Spectral Medical Inc. (“Spectral” or the “Company”) (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, 2023
and provided a corporate update.
During the second quarter, the Company continued
to execute on a number of key business initiatives that are
targeted at enhancing and accelerating Tigris enrollment.
Management is pleased to report positive progress on these
initiatives, specifically:
- During and
subsequent to the second quarter the Company enrolled an additional
18 patients, nearly half of which came from new sites opened for
enrollment in 2023;
- 71 patients
enrolled to date and the Company continues to close in on its
interim target of 90 patients, an important milestone as Spectral’s
strategic commercial partner, Baxter, will have the opportunity to
view the data as well as provide a second milestone payment to
Spectral;
- On track to have
25 active trial sites open by the end of September 2023, with three
new sites opened for enrollment during the second quarter bringing
current total active trial sites to 18;
- New CRO
transition progressing on schedule, with full transition expected
to be complete by August 2023;
- Held first
in-person Tigris Investigator Meeting since 2019 in May 2023 in
North Carolina, which was well attended by approximately 70
attendees;
-
Clinician-focused PMX media production nearing completion, with the
video expected to be released in September 2023; and
- On August 9,
2023, the Company launched a Bought Deal Private Placement with
Paradigm Capital Inc. acting as the underwriter. Expected minimum
gross proceeds are C$5,000,000 issuable in the form of convertible
senior notes (the “notes”) with a maturity of November 1, 2026 and
a coupon rate of 9% payable semi-annually. The notes will have
certain conversion rights, with an expected conversion price of
$0.40 per share.
Dr. John Kellum, Chief Medical Officer of
Spectral Medical, stated, “We have seen a surge of new enrollment
activity since April 2023, which I believe is due in part to the
new sites we have onboarded, as well as the success of our Tigris
Investigator meeting held this past May. The meeting provided the
principal investigators, clinical research coordinators, the
Company’s CRO and other key team members with educational resources
and training tools, while reinvigorating and reinforcing the
importance of this trial and the potential of bringing the PMX
therapy to market.”
Chris Seto, Chief Executive Officer of Spectral
Medical, stated, “I am encouraged by the momentum and pace of
patient enrollment in the Tigris study during the second quarter
and in the weeks thereafter, which I believe is the direct result
of the business initiatives we have undertaken. We will continue to
monitor our progress, and assuming we maintain this enrollment
momentum, we expect to be on track to reach the important interim
milestone of 90 patients enrolled by the end of 2023. At the same
time, we continue to work closely with Baxter, our strategic
commercial partner, to advance post-approval, commercial marketing
plans for PMX.”
Corporate Highlights
Tigris
- New Contract Research
Organization (“CRO”) - BeaufortOn March 23, 2023, the
Company engaged a new contract research organization (“CRO”),
Beaufort. Beaufort has extensive experience with ICU clinical
trials and brings a strong regulatory group, experienced biostats
personnel, and additional clinical field resources. Onboarding
activities are progressing well, with complete transition from the
incumbent CRO expected by August 2023. As part of its engagement,
Beaufort is reviewing and evaluating recruitment and enrollment
processes on a site-by-site basis of Tigris sites.
- Patient
EnrollmentTotal of 71 patients randomized to date out of
the 150 total patients to be enrolled in the Tigris trial. Patient
screening activities at the sites are increasing and results to
date of those enrolled in the study continue to exceed
expectations.Enrollment rate has increased to 0.25 patients from
0.182 patients per site per month, following initiatives to enhance
Tigris enrollment since April 1, 2023, and is now at the Company’s
previously stated target.
- Tigris SitesThere
are currently 18 active Tigris sites onboarded. The Company remains
on schedule to onboard an additional 7 new sites over the next
quarter bringing the total sites to 25. Should suitable sites over
and above the 25 be identified, FDA approval would be required to
approve the addition of these incremental sites.
- TimingThe Company
continues to focus on finalizing the Tigris trial within the
reasonably shortest timelines while continuing to maintain the
highest clinical standard. The Company targets reaching interim
enrollment of 90 patients around the end of 2023.
