Spectral Medical Inc. (“Spectral” or the “Company”) (TSX:
EDT), a late stage theranostic company advancing
therapeutic options for sepsis and septic shock, as well as
commercializing a new proprietary platform targeting the renal
replacement therapy market through its wholly-owned subsidiary
Dialco Medical Inc. (Dialco), today announced its financial results
for the third quarter ended September 30, 2021, and provided a
corporate update.
Chris Seto, CEO of Spectral, commented, “We are
pleased to report progress on the clinical development of
Toraymyxin™ (“PMX”), though the direct impact of covid outbreaks
continue to correlate to decreased enrollment. As we entered Q3
2021, enrollment activity ramped up significantly following our
June investigator meeting – increasing approximately 40% over a
three month period as several of our clinical sites experienced a
more ‘normalized’ clinical trial environment. However, the rapid
emergence of the delta variant at the tail end of the quarter
effectively halted Tigris patient enrollment as many trial site
ICUs once again refocused their efforts and resources on addressing
the COVID-19 pandemic. We view the summer enrollment rates somewhat
as a proxy for the velocity of patient enrollment once the impact
of COVID recedes. We continue to move forward with trial
activities, including onboarding of new trial sites, and we have a
high degree of confidence that the full fifteen sites will be
screening and open for enrollment by the end of November 2021.
Although the sample size data are limited, we are encouraged by
initial patient mortality data, which is in line with our
expectations.”
Dr. John Kellum, Chief Medical Officer of
Spectral, commented, “We remain focused on the start of our DIMI
usability trial for home use of this exciting new device aimed at a
$5.3 billion U.S. home dialysis market. We had anticipated first
patient enrollment into the DIMI usability trial at the beginning
of Q4 2021, but now expect to begin the trial in Q1 2022, as our
potential clinical site trial partners address labor shortages and
attrition within dialysis clinics, making it difficult to
participate in the usability trial until that time. In the
meantime, we have submitted an amendment for the DIMI IDE protocol
with the FDA, which, if approved, would allow study patients to
continue to utilize the device at home until the FDA provides
clearance for in-home use. We have also refined our protocol to be
minimally intrusive on the dialysis clinics staff. We believe the
steps we are taking will help us achieve our target of enrolling 35
patients into the study within the shortest timeframe
possible.”
The Company also announced that Chris Seto, CEO
of Spectral, has been appointed to the Board of Directors,
increasing the number of board members to seven. Mr. Seto
concluded, “In addition to my current role as CEO, I am honored to
join the board of directors at this important inflection point for
the Company. We remain focused on executing our clinical programs
as efficiently as possible. We look forward to a number of key
upcoming milestones, that we believe will drive significant
shareholder value.”
Program Update
Tigris Trial
- Number of Tigris SitesDespite a challenging
clinical environment due to COVID-19, Spectral has had success in
adding new trial sites with 12 trial sites open for enrollment and
now actively screening patients, as well as another 3 clinical
sites with investigator agreements in place. The Company is in the
process of onboarding the remaining clinical trial sites, with a
high degree of visibility that all 15 trial sites are anticipated
to be screening patients by the end of November 2021.
- Tigris EnrollmentTigris currently has a total
of 25 patients randomized to-date out of the 150 total to be
enrolled. Although the sample size and data are limited, we are
encouraged by preliminary patient mortality data, which is in line
with our expectations.
Dialco
- DIMI Usability TrialCommencement of the DIMI
IDE trial was postponed to the end of the first quarter of 2022,
due in large part to the impact of the COVID-19, pandemic, as the
Company awaits final commitments from its trial site partners to
initiate the clinical trial.On November 5, 2021 Dialco submitted an
IDE protocol amendment for the DIMI IDE Trial, which, if approved,
would allow study patients to continue to utilize the device at
home until the FDA provides clearance for in-home use. The IDE
protocol amendment would also allow changes to patient flow
procedures that are intended to simplify protocols, making the
trial easier to administer for both patients and clinical staff, as
well as the Company. Dialco anticipates FDA authorization of the
amendment in early December 2021.
