | (12,060 | ) | (13,368 | ) | ||||||||||||||||||
| Net loss | (41,599 | ) | (41,599 | ) | ||||||||||||||||||||
| Balances at December 31, 2022 | 6,400,000 | 1 | 594 | (173,466 | ) | (172,871 | ) | |||||||||||||||||
| Share-based compensation | 1,916 | 1,916 | ||||||||||||||||||||||
| Foreign currency translation gain | 259 | 259 | ||||||||||||||||||||||
| Accretion of convertible redeemable preferred shares to redemption value | (1,916 | ) | (12,519 | ) | (14,435 | ) | ||||||||||||||||||
| Net loss | (16,657 | ) | (16,657 | ) | ||||||||||||||||||||
| Balances at December 31, 2023 | 6,400,000 | 1 | 853 | (202,642 | ) | (201,788 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
ANHEART THERAPEUTICS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
(Amounts in thousands of U.S. Dollar ( US$ )
| Years Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| US$ | US$ | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | (16,657 | ) | (41,599 | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 185 | 136 | ||||||
| Share-based compensation | 1,916 | 1,308 | ||||||
| Noncash lease expense | 621 | 514 | ||||||
| Change in fair value of warrant liabilities | (28 | ) | (13 | ) | ||||
| Amortization of borrowing discount of SSVB Loan | 46 | 147 | ||||||
| Unrealized foreign currency transaction loss | 426 | 436 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (1,751 | ) | 612 | |||||
| Prepaid expenses and other current assets | (117 | ) | (916 | ) | ||||
| Accounts payable | 1,153 | 6,844 | ||||||
| Accrued expenses and other current liabilities | 2,264 | 38 | ||||||
| Contract liabilities | 11,760 | (4,129 | ) | |||||
| Operating lease liabilities | (629 | ) | (532 | ) | ||||
| Net cash used in operating activities | (811 | ) | (37,154 | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Cash paid for marketable securities | (19,505 | ) | (36,128 | ) | ||||
| Maturities of marketable securities | 23,571 | 31,908 | ||||||
| Purchases of property and equipment | (105 | ) | (151 | ) | ||||
| Proceed from disposal of property and equipment | 1 | 36 | ||||||
| Net cash provided by (used in) investing activities | 3,962 | (4,335 | ) | |||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from borrowings | 14,147 | 10,179 | ||||||
| Payments on borrowings | (11,963 | ) | (5,520 | ) | ||||
| Payment of issuance costs of convertible redeemable preferred shares | (34 | ) | ||||||
| Net cash provided by financing activities | 2,184 | 4,625 | ||||||
| Net Increase (Decrease) in Cash and Cash Equivalents | 5,335 | (36,864 | ) | |||||
| Cash, cash equivalents, and restricted cash at beginning of year | 30,780 | 68,486 | ||||||
| Effect of foreign exchange rate changes on cash | (89 | ) | (842 | ) | ||||
| Cash, cash equivalents, and restricted cash at end of year | 36,026 | 30,780 | ||||||
| Supplemental Disclosure of Cash Flow Information: | ||||||||
| Cash paid for interest | 490 | 291 | ||||||
| Cash paid for income taxes | 3 | 10 | ||||||
| Cash paid for amounts included in the measurement of operating lease liabilities | 680 | 580 | ||||||
| Right-of-use-assets obtained in exchange for new operating lease liabilities | 297 | 330 | ||||||
| Accretion of convertible redeemable preferred shares to redemption value | 14,435 | 13,368 | ||||||
| Issue of warrants in connection with the SSVB loan (Note 7) | 134 |
accompanying notes are an integral part of these consolidated financial statements.
ANHEART THERAPEUTICS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands of U.S. Dollar ( US$ ), except share and per share data)
Anheart Therapeutics Ltd., ( Anheart or Cayman Co ) and its subsidiaries (collectively referred to as the
Company ) are principally engaged in acquiring, developing, and commercializing innovative pharmaceutical products as novel precision oncology therapies. For the years ended December 31, 2023 and 2022, its primary operations were conducted
in the United States and China.