- Investigator
MeetingA Tigris study Investigator Meeting was held on May
17th and 18th 2023 in Charlotte, North Carolina. The in-person
meeting was attended by principal investigators and clinical
research coordinators from all existing and new trial sites, as
well as the Company’s new CRO, Beaufort. Also in attendance were
representatives from the Company’s strategic partner Baxter and
members of the Balancing Act. This successful Investigator Meeting
has already helped to bolster ongoing enrollment activities related
to the Tigris trial.
- EDEN Observational
StudyIn March 2022, the Company launched an ancillary
observational study, EDEN, to collect data on patients with sepsis
even if ineligible for Tigris. EDEN will capture much-needed data
on the full range of septic shock and its relation to organ failure
and endotoxin activity. These data will inform subsequent
discussions with the FDA on labeling for PMX, as well as to provide
the medical community and the Company a better picture of the
addressable population in the U.S. for PMX. Furthermore, patients
enrolled in EDEN will also be considered for entry into the Tigris
study, which provides another tool to support enrollment.The
Company has onboarded 4 EDEN sites and enrolled 64 patients into
the observational study.
PMX Commercialization
- In anticipation
of a positive Tigris trial outcome, the Company has been working
closely with Baxter, the Company’s strategic commercial partner, on
post-approval marketing plans for PMX commercialization. This
includes developing product branding, pricing and roll-out plans
with numerous Baxter departments, including marketing, regulatory,
clinical and reimbursement. Baxter has communicated its intention
to undertake a broad marketing campaign on day 1 of FDA approval
for PMX.
- May 5, 2023,
Baxter announced a new CEO of its proposed Kidney Care business.
For more information, please visit: Baxter Names Chris Toth CEO of
Proposed Kidney Care Spinoff | Baxter
Clinical Team Focused PMX
Media
The Company commissioned The Balancing Act to
produce a video focused on Endotoxemic Septic Shock (ESS), PMX and
positive patient outcomes. This video will target a number of
Tigris study stakeholders, including CRCs, trial treatment staff,
and potential patients. The nature of the PMX video will be to
inspire and further increase awareness of the PMX therapy.
Management believes that the video can act as an enrollment
catalyst by inspiring research staff and front-line providers, as
well as improve patient/family awareness of ESS and PMX. Production
is nearing completion with the video expected to be completed in
September 2023.
Financial Review
Revenue for three months ended June 30, 2023,
was $306,000 compared to $276,000 for the same period last year,
representing an increase of $30,000, or 10.9%. Revenue for six
months ended June 30, 2023, was $836,000 and $760,000 for the same
period last year, representing an increase of $76,000, or 10.0%.
This increase was mainly due to an increase in proprietary EAA
biochemicals product revenue.
Operating expenses for the three months ended
June 30, 2023, were $4,294,000, compared to $2,331,000 for the same
period in the prior year, an increase of $1,963,000, or 84.2%. The
change is primarily due to an increase in share-based compensation
of $891,000 due to the grant of certain stock awards in May 2023,
which were not issued during the second quarter in the prior year.
In addition, consulting and professional fees increased by $755,000
primarily due to increased site and patient fees related to the
Tigris trial and Eden observational study. Lastly, interest expense
increased $121,000 primarily related to the Notes Payable, which
was not outstanding in the same period in the prior
year. Operating expenses for the six months ended June
30, 2023, were $6,558,000, compared to $4,851,000 for the same
period in the preceding year, an increase of $1,707,000, or 35.2%.
The change is due to an increase in share-based compensation of
$172,000. In addition, consulting and professional fees increased
by $954,000 primarily due to increased site and patient fees
related to the Tigris trial and Eden observational study. Lastly,
interest expense increased $242,000 primarily related to the Notes
Payable, which was not outstanding in the same period in the prior
year.
