Spectral Medical Provides Corporate Update

• Early Tigris trial observations in-line with Euphrates post-hoc results
• Investigator-driven studies show endotoxin levels significantly elevated in most patients with COVID-induced septic shock
• Q4 2020 EAA multi-country European launch
• DIMI traditional FDA 510(k) approval for in hospital use expected in Q3 2020

TORONTO, Aug. 05, 2020 (GLOBE NEWSWIRE) -- Spectral Medical Inc. (“Spectral” or the “Company”) (TSX: EDT), a late stage theranostic company advancing therapeutic options for sepsis and septic shock, today provided a corporate update on its Tigris trial, COVID-19 initiatives, EAA launch, and Dialco regulatory activities.

EAA and PMX Update

Tigris Trial Update:

As previously disclosed in the Company’s Corporate Update dated April 28, 2020, the Tigris trial recruitment activity slowed at the beginning of March 2020 due to the COVID-19 pandemic, with most trial site ICUs diverting their research resources and focus to treating COVID-19 positive patients. While several Tigris sites continued to screen and enroll patients throughout the pandemic, enrollment was lower than anticipated rates. As a result, the Tigris timeline has been negatively impacted with a delay of approximately three months. The Company anticipates a return to normalized recruitment levels, with all 10 sites indicating active screening status by mid-August.

Tigris Enrollment and Site Status:

• Current Tigris enrollment at 9 patients:
  • Initial observations, with 28-day mortality end point data in-line with Euphrates post-hoc results
• All 10 sites expected to be actively screening in early August:
  • 5 sites currently actively screening and the 5 remaining sites expected to be active by mid-August

“While Tigris enrollment is not currently at the levels we had anticipated due to the unforeseen onset of the COVID-19 pandemic, we are encouraged both by the preliminary observations as well as the full re-activation of all our Tigris sites,” said Dr. Paul Walker, CEO and President of Spectral. “We are committed to a trial that can demonstrate a positive mortality signal, one which we believe will support both premium pricing and enhanced market penetration for PMX. We continue to believe that demonstrating an improvement in the mortality of these critically ill patients, rather than only changes in physiological parameters or levels of mediators, will drive significant value enhancement for all Spectral shareholders. We are maintaining our stringent patient screening standards, which we believe can provide for a positive mortality signal data and could lead to a successful FDA outcome, and we are not willing to compromise these standards to increase trial enrollment rates. That being said, we have a number of mitigation strategies that we have embarked upon in order to complete the trial in Q4 2021.”

The Company continues to focus on finalizing the Tigris trial within the reasonably shortest timelines, and has implemented mitigation strategies to reduce or eliminate the timing delays, including:

• Spectral submitted a protocol amendment to the FDA on July 10, 2020 to increase the number of Tigris sites to 15;
  
• Spectral’s clinical team has identified 4 sites for its FDA supplemental IDE, targeting the use of the PMX cartridge for treatment in patients with COVID-19. Two sites are actively screening for this protocol and the data from which could be subsequently added to support the PMA for the PMX cartridge;

“We continue to be pleased by the early observations in our Tigris trial,” said Debra Foster, VP Clinical & Regulatory Development. “While the the existing randomized patient sample size is limited, the mortality outcome data to-date is in-line with what we expected based on our Euphrates post-hoc experience. Additionally, the Tigris mortality assumptions continue to be validated with current evidence. In the last few weeks the Journal of Intensive Care Medicine published two review articles on the epidemiology and mortality of sepsis [https://link.springer.com/article/10.1007/s00134-020-06151-x and https://link.springer.com/content/pdf/10.1007%2Fs00134-020-06106-2.pdf]. In summary, the ICU mortality for sepsis is between 42% to 52% – which reinforces that sepsis remains a severe global health problem.”