- DIMI CommercializationIn order to support
commercial expansion, and in anticipation to the start-up of the
DIMI usability trial, Dialco is expanding its field force for sales
training and technical support. Dialco currently has field
representatives in Ontario, as well as California, Pennsylvania,
Florida and Michigan, with recruitment initiatives underway for
further expansion.
- SAMI CommercializationSAMI continues to be
launched in Canada and the U.S. with successful clinical
evaluations ongoing in key hemodialysis centres, as well as
expansion of the commercial sales pipeline. As hospitals are
experiencing a significant shortage of CRRT machines in COVID-19
affected ICUs, there has been increased activity with respect to
the use of SAMI in the treatment of COVID-19 positive patients. The
Company has successfully developed remote installation, and set-up
on-line training for SAMI.
Financial Review
Revenue for the three-months ended September 30,
2021 was $230,000 compared to $418,000 for the same three-month
period last year. For the nine-months ended September 30, 2021,
revenue was $1,535,000 compared to $1,566,000 for the same
nine-month period in 2020. Royalty revenue has been negatively
impacted by the decreased usage of the Company’s IP from one
customer. Product revenue has fluctuated for the three and
nine-months ended due to the timing of orders from customers.
Revenue continues to be recognised from the exclusive distribution
agreement with Baxter International Inc. (“Baxter”).
Operating costs for the quarter ended September
30, 2021, were $2,297,000 compared to $1,995,000 for the
corresponding period in 2020, representing an increase of $302,000.
Operating costs for the nine-months ended September 30, 2021 were
$7,768,000, a decrease of $749,000 from $8,517,000 for the
nine-month period ended September 30, 2020. The majority of the
decrease relates to a non-recurring fee payable to a financial
advisory services firm, which was incurred in the first quarter of
2020, relating to a legacy financial advisory agreement. Clinical
development and regulatory program expenses has remained consistent
in the nine-months ended September 30, 2021 as compared to the same
nine-month period in the prior year. Clinical activity has been
negatively impacted by the COVID-19 pandemic on the Tigris trial.
The Company also incurred approximately $275,000 in professional
fees in connection with a withdrawn prospectus offering in early
March 2020. Lastly, the Company received $378,000 and $628,000 for
the three and nine-months ended September 30, 2021, primarily under
the Canada Emergency Wage Subsidy Program established to support
businesses during the COVID-19 pandemic. The government assistance
was used to offset the expenses incurred in the periods.
While the Company maintains a low-cost operating
structure for its base business operations, the Company anticipates
its operating costs to increase for the remainder of 2021. The
Company expects its Tigris trial enrollment to increase, combined
with incremental costs associated with Dialco’s upcoming usability
trial for DIMI, product development and the increase in field
resources for the marketing and commercialization activities of its
RRT devices.
Loss for the quarter ended September 30, 2021
was $2,067,000 ($0.008 per share) compared to a loss of $1,577,000
($0.007 per share) for the same quarter last year. Loss for the
nine-months ended September 30, 2021 was $6,233,000 ($0.025 loss
per share) compared to a loss of $6,951,000 ($0.030 loss per share)
for the same period last year.
The Company ended the third quarter of 2021 with
cash of $10,923,000 compared to $5,807,000 cash on hand as of
December 31, 2020.
The total number of common shares outstanding
for the Company was 267,886,408 as of September 30, 2021.
Bought Deal Offering
On July 27, 2021, the Company closed a bought
deal offering (“Offering”) resulting in the issuance of 23,530,000
units (“Units”), at a price of $0.425 per Unit. Aggregate gross
proceeds of the Offering were approximately $10.0 million. Each
Unit consists of one share of the Company and one-half of one share
purchase warrant (each whole share purchase warrant a “Warrant”),
with each Warrant entitling the holder to acquire one share at a
price of $0.50, with an expiry date of July 27, 2024.
