Spectral Announces Second Quarter Results

TORONTO, Aug. 14, 2020 (GLOBE NEWSWIRE) --Spectral Medical Inc. Inc., (TSX: EDT), a late stage theranostic company advancing therapeutic options for sepsis and septic shock, today announced its financial results for the second quarter ended June 30, 2020.

Financial Review

Revenue for the three-months ended June 30, 2020 was $517,000 compared to $1,041,000 for the same three-month period last year. For the six-months ended June 30, 2020, revenue was $1,148,000 compared to $1,588,000 in the first half of 2019. The majority of the decrease is due to the timing of orders for product revenue and the non-recurring technology transfer revenue. This was mitigated by an increase in royalty revenue, and revenue from the exclusive distribution agreement with Baxter International Inc. (“Baxter”).

Operating costs for the quarter-ended June 30, 2020, were $2,466,000 compared to $2,093,000 for the corresponding period in 2019. Operating costs for the six-months ended June 30, 2020 were $6,522,000, an increase of $2,889,000 from $3,633,000 for the six-month period ended June 30, 2019. The increase is a result of the ramping up of the Company’s Phase III clinical trial, whereby costs vary depending on the timing and level of patient enrolment. In addition, there was an increase in share compensation expense, due to options being granted earlier in 2020 that had higher share option valuations compared to the share option valuation for share options issued in 2019. Salaries and benefits also increased by approximately $189,000 for the six-months ended June 30, 2020 due to the addition of the Company’s CFO, who joined in August, 2019. Furthermore,  as previously stated, the Company incurred one-time costs associated with a legacy financial advisory services agreement relating to the commercial transaction agreement completed with Baxter and the withdrawn prospectus offering in March 2020. Lastly, there was a 4% decline in the CAD/USD exchange rate in the period from March 31, 2020 to June 30, 2020, which resulted in a foreign exchange loss in the second quarter, reversing the foreign exchange gain recorded in the first quarter of 2020. The CAD/USD exchange rate was relatively consistent throughout 2019.

The Company continues to maintain a low cost operating structure for its base business operations.

For the three-months ended June 30, 2020, the Company reported a loss of $1,949,000 ($0.009 loss per share) compared to a loss of $1,052,000 ($0.005 loss per share) for the three-months ended June 30, 2019. Loss for the six-months ended June 30, 2020 was $5,374,000 ($0.024 loss per share) compared to a loss of $2,045,000 ($0.009 loss per share) for the same period last year.

The Company concluded the second quarter of 2020 with cash of $10,230,000 compared to $1,435,000 cash on hand as of December 31, 2019. This cash balance reflects the non-refundable US$5,000,000 (CA$6,629,000) upfront rights payment from Baxter, which was received in the first quarter, as well as the net proceeds of $4,397,000 received on the public offering, reduced by operating cash outflows.  Based on current operating plans, Spectral expects to have cash to fund its 2020 business plan.

The total number of common shares outstanding for the Company was 236,605,745 as at June 30, 2020.

About Spectral

Spectral is a Phase III company seeking U.S. FDA approval for its unique product for the treatment of patients with septic shock, Toraymyxin™ (“PMX”). PMX is a therapeutic hemoperfusion device that removes endotoxin, which can cause sepsis, from the bloodstream and is guided by the Company’s Endotoxin Activity Assay (EAA™), the only FDA cleared diagnostic for the risk of developing sepsis.

PMX has been approved for therapeutic use in Japan and Europe, and has been used safely and effectively on more than 200,000 patients to date. In March 2009, Spectral obtained the exclusive development and commercial rights in the U.S. for PMX, and in November 2010, signed an exclusive distribution agreement for this product in Canada. Approximately 330,000 patients are diagnosed with severe sepsis and septic shock in North America each year.

Spectral, through its wholly owned subsidiary, Dialco Medical Inc. (“Dialco”), is also commercializing a new proprietary platform, “SAMI”, targeting the renal replacement therapy (“RRT”) market.  Dialco is also seeking regulatory approval for “DIMI” which is based on the same RRT platform, but will be intended for home hemodialysis use.

Spectral is listed on the Toronto Stock Exchange under the symbol EDT. For more information please visit www.spectraldx.com.

Forward-looking statement

Information in this news release that is not current or historical factual information may constitute forward-looking information or forward looking statements within the meaning of securities laws. Implicit in this information, particularly in respect of the future outlook of Spectral and anticipated events or results, are assumptions based on beliefs of Spectral's senior management as well as information currently available to it. While these assumptions were considered reasonable by Spectral at the time of preparation, they may prove to be incorrect. Readers are cautioned that actual results are subject to a number of risks and uncertainties, including the availability of funds and resources to pursue R&D projects, the successful and timely completion of clinical studies, the ability of Spectral to take advantage of business opportunities in the biomedical industry, the granting of necessary approvals by regulatory authorities including but not limited to the ongoing impact of COVID-19. Actual results could differ materially from what is currently expected, and readers are cautioned not to place undue reliance on these forward-looking statements. Except as required by law, the Company disclaims any obligation to update or revise any forward-looking statements. Reference is also made to the other risks and uncertainties that may affect the Company which are more fully described in Spectral’s Annual Information Form dated March 26, 2020 and other filings of Spectral with the securities regulatory authorities which are available at www.sedar.com.

The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this statement.