Loss for the three months ended June 30, 2023
was $3,939,000, or $0.01 per share, compared to a loss of
$2,954,000, or $0.01 per share, for the same quarter last year. The
increased loss of $985,000 was due to increased operating expenses,
partially offset by a reduction in loss from discontinued
operations of $948,000 related to the reduction in Dialco operating
expenses. Loss for the six months ended June 30, 2023 was
$5,716,000, or $0.01 per share, compared to a loss of $5,639,000,
or $0.01 per share, for the same quarter last year. The increased
loss of $77,000 was due to increased operating expenses, partially
offset by a reduction in loss from discontinued operations of
$1,554,000 related to the prior Dialco operating expenses.
The Company concluded the second quarter of 2023
with cash of $2,521,000 compared to $8,414,000 of cash on hand as
of December 31, 2022.
The total number of common shares outstanding
for the Company was 278,576,261 at June 30, 2023.
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
340,000 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. In July 2022, the U.S. FDA granted
Breakthrough Device Designation for PMX for the treatment of
endotoxemic septic shock. Approximately 330,000 patients are
diagnosed with 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 company’s ability to raise capital and
the availability of funds and resources to pursue R&D projects,
the recruitment of additional clinical trial sites, the rate of
patient enrollment, the successful and timely completion of
clinical studies, the success of Baxter’s commercialization
efforts, 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:
Ali Mahdavi |
David Waldman/Natalya
Rudman |
Blair McInnis |
Capital Markets & Investor
Relations |
US Investor Relations |
CFO |
Spinnaker Capital Markets
Inc. |
Crescendo Communications,
LLC |
Spectral Medical Inc. |
416-962-3300 |
212-671-1020 |
416-626-3233 |
am@spinnakercmi.com |
edt@crescendo-ir.com |
bmcinnis@spectraldx.com |
Spectral Medical Inc.Condensed Interim
Consolidated Statements of Financial PositionIn CAD (000s),
except for share and per share
data(Unaudited)
|
June 30,2023 |
|
December 31,2022 |
|
|
$ |
|
$ |
|
|
|
|
Assets |
|
|
Current
assets |
|
|
Cash |
2,521 |
|
8,414 |
|
Trade and other
receivables |
742 |
|
1,056 |
|
Inventories |
288 |
|
340 |
|
Prepayments and other assets |
1,142 |
|
276 |
|
|
4,693 |
|
10,086 |
|
Non-current
assets |
|
|
Right-of-use-asset |
417 |
|
464 |
|
Property and equipment |
191 |
|
237 |
|
Intangible asset |
196 |
|
211 |
|
Investment in iDialco |
834 |
|
998 |
|
Total assets |
6,331 |
|
11,996 |
|
|
|
|
Liabilities |
|
|
Current liabilities |
|
|
Trade and other payables |
2,724 |
|
3,167 |
|
Current portion of contract
liabilities |
698 |
|
696 |
|
Current
portion of lease liability |
98 |
|
96 |
|
|
3,520 |
|
3,959 |
|
Non-current liability |
|
|
Lease liability |
374 |
|
420 |
|
Non-current portion of
contract liabilities |
3,676 |
|
4,011 |
|
Notes payable |
6,039 |
|
6,129 |
|
Total liabilities |
13,609 |
|
14,519 |
|
|
|
|