U.S. Listing Update
Management and the Board believe a senior U.S.
listing aligns with the goals of the business and its stakeholders,
and the Company continues to prepare for a potential listing on a
senior U.S. exchange.
Corporate Update Conference
Call
The Company plans to host an investor conference
call on December 2, 2021 to discuss to discuss the Company’s
corporate progress and other developments, as well as financial
results for the fiscal 2021 third quarter ended September 30, 2021.
Additional details will be provided in advance of the conference
call.
About Spectral
Spectral is a Phase 3 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 is approved for therapeutic use in Japan and
Europe, and has been used safely and effectively on more than
300,000 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., is also commercializing a new set of
proprietary platforms addressing renal replacement therapy
(RRT) across the dialysis spectrum. SAMI is
targeting the acute RRT market, while DIMI is targeting the chronic
RRT market. Dialco is currently pursuing regulatory approval for
U.S. in-home use of DIMI, which is based on the same RRT platform
as SAMI, but will be intended for home hemodialysis use. DIMI
recently received its FDA 510k clearance for use in hospital and
clinical settings, and obtained its Health Canada license for use
within Canadian hospitals, clinics and in home.
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:
Chris Seto |
Ali Mahdavi |
David Waldman/Natalya Rudman |
CEO |
Capital Markets & Investor
Relations |
US Investor Relations |
Spectral Medical Inc. |
Spinnaker Capital Markets
Inc. |
Crescendo Communications,
LLC |
416-626-3233 ext. 2004 |
416-962-3300 |
212-671-1020 |
cseto@spectraldx.com |
am@spinnakercmi.com |
edt@crescendo-ir.com |
|
|
|
|
|
|
|
|
|
|
Spectral Medical Inc. |
|
|
|
|
|
|
Condensed Interim Consolidated Statements of Financial
Position(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands of Canadian dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021 |
|
|
December 31, 2020 |
|
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
Current
assets |
|
|
|
|
|
Cash |
|
10,923 |
|
|
5,807 |
|
Trade and other
receivables |
|
567 |
|
|
260 |
|
Inventories |
|
399 |
|
|
348 |
|
Prepayments and other
assets |
|
792 |
|
|
389 |
|
|
|
12,681 |
|
|
6,804 |
|
Non-current
assets |
|
|
|
|
|
Right-of-use-asset |
|
555 |
|
|
625 |
|
Property and equipment |
|
538 |
|
|
488 |
|
Intangible asset |
|
233 |
|
|
246 |
|
Total assets |
|
14,007 |
|
|
8,163 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
Trade and other payables |
|
1,335 |
|
|
2,141 |
|
Current portion of contract
liabilities |
|
729 |
|
|
676 |
|
Current
portion of lease liability |
|
91 |
|
|
85 |
|
|
|
2,155 |
|
|
2,902 |
|
Non-current
liability |
|
|
|
|
|
Lease liability |
|
513 |
|
|
582 |
|
Non-current portion of contract liabilities |
|
4,846 |
|
|
5,348 |
|
Total liabilities |
|
7,514 |
|
|
8,832 |
|
|
|
|
|
|
|
Shareholders’ equity
(deficiency) |
|
|
|
|
|
Share capital |