EAA and PMX COVID-19:

Spectral’s PMX cartridge continues to be utilized in the treatment of patients with COVID-19, with 6 patients treated to-date through either emergency access or the IDE supplement. The general observations are that the earlier PMX is used in COVID-19 patients, the better the outcome – with a reduction in EAA levels after each PMX treatment with an accompanying improvement in critical organ function.

Spectral believes that there is a very strong scientific case for the use of PMX in COVID-19 patients. Endotoxin is the primary driver of the cytokine storm and there is reliable evidence that by removing endotoxin using the PMX cartridge, there is a reduction in circulating levels of cytokines. Increased levels of endotoxin activity as measured by Spectral’s FDA approved Endotoxin Activity Assay (EAA) have been identified in COVID-19 patients in the US, Italy and Asia.

Most recently, 2 US hospitals ran investigator-driven studies during the COVID-19 pandemic to measure endotoxin activity levels in COVID-19 positive patients, with the following summary observations:

• EAA administered on over 180 COVID-19 positive patients in the ICU;
• High levels {> 0.60 EAA} were observed in 68% of patients at ICU admission;
• Data compares to 42% incidence in Thailand reports and 60% incidence in Italy reports with EAA >0.60.

In another investigator-driven study at a US hospital, EAA levels were measured in 90 COVID-19 positive patients, and tracked for incidence of AKI. While results have not yet been published, preliminary observations suggest that COVID-19 positive patients with high EAA are associated with developing AKI.

EAA Launch Q4 2020:

The Company is currently in the market planning phase, collaborating with one of its distribution partners on a multi-country European launch of EAA at the beginning of Q4 2020. Spectral’s distribution partner currently anticipates a simultaneous launch in five countries in western Europe. The Company is pleased with the efforts and engagement of its distribution partner and looks forward to continue working with its partner to launch EAA in other potential new markets.

Dialco Medical Inc. Update

Dialco is continuing the commercial deployment of its proprietary renal replacement (“RRT”) machine SAMI and gaining the U.S. and Canada regulatory approvals of its home hemodialysis (“HHD”) machine branded as DIMI.

SAMI:

Dialco continues its commercialization activities in building its RFP and clinical evaluation pipeline. While the Company believes there are significant penetrable commercial opportunities in the approximately $200 million US CRRT market, Dialco will strategically utilize these commercial activities to increase brand awareness and open the door for DIMI. To-date, the feedback on SAMI has been positive amongst its customers:

• SAMI CRRT/PIRRT units continuously being used on a daily basis in the treatment of numerous patients with acute renal failure at several prominent renal programs in North America:
  • Since the beginning of 2020, over 100 treatments carried out on SAMI devices
• Research group from the University of Michigan, one of Dialco’s early adopters, recently submitted a paper to an international medical journal discussing the institution’s successful deployment of SAMI during the COVID-19 pandemic with innovative virtual training and technical support

DIMI:

DIMI is a flexible and user-friendly dialysis platform targeting the rapidly growing home dialysis segment. The Company believes there are several differentiating features to its DIMI device from current devices in market, as well as other potential new entrants. For example, DIMI is the only dialysis machine capable of performing both forms of dialysis, peritoneal (PD) and hemodialysis (HD); DIMI will be equipped with remote monitoring and control functions for physicians; DIMI can be used with any dialyzer; and DIMI uses pre-packaged sterile dialysate bags to reduce user workload and to increase safety. Moreover, DIMI’s portability allows patients to easily manage, store and travel with the device. Dialco is currently pursuing DIMI’s regulatory approvals, in a stepwise process as outlined below:

U.S.FDA (“FDA”) Regulatory Pathway for DIMI:

