Profound Medical Corp., the only company to provide customizable, incision-free therapies which combine real-time Magnetic Resonance Imaging, thermal ultrasound and closed-loop temperature feedback control for the radiation-free ablation of diseased tissue, reported financial results for the second quarter ended June 30, 2020, and provided an update on its operations.
TORONTO, Aug. 06, 2020 (GLOBE NEWSWIRE) -- Profound Medical Corp. (NASDAQ:PROF; TSX:PRN) (“Profound” or the “Company”), the only company to provide customizable, incision-free therapies which combine real-time Magnetic Resonance Imaging (“MRI”), thermal ultrasound and closed-loop temperature feedback control for the radiation-free ablation of diseased tissue, today reported financial results for the second quarter ended June 30, 2020, and provided an update on its operations.
Recent Corporate Highlights
- On April 3, 2020, Profound launched a TULSA procedure website, www.tulsaprocedure.com, as a resource for patients with prostate disease.
- On July 21, 2020, Profound closed an underwritten offering of common shares (the “July 2020 Offering”), including the full exercise of the over-allotment option, for gross proceeds of approximately US$46 million.
“We are very encouraged by the continuing strong interest shown in TULSA-PRO® by both surgeons and patients across the United States,” said Arun Menawat, Profound’s CEO. “That culminated in us completing the first installation of TULSA-PRO® at a teaching hospital – the world-renowned Mayo Clinic in Jacksonville, FL – in early July. Moving forward, as we continue to execute on our U.S. TULSA-PRO® commercialization strategy, building additional awareness of this technology will be key to our success. To that end, we are looking forward to launching a new patient forum in the Fall, through which patients will be able to share their experiences with the TULSA procedure, as well as rolling out both surgeon-to-surgeon and patient-to-patient education programs.”
Summary Second Quarter 2020 Results
All amounts, unless specified otherwise, are expressed in Canadian dollars and are presented in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, applicable to the preparation of interim financial statements, including IAS 34, Interim Financial Reporting.
For the second quarter ended June 30, 2020, the Company recorded revenue of $1,421,223, with $1,131,801 from the sale of product, $97,868 from pay for procedure and $191,554 from installation and training services. Second quarter 2020 revenue increased approximately 148% from $574,109 in the same three-month period a year ago.
The Company recorded a net loss for the three months ended June 30, 2020 of $7,347,529, or $0.46 per common share, compared to a net loss of $5,844,134, or $0.54 per common share, for the three months ended June 30, 2019. The increase in net loss was primarily attributed to increases in general and administrative (“G&A”) expenses, selling and distribution expenses, and net financing costs by $688,764, $220,619, $1,469,688, respectively. This was offset by a decrease in research and development (“R&D”) expense of $802,488 and an increase in gross profits of $245,788.
Expenditures for R&D for the three months ended June 30, 2020 were $2,383,867, compared to $3,186,355 for the three months ended June 30, 2019. Clinical trial costs, materials, travel, salaries and benefits, and software expenses decreased by $330,260, $517,520, $77,408, $167,227, and $26,646, respectively. These decreases were due to decreased spending on materials and R&D projects due to the impact of COVID-19, as hospitals and testing facilities were not accessible, lower travel due to COVID-19 restrictions, decreased R&D personnel, the Canada Emergency Wage Subsidy (CEWS) and lower software and hardware costs. Offsetting these amounts were increases in consulting fees and share based compensation of $181,807, and $153,453, respectively, due to increased spending for reimbursement, market research and options awarded to employees.
G&A expenses for the three months ended June 30, 2020 increased by $688,764 compared to the three months ended June 30, 2019. Consulting fees, share based compensation, insurance and software expenses increased by $59,737, $242,009, $397,181, and $177,670, respectively, due to increased costs associated with being Nasdaq listed, options awarded to employees, increased insurance costs associated with being Nasdaq listed and increased software costs for cybersecurity. Offsetting these amounts were decreases to salaries and benefits of $97,607 and travel of $59,146 which were due to lower personnel costs, CEWS and COVID-19 travel restrictions. Depreciation expenses decreased by $23,173 due to certain assets being fully depreciated.
Liquidity and Outstanding Share Capital
As at June 30, 2020, the Company had cash of $55,964,086. Subsequent to quarter end, the Company completed the July 2020 Offering, resulting it in having approximate cash of $112 million at July 31, 2020.
As at August 6, 2020, Profound had 19,378,152 common shares issued and outstanding.
For complete financial results, please see our filings at www.sedar.com and our website at www.profoundmedical.com.
Conference Call Details
Profound Medical is pleased to invite all interested parties to participate in a conference call today, August 6, 2020, at 4:30 pm ET during which time the results will be discussed.
| Live Call: | 1-844-407-9500 (Canada and the United States) | |
| 1-862-298-0850 (International) | ||
| Replay: | 1-919-882-2331 | |
| Replay ID: | 35945 |
The call will also be broadcast live and archived on the Company’s website at www.profoundmedical.com under “Webcasts” in the Investors section.