|
84,357 |
|
|
71,870 |
|
Contributed surplus |
|
7,985 |
|
|
7,981 |
|
Share-based compensation |
|
7,842 |
|
|
6,771 |
|
Warrants |
|
2,251 |
|
|
2,418 |
|
Deficit |
|
(95,942 |
) |
|
(89,709 |
) |
Total shareholders’ equity (deficiency) |
|
6,493 |
|
|
(669 |
) |
|
|
|
|
|
|
Total liabilities and shareholders’ equity
(deficiency) |
|
14,007 |
|
|
8,163 |
|
|
|
|
|
|
|
|
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 September 30, |
|
Nine-months ended September 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
|
|
|
|
|
|
|
|
|
Revenue |
230 |
|
418 |
|
1,535 |
|
1,566 |
|
|
|
|
|
|
Expenses |
|
|
|
|
Changes in inventories of
finished goods and work-in-process |
26 |
|
72 |
|
198 |
|
84 |
|
Raw materials and consumables
used |
108 |
|
47 |
|
273 |
|
351 |
|
Salaries and benefits |
826 |
|
1,014 |
|
3,640 |
|
3,505 |
|
Consulting and professional
fees |
913 |
|
418 |
|
2,075 |
|
3,612 |
|
Regulatory and investor
relations |
128 |
|
87 |
|
402 |
|
318 |
|
Travel and entertainment |
118 |
|
6 |
|
178 |
|
109 |
|
Facilities and
communication |
50 |
|
95 |
|
196 |
|
262 |
|
Insurance |
98 |
|
62 |
|
292 |
|
186 |
|
Depreciation and
amortization |
71 |
|
79 |
|
223 |
|
223 |
|
Interest expense on lease
liability |
7 |
|
8 |
|
21 |
|
25 |
|
Foreign exchange loss
(gain) |
(57 |
) |
110 |
|
37 |
|
(144 |
) |
Other expense (income) |
9 |
|
(3 |
) |
99 |
|
(6 |
) |
Write down of property and
equipment to fair value |
- |
|
- |
|
174 |
|
- |
|
Gain on disposal of property
and equipment |
- |
|
- |
|
(40 |
) |
(8 |
) |
|
2,297 |
|
1,995 |
|
7,768 |
|
8,517 |
|
|
|
|
|
|
Loss and comprehensive loss for the period |
(2,067 |
) |
(1,577 |
) |
(6,233 |
) |
(6,951 |
) |
|
|
|
|
|
Basic and diluted loss per common share |
(0.008 |
) |
(0.007 |
) |
(0.025 |
) |
(0.030 |
) |
|
|
|
|
|
Weighted average number of common shares outstanding –
basic and diluted |
260,928,039 |
|
236,605,745 |
|
247,267,326 |
|
231,109,027 |
|
|
|
|
|
|
|
|
|
Spectral Medical Inc. |
|
|
|
|
|
|
|
Condensed Interim Consolidated Statements of Changes in
Shareholders’ (Deficiency) Equity |
|
(unaudited) |
|
|
|
|
|
|
|
(in thousands of Canadian dollars) |
|
|
|
|
|
|
|
|
|
|
Issued capital |
Contributed surplus |
Share-based compensation |
|
Warrants |
|
Deficit |
|
Total Shareholders’ (deficiency) equity |
|
|
Number |
$ |
|
$ |
$ |
|
$ |
|
$ |
|
$ |
|
Balance, January 1, 2020 |
225,876,683 |
66,837 |
|
7,981 |
6,183 |
|
1,870 |
|
(80,611 |
) |
2,260 |
|
Public offering |
8,500,000 |
3,526 |
|
- |
- |
|
788 |
|
- |
|
4,316 |
|
Share options exercised |
1,129,062 |
677 |
|
- |
(248 |
) |
- |
|
- |
|
429 |
|
Warrants exercised |
1,100,000 |
735 |
|
- |
- |
|
(240 |
) |
- |
|
495 |
|
Loss and comprehensive loss
for the period |
- |
- |
|
- |
- |
|
- |
|
(6,951 |
) |
(6,951 |
) |
Share-based compensation |
- |
- |
|
- |
803 |
|
- |
|
- |
|
803 |
|
Balance, September 30, 2020 |
236,605,745 |
71,777 |
|
7,981 |
6,738 |
|
2,418 |
|
(87,562 |
) |
1,352 |
|
Public offering |
- |
(2 |
) |
|
|
|
|
(2 |
) |
Share options exercised |
150,000 |