• FDA traditional 510(k) approval for utilization of acute and chronic dialysis treatment in hospitals and other health care facilities expected in Q3 2020. This approval has been delayed slightly due to further biocompatibility and electro-magnetic immunity tests required by the FDA. These tests, which are carried out at external labs, were interrupted by the COVID-19 lockdown. To-date, these tests are now complete;
  • Immediately enables DIMI to be used within hospitals, clinics and skilled nursing facilities (“SNFs”)
• FDA home HD usability and safety trial in Q4 2020. This is will be a required six-month, 25-patient safety and usability trial which tests the ability of non-medical professionals to assist the patient in setting up and running the dialysis treatment;
• PD FDA 510(k) submission expected in Q4 2020. This enables patients to use DIMI for automated PD treatments at home, especially for those who are transitioning from PD to home HD;
• Special FDA 510(k) application for remote monitoring software submission expected in Q1 2021. This unlocks the full remote monitoring software suite, allowing physicians to remotely check-in and adjust a patient’s treatment regime;
• Special FDA 510(k) application for home HD submission expected in Q2 2021. This is the final step approval to allow for in-home use of DIMI.

Health Canada Approvals:

• In Q2 2020, Dialco submitted its application to add DIMI as an extension of the existing SAMI approval. With respect to Health Canada approval timelines, there are no standard turnaround times. However, Dialco anticipates Health Canada response in H2 2020;
  • The advantage of obtaining this approval is that it will immediately unlock the full HD use of DIMI across hospitals, clinics, nursing homes and home in Canada
• Health Canada PD use submission expected in Q4 2020 with possible approval in early 2021.

“We are committed to bringing to market an innovative dialysis system that can allow an increasing number of patients to embrace the choice of home dialysis,” said Gualtiero Guadagni, President of Dialco. “Our attention is focused on the regulatory approvals for DIMI as well as on providing outstanding service and customer experience to our SAMI early adopters. In parallel to the approvals process, we will continue to evaluate value maximizing structures for Dialco, whether it is through vertical integration, partnerships or other value add structures.”

Corporate Activities Update

• Organizational Changes: The Company recently announced the appointment of Chris Seto as COO where he will oversee the daily operations of the Company, in addition to his responsibilities as company CFO. Spectral is at a pivotal point in its regulatory and commercial development processes. The re-alignment allows Dr. Walker to focus on the successful outcome of the Tigris trial, and Dr. Guadagni to focus on the regulatory approvals for DIMI and the further commercialization of Dialco. Additionally, on August 4^th the Company announced the appointment of Mr. John Nosenzo to the Board. Mr. Nosenzo brings over 30 years of senior commercialization experience across the healthcare sector working in multi-billion dollar enterprises. His appointment comes at a critical time, as Spectral continues its commercialization efforts with Dialco and prepares for the commercialization of PMX.
  
• Recent Financing: On June 18, 2020, the Company closed a brokered prospectus offering for gross proceeds of approximately $5.1 million. The financing accomplished two important achievements for the Company. First, the proceeds raised addresses the Company’s anticipated costs to complete the Tigris trial. Second, the financing broadened the Company’s shareholder base to a supportive, and aligned institutional audience comprised of Canadian and US-based institutions which were all new to the Spectral shareholder register.
• Filing of Base Shelf Prospectus: On July 6, 2020, the Company filed a $50 million base shelf prospectus as a measure to maintain financing flexibility in a volatile capital markets environment. The decision to file the base shelf prospectus shortly after closing the June 2020 financing was to take advantage of significantly reduced prospectus drafting costs, as well as potentially reducing the regulatory review burden. The base shelf prospectus provides Spectral with the flexibility to access the capital markets as potential corporate development opportunities arise, including potential commercial scale-up activities, acquisitions and in-licensing opportunities. The Company, at this time, has no immediate plans for a financing.
• Upcoming Presentations: Spectral will be presenting at the H.C. Wainwright 22^nd Annual Investment Conference to be held virtually from September 14-16, 2020. Presenting at this conference continues the Company’s efforts to increase its efforts to broaden its exposure to US institutional investors, including the opportunity for further one-on-one meetings with US investors. Additionally, in November 2020, Spectral will be sponsoring a symposium at the 38^th Vincenza Course – this year a virtual conference which focuses on AKI and CRRT. Details on the sponsored symposium are being finalized, with details to be provided shortly.

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.

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