For further information, please contact:

Dr. Paul Walker President and CEO Spectral Medical Inc. 416-626-3233 ext. 2100 pwalker@spectraldx.com

Mr. Chris Seto CFO and COO Spectral Medical Inc. 416-626-3233 ext. 2004 cseto@spectraldx.com

Ali Mahdavi Capital Markets & Investor Relations 416-962-3300 am@spinnakercmi.com

 

Spectral Medical Inc.
Condensed Interim Consolidated Statements of Financial Position
(Unaudited)

(in thousands of Canadian dollars)

	June 30 2020			December 31 2019
	$			$
Assets
Current assets
Cash	10,230			1,435
Trade and other receivables	401			271
Inventories	348			276
Prepayments and other assets	509			155
Contract asset	-			519
	11,488			2,656
Non-current assets
Right-of-use-asset	672			719
Property and equipment	409			368
Intangible asset	255			263
Total assets	12,824			4,006
Liabilities
Current liabilities
Trade and other payables	2,894			1,002
Current portion of contract liabilities	672			-
Current portion of lease liability	81			77
	3,647			1,079
Non-current liabilities
Lease liability	626			667
Non-current portion of contract liabilities	5,682			-
Total liabilities	9,955			1,746
Equity
Share capital	71,858			66,837
Contributed surplus	7,981			7,981
Share-based compensation	6,597			6,183
Warrants	2,418			1,870
Deficit	(85,985	)		(80,611	)
Total equity	2,869			2,260
Total liabilities and equity	12,824			4,006

 

Spectral Medical Inc.
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
(Unaudited)

(in thousands of Canadian dollars, except for share and per share data)

	Three-months ended June 30						Six-months ended June 30
	2020			2019			2020			2019
	$			$			$			$
Revenue	517			1,041			1,148			1,588
Expenses
Changes in inventories of finished goods and work-in-process	8			136			12			211
Raw materials and consumables used	171			87			304			147
Salaries and benefits	1,061			951			2,491			1,660
Consulting and professional fees	682			381			3,194			641
Regulatory and investor relations	85			191			231			277
Travel and entertainment	15			74			103			162
Facilities and communication	81			71			167			135
Insurance	62			57			124			123
Depreciation and amortization	74			69			144			140
Interest expense on lease liability	9			10			17			19
Foreign exchange (gain) loss	226			63			(254	)		105
Interest income	(4	)		-			(11	)		-
(Gain) loss on disposal of property and equipment	(8	)		-			(8	)		7
Other expenses	4			3			8			6
	2,466			2,093			6,522			3,633
Loss and comprehensive loss for the period	(1,949	)		(1,052	)		(5,374	)		(2,045	)
Basic and diluted loss per common share	(0.009	)		(0.005	)		(0.024	)		(0.009	)
Weighted average number of common shares outstanding – basic and diluted
	229,226,624			225,675,249			228,330,467			225,633,448

 

Spectral Medical Inc.
Condensed Interim Consolidated Statements of Changes in Equity
(Unaudited)

(in thousands of Canadian dollars)

	Issued capital		Contributed surplus	Share-based compensation		Warrants		Deficit		Total equity
	Number	$	$	$		$		$		$
Balance, January 1, 2019	225,591,183	66,646	7,981	5,564		1,930		(75,751	)	6,370
Warrants exercised	225,000	150	-	-		(49	)	-		101
Loss and comprehensive loss  for the period	-	-	-	-		-		(2,045	)	(2,045				)
Share-based compensation	-	-	-	348		-		-		348
Balance, June 30, 2019	225,816,183	66,796	7,981	5,912		1,881		(77,796	)	4,774
Share options exercised	10,500	7	-	(3	)	-		-		4
Warrants exercised	50,000	34	-	-		(11	)	-		23
Loss and comprehensive loss for the period	-	-	-	-		-		(2,815	)	(2,815		)
Share-based compensation	-	-	-	274		-		-		274
Balance, December 31, 2019	225,876,683	66,837	7,981	6,183		1,870		(80,611	)	2,260
Balance, January 1, 2020	225,876,683	66,837	7,981	6,183		1,870		(80,611	)	2,260
Public offering	8,500,000	3,609	-	-		788		-		4,397
Share options exercised	1,129,062	677	-	(248	)	-		-		429
Warrants exercised	1,100,000	735	-	-		(240	)	-		495
Loss and comprehensive loss for the period	-	-	-	-		-		(5,374	)	(5,374		)
Share-based compensation	-	-	-	662		-		-		662
Balance, June 30, 2020	236,605,745	71,858	7,981	6,597		2,418		(85,985	)	2,869

 

Spectral Medical Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)

(in thousands of Canadian dollars)

	Six-months ended June 30
	2020			2019
	$			$
Cash flow provided by (used in)
Operating activities
Loss and comprehensive loss for the period	(5,374	)		(2,045	)
Adjustments for:
Depreciation on right-of-use asset	47			47
Depreciation on property and equipment	89			81
Amortization of intangible asset	8			12
Interest expense on lease liability	17			19
Unrealized foreign exchange loss(gain) on cash	27			(6	)
Share-based compensation	662			348
(Gain) loss on disposal of property and equipment	(8	)		7
Changes in items of working capital:
Trade and other  receivables	(130	)		1,120
Inventories	(72	)		(98	)
Prepayments and other assets	(354	)		(199	)
Contract asset	519			126
Trade and other payables	1,611			(28	)
Contract liabilities	6,354			39
Net cash provided by (used in) operating activities	3,396			(577	)
Investing activities
Proceeds on disposal of property and equipment	10			-
Property and equipment expenditures	(132	)		(46	)
Net cash used in investing activities	(122	)		(46	)
Financing activities
Proceeds from public offering	5,100			-
Transaction costs paid	(422	)		-
Lease liability payments	(54	)		(52	)
Share options exercised	429			-
Warrants exercised	495			101
Net cash provided by financing activities	5,548			49
Increase (decrease) in cash	8,822			(574	)
Effects of exchange rate changes on cash	(27	)		6
Cash, beginning of period	1,435			4,368
Cash, end of period	10,230			3,800