Shareholders’
deficiency |
|
|
Share capital |
87,061 |
|
87,050 |
|
Contributed surplus |
8,773 |
|
8,773 |
|
Share-based compensation |
9,858 |
|
8,908 |
|
Warrants |
2,490 |
|
2,490 |
|
Deficit |
(115,460 |
) |
(109,744 |
) |
Total shareholders’ deficiency |
(7,278 |
) |
(2,523 |
) |
Total liabilities and shareholders’
deficiency |
6,331 |
|
11,996 |
|
Spectral Medical Inc.Condensed Interim
Consolidated Statements of Loss and Comprehensive Loss In
CAD (000s), except for share and per share
data(Unaudited)
|
|
Three-monthsended
June 30, 2023 |
|
Three-monthsended
June 30,2022 |
|
Six-monthsended June
30,2023 |
|
|
Six-monthsendedJune
30,2022 |
|
|
|
$ |
|
$ |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
Revenue |
|
306 |
|
276 |
|
836 |
|
760 |
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
Changes in inventories of
finished goods and work-in-process |
|
- |
|
- |
|
- |
|
(36 |
) |
Raw materials and consumables
used |
|
281 |
|
187 |
|
418 |
|
368 |
|
Salaries and benefits |
|
976 |
|
876 |
|
1,932 |
|
1,682 |
|
Consulting and professional
fees |
|
1,472 |
|
717 |
|
2,100 |
|
1,146 |
|
Regulatory and investor
relations |
|
196 |
|
140 |
|
304 |
|
282 |
|
Travel and entertainment |
|
99 |
|
66 |
|
183 |
|
121 |
|
Facilities and
communication |
|
82 |
|
70 |
|
164 |
|
137 |
|
Insurance |
|
101 |
|
119 |
|
187 |
|
238 |
|
Depreciation and
amortization |
|
55 |
|
56 |
|
116 |
|
115 |
|
Interest expense |
|
127 |
|
6 |
|
255 |
|
13 |
|
Foreign exchange (gain)
loss |
|
(176 |
) |
6 |
|
(237 |
) |
10 |
|
Share-based compensation |
|
986 |
|
95 |
|
961 |
|
788 |
|
Other
expense (income) |
|
17 |
|
(7 |
) |
12 |
|
(13 |
) |
Net Loss on joint
arrangement |
|
78 |
|
- |
|
163 |
|
- |
|
|
|
4,294 |
|
2,331 |
|
6,558 |
|
4,851 |
|
Loss and comprehensive loss for the year from continuing
operations |
|
(3,988 |
) |
(2,055 |
) |
(5,722 |
) |
(4,091 |
) |
Income (loss) from discontinued operations |
|
49 |
|
(899 |
) |
6 |
|
(1,548 |
) |
Loss and comprehensive loss for the year |
|
(3,939 |
) |
(2,954 |
) |
(5,716 |
) |
(5,639 |
) |
Basic and diluted loss from continuing operations per
common share |
|
(0.01 |
) |
(0.00 |
) |
(0.02 |
) |
(0.01 |
) |
Basic and diluted income (loss) from discontinued
operations per common share |
|
(0.00 |
) |
(0.00 |
) |
(0.00 |
) |
(0.00 |
) |
Basic and diluted loss per common share |
|
(0.01 |
) |
(0.01 |
) |
(0.02 |
) |
(0.02 |
) |
Weighted average number of common shares outstanding – basic and
diluted |
|
278,552,182 |
|
268,147,683 |
|
278,550,005 |
|
|
268,064,079 |
|
Spectral Medical Inc.Condensed Interim
Consolidated Statements of Changes in Shareholders’
DeficiencyIn CAD (000s)(Unaudited)
|
|
Number ofshares |
ShareCapital |
Contributed surplus |
Share-based compensation |
|
Warrants |
|
Deficit |
|
Total Shareholders’ (deficiency) |
|
|
|
|
$ |
$ |
$ |
|
$ |
|
$ |
|
$ |
|
Balance, January 1, 2022 |
|
267,886,408 |
84,357 |
7,985 |
7,984 |
|
2,251 |
|
(98,494 |
) |
4,083 |
|
Share
options exercised |
|
219,546 |
121 |
- |
(53 |
) |
- |
|
- |
|
68 |
|
RSUs
released |
|
49,038 |
31 |
- |
(31 |