95 |
|
- |
(44 |
) |
- |
|
- |
|
51 |
|
Loss and comprehensive loss
for the period |
- |
- |
|
- |
- |
|
- |
|
(2,147 |
) |
(2,147 |
) |
Share-based compensation |
- |
- |
|
- |
77 |
|
- |
|
- |
|
77 |
|
Balance, December 31, 2020 |
236,755,745 |
71,870 |
|
7,981 |
6,771 |
|
2,418 |
|
(89,709 |
) |
(669 |
) |
Balance, January 1, 2021 |
236,755,745 |
71,870 |
|
7,981 |
6,771 |
|
2,418 |
|
(89,709 |
) |
(669 |
) |
Bought deal offering |
23,530,000 |
7,406 |
|
- |
- |
|
1,464 |
|
- |
|
8,870 |
|
Share options exercised |
143,333 |
98 |
|
- |
(46 |
) |
- |
|
- |
|
52 |
|
Warrants exercised |
7,457,330 |
4,983 |
|
- |
- |
|
(1,627 |
) |
- |
|
3,356 |
|
Warrants expired |
- |
- |
|
4 |
- |
|
(4 |
) |
- |
|
- |
|
Loss and comprehensive loss
for the period |
- |
- |
|
- |
- |
|
- |
|
(6,233 |
) |
(6,233 |
) |
Share-based compensation |
- |
- |
|
- |
1,117 |
|
- |
|
- |
|
1,117 |
|
Balance, September 30, 2021 |
267,886,408 |
84,357 |
|
7,985 |
7,842 |
|
2,251 |
|
(95,942 |
) |
6,493 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spectral Medical Inc. |
|
Condensed Interim Consolidated Statements of Cash Flows |
|
(unaudited) |
|
|
|
(in thousands of Canadian dollars) |
|
|
|
|
Nine-months ended September 30, |
|
|
2021 |
|
2020 |
|
|
$ |
|
$ |
|
Cash flow provided by (used in) |
|
|
|
|
|
Operating
activities |
|
|
Loss and comprehensive loss
for the period |
(6,233 |
) |
(6,951 |
) |
Adjustments for: |
|
|
Depreciation on right-of-use asset |
70 |
|
70 |
|
Depreciation on property and equipment |
140 |
|
140 |
|
Amortization of intangible asset |
13 |
|
13 |
|
Interest expense on lease liability |
21 |
|
25 |
|
Unrealized foreign exchange loss on cash |
42 |
|
32 |
|
Share-based compensation |
1,117 |
|
803 |
|
Write down of property and equipment to fair value |
174 |
|
- |
|
Gain on disposal of property and equipment |
(40 |
) |
(8 |
) |
Changes in items of working
capital: |
|
|
Trade and other receivables |
(307 |
) |
(59 |
) |
Inventories |
(51 |
) |
(67 |
) |
Prepayments and other assets |
(403 |
) |
(257 |
) |
Contract asset |
- |
|
519 |
|
Trade and other payables |
(806 |
) |
776 |
|
Contract liabilities |
(449 |
) |
6,183 |
|
Net cash (used in) provided by operating
activities |
(6,712 |
) |
1,219 |
|
|
|
|
Investing
activities |
|
|
Proceeds on disposal of
property and equipment |
77 |
|
10 |
|
Property and equipment
expenditures |
(401 |
) |
(215 |
) |
Net cash used in investing activities |
(324 |
) |
(205 |
) |
|
|
|
Financing
activities |
|
|
Proceeds from financing |
10,000 |
|
5,100 |
|
Transaction costs paid |
(1,130 |
) |
(784 |
) |
Warrants exercised |
3,356 |
|
495 |
|
Share options exercised |
52 |
|
429 |
|
Lease liability payments |
(84 |
) |
(81 |
) |
Net cash provided by financing activities |
12,194 |
|
5,159 |
|
|
|
|
Increase in cash |
5,158 |
|
6,173 |
|
Effects of exchange rate
changes on cash |
(42 |
) |
(32 |
) |
Cash,
beginning of period |
5,807 |
|
1,435 |
|
Cash, end of period |
10,923 |
|
7,576 |
|
|
|
|
|
|
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