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Spectral Announces Third Quarter Results

TORONTO, Nov. 14, 2018 (GLOBE NEWSWIRE) -- Spectral Medical Inc., (TSX: EDT), a Phase III company developing the first treatment for patients with septic shock guided by a companion diagnostic, today announced its unaudited financial results for the third quarter ended September 30, 2018.

Financial Review

Revenue for the three-months ended September 30, 2018 was $579,000 compared to $820,000 for the same period in the preceding year. For the nine-months ended September 30, 2018 revenues were $1,976,000 compared to $2,785,000 in the nine-months ended September 30, 2017.

Royalty revenue from one customer has decreased from $1,264 (US$966) to $168 (US$130) for the first nine-months of 2018, due to the expiry of certain patents. As a result, the Company entered into a technology transfer agreement (the “Agreement”) whereby it transferred certain technology and related materials to this customer. The Agreement will generate approximately $2,000 in additional revenue over 2018 and 2019, upon the fulfillment of four milestones. On November 5, 2018, the Company completed its first milestone under the Agreement and is entitled to receive payment of US$271. As all royalty revenue contracts related to the Company’s biological reagents will expire by the end of 2019, the Company intends to negotiate similar agreements over the next several months. In addition to technology transfers, the Company will increase the unit price of its reagents to offset the loss in royalty revenue.

Operating costs for the quarter ended September 30, 2018 amounted to $1,288,000 compared to $1,677,000 in 2017. Operating costs for the nine-months ended September 30, 2018 were $4,909,000, a decrease of $876,000 from $5,785,000 for the first nine months of 2017. Most of the Company’s expenses are incurred in its Phase III clinical trial and regulatory program and will vary depending on the timing and determination of the regulatory path forward. Apart from clinical trial and regulatory activities, the Company continues to maintain a low cost operating structure for its base business operations.

For the three-months ended September 30, 2018, the Company reported a loss of $709,000 ($0.003 per Share) compared to a loss of $857,000 ($0.004 per Share) for the three-months ended September 30, 2017. The loss for the nine-months ended September 30, 2018 was $2,933,000 ($0.013 per Share) compared to $3,000,000 ($0.014 per Share) for the same nine-month period in the prior year.

The Company concluded the third quarter of 2018 with cash on hand of $4,567,000 compared to $1,449,000 as of December 31, 2017.

The total number of shares outstanding for the Company was 225,591,183 as at September 30, 2018.

Regulatory update

The Company continues its dialogue with the U.S. FDA concerning the planning of the TIGRIS trial and anticipates that an agreement could be reached in calendar year 2018 as to the clinical trial protocol and the Statistical Analysis Plan.

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 150,000 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 350,000 patients are diagnosed with severe sepsis and septic shock in North America each year. 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 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 as well as general economic, market and business conditions, and could differ materially from what is currently expected.

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

For further information, please contact:

Paul Walker
President and CEO
Spectral Medical Inc.
416-626-3233 ext. 2100
pwalker@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)
 September 30
2018
 December 31
2017
 January 01
2017
 
   Restated  Restated  
 $ $ $ 
    
Assets   
Current assets   
Cash4,567 1,449 5,080 
Trade and other receivables504 881 642 
Inventories289 191 244 
Prepayments and other assets193 73 166 
Contract asset126 - - 
 5,679 2,594 6,132 
Non-current assets   
Property and equipment454 570 634 
Intangible asset290 309 334 
    
Total assets6,423 3,473 7,100 
    
Liabilities   
Current liabilities   
Trade and other payables441 612 1,112 
Contract liability29 3 6 
Total liabilities470 615 1,118 
    
Equity    
Share capital66,646 63,225 63,084 
Contributed surplus7,981 7,849 7,849 
Share-based compensation5,591 4,914 4,103 
Warrants1,930 132 132 
Deficit(76,195)(73,262)(69,186)
Total equity5,953 2,858 5,982 
    
Total liabilities and equity6,423 3,473 7,100 


Spectral Medical Inc.
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
For the nine-months ended September 30, 2018 and 2017
(Unaudited)
(in thousands of Canadian dollars, except for share and per share data)
 Three-months ended
 Nine-months ended
 