) |
- |
|
- |
|
- |
|
Warrants
expired |
|
- |
- |
788 |
- |
|
(788 |
) |
- |
|
- |
|
Loss and
comprehensive loss for the period |
|
- |
- |
- |
- |
|
- |
|
(5,643 |
) |
(5,643 |
) |
Share-based compensation |
|
- |
- |
- |
788 |
|
- |
|
- |
|
788 |
|
Balance, June 30, 2022 |
|
268,154,992 |
84,509 |
8,773 |
8,688 |
|
1,463 |
|
(104,137 |
) |
(704 |
) |
Bought
deal offering |
|
10,061,250 |
2,313 |
- |
- |
|
1,027 |
|
- |
|
3,340 |
|
Share
options exercised |
|
49,251 |
36 |
- |
(16 |
) |
- |
|
- |
|
20 |
|
RSU
Released |
|
282,311 |
192 |
- |
(173 |
) |
- |
|
- |
|
19 |
|
Loss and
comprehensive loss for the period |
|
- |
- |
- |
- |
|
- |
|
(5,607 |
) |
(5,607 |
) |
Share-based compensation |
|
- |
- |
- |
409 |
|
- |
|
- |
|
409 |
|
Balance, December 31, 2022 |
|
278,547,804 |
87,050 |
8,773 |
8,908 |
|
2,490 |
|
(109,744 |
) |
(2,523 |
) |
Balance, January 1, 2023 |
|
278,547,804 |
87,050 |
8,773 |
8,908 |
|
2,490 |
|
(109,744 |
) |
(2,523 |
) |
RSUs
released |
|
28,457 |
11 |
- |
(11 |
) |
- |
|
- |
|
- |
|
Loss and
comprehensive loss for the period |
|
- |
- |
- |
- |
|
- |
|
(5,716 |
) |
(5,716 |
) |
Share-based compensation |
|
- |
- |
- |
961 |
|
- |
|
- |
|
961 |
|
Balance, June 30, 2023 |
|
278,576,261 |
87,061 |
8,773 |
9,858 |
|
2,490 |
|
(115,460 |
) |
(7,278 |
) |
Spectral Medical Inc.Condensed Interim
Consolidated Statements of Cash FlowsIn CAD
(000s)(Unaudited)
|
|
Six-monthsended June 30,
2023 |
|
Six-monthsended June 30,
2022 |
|
|
|
$ |
|
$ |
|
Cash flow provided by (used in) |
|
|
|
|
|
|
|
Operating
activities |
|
|
|
Loss and comprehensive loss for the period |
|
(5,716 |
) |
(5,643 |
) |
Adjustments for: |
|
|
|
Depreciation on right-of-use asset |
|
47 |
|
47 |
|
Depreciation on property and equipment |
|
46 |
|
88 |
|
Amortization of intangible asset |
|
15 |
|
9 |
|
Amortization of deferred financing Fees |
|
87 |
|
- |
|
Interest expense |
|
255 |
|
13 |
|
Unrealized foreign exchange gain |
|
(176 |
) |
(7 |
) |
Share-based compensation |
|
961 |
|
788 |
|
Write down of property and equipment to fair value |
|
- |
|
83 |
|
Loss on investment in iDialco |
|
163 |
|
- |
|
Changes
in items of working capital: |
|
|
|
Trade and other receivables |
|
314 |
|
105 |
|
Inventories |
|
52 |
|
(170 |
) |
Prepayments and other assets |
|
(866 |
) |
(266 |
) |
Trade and other payables |
|
(679 |
) |
(112 |
) |
Contract liabilities |
|
(333 |
) |
(355 |
) |
Net cash used in operating activities |
|
(5,830 |
) |
(5,420 |
) |
|
|
|
|
Investing activities |
|
|
|
Property and equipment acquisitions |
|
- |
|
(21 |
) |
Net cash used in investing activities |
|
- |
|
(21 |
) |
|
|
|
|
Financing activities |
|
|
|
Lease
liability payments |
|
(63 |
) |
(58 |
) |
Share options exercised |
|
- |
|
68 |
|
Net cash provided by financing activities |
|
(63 |
) |
10 |
|
|
|
|
|
Decrease
in cash |
|
(5,893 |
) |
(5,431 |
) |
Effects
of exchange rate changes on cash |
|
- |
|
7 |
|
Cash, beginning of period |
|
8,414 |
|
8,890 |
|
Cash, end of period |
|
2,521 |
|
3,466 |
|
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