About Profound Medical Corp.
Profound is a commercial-stage medical device company that develops and markets customizable, incision-free therapies for the ablation of diseased tissue.
Profound is commercializing TULSA-PRO®, a technology that combines real-time MRI, robotically-driven transurethral ultrasound and closed-loop temperature feedback control. TULSA-PRO® is designed to provide customizable and predictable radiation-free ablation of a surgeon-defined prostate volume while actively protecting the urethra and rectum to help preserve the patient’s natural functional abilities. TULSA-PRO® has the potential to be a flexible technology in customizable prostate ablation, including intermediate stage cancer, localized radio-recurrent cancer, retention and hematuria palliation in locally advanced prostate cancer, and the transition zone in large volume benign prostatic hyperplasia (BPH). TULSA-PRO® is CE marked, Health Canada approved, and 510(k) cleared by the U.S. Food and Drug Administration.
Profound is also commercializing Sonalleve®, an innovative therapeutic platform that is CE marked for the treatment of uterine fibroids and palliative pain treatment of bone metastases. Sonalleve® has also been approved by the China National Medical Products Administration for the non-invasive treatment of uterine fibroids. The Company is in the early stages of exploring additional potential treatment markets for Sonalleve® where the technology has been shown to have clinical application, such as non-invasive ablation of abdominal cancers and hyperthermia for cancer therapy.
Forward-Looking Statements
This release includes forward-looking statements regarding Profound and its business which may include, but is not limited to, the expectations regarding the efficacy of Profound’s technology in the treatment of prostate cancer, uterine fibroids and palliative pain treatment. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “is expected”, “expects”, “scheduled”, “intends”, “contemplates”, “anticipates”, “believes”, “proposes” or variations (including negative variations) of such words and phrases, or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Such statements are based on the current expectations of the management of Profound. The forward-looking events and circumstances discussed in this release, may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting the company, including risks regarding the pharmaceutical industry, economic factors, the equity markets generally and risks associated with growth and competition. Although Profound has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statement can be guaranteed. In addition, there is uncertainty about the spread of the COVID-19 virus and the impact it will have on Profound’s operations, the demand for its products, global supply chains and economic activity in general. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Profound undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, other than as required by law.
For further information, please contact:
Stephen Kilmer
Investor Relations
skilmer@profoundmedical.com
T: 647.872.4849
| Profound Medical Corp. Interim Condensed Consolidated Balance Sheets (Unaudited) | ||||||
| June 30, 2020 $ | December 31, 2019 $ | |||||
| Assets | ||||||
| Current assets | ||||||
| Cash | 55,964,086 | 19,222,195 | ||||
| Trade and other receivables | 4,594,426 | 4,058,136 | ||||
| Investment tax credits receivable | 240,000 | 240,000 | ||||
| Inventory | 6,781,987 | 4,764,458 | ||||
| Prepaid expenses and deposits | 583,891 | 1,335,620 | ||||
| Total current assets | 68,164,390 | 29,620,409 | ||||
| Property and equipment | 663,366 | 684,718 | ||||
| Intangible assets | 2,551,997 | 3,128,820 | ||||
| Right-of-use assets | 2,012,198 | 2,199,381 | ||||
| Goodwill | 3,409,165 | 3,409,165 | ||||
| Total assets | 76,801,116 | 39,042,493 | ||||
| Liabilities | ||||||
| Current liabilities | ||||||
| Accounts payable and accrued liabilities | 2,742,942 | 3,933,114 | ||||
| Deferred revenue | 1,028,766 | 654,763 | ||||
| Long-term debt | - | 5,144,461 | ||||
| Warranty provision | 129,871 | 134,956 | ||||
| Other liabilities | 106,513 | 286,858 | ||||
| Derivative financial instrument | 487,235 | 254,769 | ||||
| Lease liabilities | 346,587 | 258,685 | ||||
| Income taxes payable | 5,856 | 15,763 | ||||
| Total current liabilities | 4,847,770 | 10,683,369 | ||||
| Long-term debt | - | 6,719,924 | ||||
| Deferred revenue | 490,835 | 829,784 | ||||
| Warranty provision | 28,509 | 19,005 | ||||