As of December 31, 2023, the Company s principal subsidiaries are as follows:
| Name of the entity | Date of incorporation or date of acquisition | Place of incorporation | Percentage of direct or indirect economic ownership | Principle activities | ||||||
| AnHeart Therapeutics Inc. ( AnHeart US ) | December 11, 2017 | Delaware, USA | 100 | % | Development and commercialization of innovative medicines | |||||
| AnBio Therapeutics (HK) Ltd. ( AnHeart HK ) | May 28, 2021 | Hong Kong, China | 100 | % | Investment holding company | |||||
| AnHeart Therapeutics (Hangzhou) Co., Ltd. ( AnHeart HZ ) | November 27, 2018 | Hangzhou, China | 100 | % | Development and commercialization of innovative medicines | |||||
| Baoquan Biomedical Technology (Shanghai) Co. Ltd. | February 8, 2021 | Shanghai, China | 100 | % | Development and commercialization of innovative medicines | |||||
| NanGene Biomedical Co. Ltd. ( NanGene ) | April 15, 2022 | Nanjing, China | 100 | % | Development and commercialization of innovative medicines |
Basis of Presentation and Principles of Consolidation
The Company s consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles
( GAAP ). Any reference in these notes to applicable guidance is meant to refer to the authoritative accounting principles generally accepted in the United States. All intercompany transactions and balances have been eliminated.
Liquidity and Going Concern
The Company has been incurring losses from operations since its inception, with net loss of $16,657 and $41,599 for the years ended
December 31, 2023 and 2022, respectively. Accumulated deficit amounted to $202,642 as of December 31, 2023. Net cash used in operating activities was approximately $811 and $37,154 for the years ended December 31, 2023 and 2022,
respectively. The Company has historically financed its operations primarily from the issuances of the Convertible Redeemable Preferred Shares ( CRPS ), proceeds from borrowings and cash received from collaboration and license Agreement
with customers. Management expects operating losses and negative cash flows from operations to continue for the foreseeable future.
Company has cash and cash equivalents available on hand of $36.0 million and net current assets of $4.2 million as of December 31, 2023. In addition, on March 25, 2024, the Company has entered into a definitive agreement with a third
party to acquire the Company in an all-stock transaction (see Note 15). The Company together with the third party (the combined company ) will continue to focus on executing the development strategy
for pipelines. The Company believes it appropriate that the consolidated financial statements are prepared on going concern basis.
ANHEART THERAPEUTICS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands of U.S. Dollar ( US$ ), except share and per share data)
The preparation of the Company s 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 at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period.
Significant estimates and assumptions reflected in these consolidated financial statements include but are not limited to accrued research and
development expenses; valuation of share-based compensation arrangements; the fair value of convertible redeemable preferred shares; the fair value of the warrant liabilities; identifying separate accounting units and the standalone selling price of
each performance obligation in the Company s revenue arrangements; the incremental borrowing rate for determining lease liabilities and right-of-use assets and
valuation allowance for deferred tax assets.
The Company bases its estimates on historical experience, known trends and other
market-specific or other relevant factors that it has concluded to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates as there are changes in circumstances, facts and experience. Changes in estimates are
recorded in the period in which they become known. Actual results may differ materially from those estimates or assumptions.
Functional Currency and Foreign Currency Translations
The Company s reporting currency is the USD. The functional currency of the Company s subsidiaries incorporated in PRC is RMB. The
functional currency of the Company and its subsidiaries incorporated outside the PRC is USD.
Transactions denominated in currencies other
than the functional currencies are re-measured into the functional currency of the entity at the exchange rates prevailing on the transaction dates. Foreign currency denominated financial assets and
liabilities are re-measured at the balance sheet date exchange rate. The resulting exchange differences are included in the net loss of the statements of operations and comprehensive loss.
Assets and liabilities of the Company with functional currency other than US$ are translated into US$ at fiscal
year-end exchange rates. Equity amounts are translated at historical exchange rates. Income and expense items are translated at average exchange rates during the fiscal year. Translation adjustments arising
from these are reported as foreign currency translation adjustments and are shown as a component of other comprehensive income.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash
equivalents. Cash and cash equivalents include cash in readily available checking and money market accounts. Cash equivalents are reflected at fair value based on quoted market prices as further described in Note 3.