 2018 2017 2018 2017 
  Restated  Restated 
  $   $ 
     
Revenue579 820 1,976 2,785 
      
Expenses    
Changes in inventories of finished goods and work-in-process13 78 69 204 
Inventory write-down- - 38 - 
Raw materials and consumables used82 56 207 167 
Salaries and benefits619 748 2,523 2,632 
Consulting and professional fees266 406 962 1,610 
Product development- - 66 50 
Regulatory and investor relations80 59 360 220 
Travel and entertainment16 81 78 226 
Depreciation and amortization57 56 176 168 
Foreign exchange (gain) loss12 39 (10)73 
Other expenses143 154 440 435 
 1,288 1,677 4,909 5,785 
     
Loss and comprehensive loss for the period(709)(857)(2,933)(3,000)
     
Basic and diluted loss per Share(0.003)(0.004)(0.013)(0.014)
     
Weighted average number of Shares outstanding225,591,183 207,446,674 218,346,659 207,288,352 


Spectral Medical Inc.
Condensed Interim Consolidated Statements of Changes in Equity
For the nine-months ended September 30, 2018 and 2017
(Unaudited)
 
(in thousands of Canadian dollars)
 Issued capitalContributed
surplus
Share-based
compensation
 Warrants Deficit Total equity 
 Number$$$ $ $ $ 
Balance, January 1, 2017207,165,58763,0847,8494,103 132 (69,346)5,822 
Change in accounting policies---- - 160 160 
Restated equity, January 1, 2017207,165,58763,0847,8494,103 132 (69,186)5,982 
Share options exercised283,750137-(56)- - 81 
Loss and comprehensive loss for the period, restated---- - (3,000)(3,000)
Share-based compensation---433 - - 433 
Balance, September 30, 2017207,449,33763,2217,8494,480 132 (72,186)3,496 
Share options exercised9,6854-(1)- - 3 
Loss and comprehensive loss for the period, restated---- - (1,076)(1,076)
Share-based compensation-- 435  - 435 
Balance, December 31, 2017207,459,02263,2257,8494,914 132 (73,262)2,858 
        
Balance, January 1, 2018207,459,02263,2257,8494,914 132 (73,262)2,858 
Private placement17,694,6613,267-- 1,930 - 5,197 
Share options exercised437,500154-(63)- - 91 
Warrant expiry--132- (132)- - 
Loss and comprehensive loss for the period---- - (2,933)(2,933)
Share-based compensation---740 - - 740 
Balance, September 30, 2018225,591,18366,6467,9815,591 1,930 (76,195)5,953 


Spectral Medical Inc.
Condensed Interim Consolidated Statements of Cash Flows
For the nine-months ended September 30, 2018 and 2017
(Unaudited)
 
(in thousands of Canadian dollars)
 2018 2017 
   Restated 
 $ $ 
Cash flow provided by (used in)  
   
Operating activities  
Loss and comprehensive loss for the period(2,933)(3,000)
Adjustments for:  
Depreciation on property and equipment157 149 
Amortization of intangible asset19 19 
Share-based compensation740 433 
Gain on disposal of property and equipment- (4)
Changes in items of working capital :  
Trade and other receivables377 (97)
Inventories(98)22 
Prepayments and other assets(120)(7)
Contract asset(126)- 
Trade and other payables(171)(328)
Contract liability26 (2)
Net cash used in operating activities(2,129)(2,815)
   
Investing activities  
Purchase of property and equipment(41)(90)
Proceeds on disposal of property and equipment- 15 
Net cash used in investing activities(41)(75)
   
Financing activities  
Proceeds from private placement5,308 - 
Transaction costs paid(111)- 
Proceeds from Share options exercised91 81 
Net cash provided by financing activities5,288 81 
   
Increase (decrease) in cash3,118 (2,809)
   
Cash, beginning of period1,449 5,080 
Cash, end of period4,567 2,271 
Wednesday, November 14, 2018 - 08:00