| Lease liabilities | 1,937,279 | 2,125,873 | ||||
| Total liabilities | 7,304,393 | 20,377,955 | ||||
| Shareholders’ Equity | ||||||
| Share capital | 194,991,770 | 130,266,880 | ||||
| Contributed surplus | 16,483,466 | 19,580,338 | ||||
| Accumulated other comprehensive gain/(loss) | 42,201 | (117,188 | ) | |||
| Deficit | (142,020,714 | ) | (131,065,492 | ) | ||
| Total Shareholders’ Equity | 69,496,723 | 18,664,538 | ||||
| Total Liabilities and Shareholders’ Equity | 76,801,116 | 39,042,493 | ||||
| Profound Medical Corp. Interim Condensed Consolidated Statements of Loss and Comprehensive Loss (Unaudited) | ||||||||||||
| Three months ended June 30, 2020 $ | Three months ended June 30, 2019 $ | Six months ended June 30, 2020 $ | Six months ended June 30, 2019 $ | |||||||||
| Revenue | ||||||||||||
| Products | 1,131,801 | 465,840 | 2,489,340 | 1,813,621 | ||||||||
| Services | 191,554 | 108,269 | 353,148 | 236,276 | ||||||||
| Pay per procedure | 97,868 | - | 138,953 | - | ||||||||
| 1,421,223 | 574,109 | 2,981,441 | 2,049,897 | |||||||||
| Cost of sales | 845,392 | 244,066 | 1,811,000 | 777,422 | ||||||||
| Gross profit | 575,831 | 330,043 | 1,170,441 | 1,272,475 | ||||||||
| Operating Expenses | ||||||||||||
| Research and development | 2,383,867 | 3,186,355 | 5,223,084 | 5,864,101 | ||||||||
| General and administrative | 2,275,087 | 1,586,323 | 5,328,314 | 3,100,436 | ||||||||
| Selling and distribution | 1,375,488 | 1,154,869 | 2,629,817 | 625,524 | ||||||||
| Total operating expenses | 6,034,442 | 5,927,547 | 13,181,215 | 9,590,061 | ||||||||
| Operating Loss | 5,458,611 | 5,597,504 | 12,010,774 | 8,317,586 | ||||||||
| Net finance (income)/costs | 1,696,118 | 226,430 | (1,372,087 | ) | 399,234 | |||||||
| Loss before income taxes | 7,154,729 | 5,823,934 | 10,638,687 | 8,716,820 | ||||||||
| Income taxes | 192,800 | 20,200 | 316,535 | 54,000 | ||||||||
| Net loss for the period | 7,347,529 | 5,844,134 | 10,955,222 | 8,770,820 | ||||||||
| Other comprehensive loss (income) | ||||||||||||
| Item that may be reclassified to profit or loss | ||||||||||||
| Foreign currency translation adjustment - net of tax of $nil (2019 - $nil) | (25,728 | ) | (11,843 | ) | 159,389 | (58,232 | ) | |||||
| Net loss and comprehensive loss for the period | 7,321,801 | 5,832,291 | 11,114,611 | 8,712,588 | ||||||||
| Loss per share | ||||||||||||
| Basic and diluted net loss per share | 0.46 | 0.54 | 0.71 | 0.81 | ||||||||
| Profound Medical Corp. Interim Condensed Consolidated Statements of Cash Flows (Unaudited) | ||||
| Six months ended June 30, 2020 $ | Six months ended June 30, 2019 $ | |||
| Operating activities | ||||
| Net loss for the period | (10,955,222 | ) | (8,770,820 | ) |
| Adjustments to reconcile net loss to net cash flows from operating activities: | ||||
| Depreciation of property and equipment | 245,277 | 257,299 | ||
| Amortization of intangible assets | 203,663 | 564,219 | ||
| Depreciation of right-of-use assets | 576,823 | 204,126 | ||
| Share-based compensation | 1,490,806 | 456,427 | ||
| Interest and accretion expense | 696,866 | 681,258 | ||
| Deferred revenue | 35,054 | 387,165 | ||
| Change in fair value of derivative financial instrument | 232,466 | 54,220 | ||
| Change in fair value of contingent consideration | 11,580 | (208,911 | ) | |
| Foreign exchange on cash | (1,701,391 | ) | - | |
| Changes in non-cash working capital balances | ||||
| Trade and other receivables | (536,290 | ) | (248,171 | ) |
| Prepaid expenses and deposits | 751,729 | 63,186 | ||
| Inventory | (2,206,342 | ) | 20,277 | |
| Accounts payable and accrued liabilities | (1,071,273 | ) | (1,612,144 | ) |
| Provisions | 4,419 | (1,219,114 | ) | |
| Income taxes payable | (9,907 | ) | (133,274 | ) |
| Net cash flow used in operating activities | (12,231,742 | ) | (9,504,257 | ) |
| Financing activities | ||||
| Issuance of common shares | 52,098,723 | - | ||
| Transaction costs paid | (4,152,072 | ) | - | |
| Payment of other liabilities | (191,925 | ) | (16,203 | ) |
| Payment of long-term debt and interest | (12,497,993 | ) | (534,709 | ) |
| Proceeds from share options exercised | 1,540,180 | 5,399 | ||
| Proceeds from warrants exercised | 10,650,381 | - | ||
| Payment of lease liabilities | (175,052 | ) | (143,943 | ) |
| Total cash from financing activities | 47,272,242 | (689,456 | ) | |
| Net change in cash during the period | 35,040,500 | (10,193,713 | ) | |
| Foreign exchange on cash | 1,701,391 | - | ||
| Cash – Beginning of period | 19,222,195 | 30,687,183 | ||
| Cash – End of period | 55,964,086 | 20,493,470 | ||
