- Net Income positive US operations for the
third consecutive year
- Controlled operating results despite Covid-19
pandemic
- Cash runway over 36 months
- Q1-21 OUS growth at 21%
Regulatory News:
SpineGuard (FR0011464452 – ALSGD) (Paris:ALSGD), an
innovative company that deploys its DSG® (Dynamic Surgical
Guidance) sensing technology to secure and streamline the placement
of bone implants announced today its full-year 2020 financial
results, as approved by the Board of Directors on April 8, 2021,
its first quarter 2021 sales and a €10M financing in the form of an
equity line with Nice & Green.
€ thousands – IFRS audited
Dec 31, 2020
Dec 31, 2019
Revenue
4 852
6 829
Gross Margin
4 036
5 768
Gross margin (% of revenue)
83,2%
84,5%
Sales, distribution & marketing
2 578
3 500
Administrative costs
1 740
1 855
Research & Development
680
724
Operating profit / (loss)
- 961
- 311
Non-recurring operating costs
-875
-120
Financial Result
-844
-643
Income Tax
-37
-389
Net profit / (loss)
-2 276
-686
EBITDA
-1 284
-50
Pierre Jérôme, co-founder, Chairman and CEO of SpineGuard,
said: “Despite the significant impact on our sales of the
Covid-19 related cancellation of numerous elective surgeries, we
exited 2020 much stronger than anticipated thanks to the
mobilization of the entire team, the controlled use of our equity
line, the favorable outcome of the “sauvegarde” proceeding as well
as our sustained investments in R&D. The latter enabled us to
continue to innovate and advance our projects, which has already
borne fruit in 2021 with the FDA clearance of the DSG Connect
platform, the participation to the Faros surgical robotic program
and the extension of our intellectual property. The rescheduling of
our debt validated by the French Commercial Court at the end of
March and the new substantial and flexible funding provide us with
appreciable room to maneuver. We can now accelerate the deployment
of our DSG technology and boost our commercial activities,
particularly in the US, leaning on the launch of DSG Connect and
the gradual resumption of elective surgeries as vaccination
campaigns continue to expand.”
Net operating result under control despite the Covid-19
pandemic
The current operating loss was € -961K vs. € -311K in 2019. In
S2-2021, the operating loss was € -211K. Gross margin decreased by
130 bps at 83.2% vs. 84.5% mainly due to reduced volumes and
temporary adjustments.
Operating expenses decreased by 17.8% or € 1,082k reflecting
both the full impact of the company reorganization started in 2019,
the impact of the Covid 19 pandemic and a rigorous control of
operational expenses over the year.
Despite the pandemic and maintaining a solid level of strategic
innovation expenses, R&D and IP protection, the operating cash
flow was € -646K vs € +224K in 2019.
Non-recurring operating costs are mainly related to the French
“sauvegarde” and US Chapter 11 proceedings at € 875K vs € 120K in
2019.
Working capital requirements were € -176K vs. € 512K in
2019.
Financial expenses were € -844K mainly corresponding to the
interest charges of the venture loans with Norgine Venture and
Harbert European Growth Capital. There are € 108K of Fx rate losses
and € 35K of non-cash financial income related to the compliance
with IFRS accounting principles on financing instruments.
Cash runway extended over 36 months
At Dec. 31, 2020, cash and cash equivalents were € 1.2M, plus
the secured € 1.8M of convertible warrants (BSAR) which was since
drawn. At March 31, 2021, cash and cash equivalents were € 2.1M.
With the new financing equity line of €10M provided by Nice &
Green, SpineGuard’s cash runway stands at over 36 months.
French ‘sauvegarde’ and US Chapter 11 proceedings
In its decision of March 24, 2021, the Commercial Court of
Creteil validated the ‘sauvegarde’ plan which ends the French
‘sauvegarde’ proceeding. The company will now enter the execution
phase of the plan.
In summary, the liabilities of c. € 5M including € 4.8M of
financial debt, were settled as follows:
1) An agreement with the bond holders
(Norgine and Harbert) as part of the U.S. Chapter 11 proceeding for
an amount of € 3,875K with a 5-year reimbursement schedule starting
February 2021;
2) Bpifrance has accepted the reimbursement
of its € 975K loan over a 9-year period starting February 2022;
3) The majority of the other creditors
accepted a 9-year reimbursement plan starting February 2022 for a
total of € 60K;
4) The few remaining suppliers opted for a
one-time payment of € 5K totaling € 60K;
5) There is no remaining litigation. Two
non-material disputes have been addressed and resolved by the
‘Mandataire Judiciaire’ on March 24, 2021.
As the U.S. court also agreed on the two procedures to be
aligned in timing, the company expects to exit Chapter 11 by the
end of May contingent upon the U.S. judicial administrative
processes.
Significant technology advances
Robotic application
In 2020, the collaboration with Sorbonne's ISIR lab made solid
progress with a new experimental platform using a medical grade
robotic arm, multiple experiments using 2nd generation algorithms
for automatic breach detection, the commencement of live patient
DSG data collection at the Trousseau Hospital in Paris and the
preparation of new IP. The company also started a project of a
smart universal drill for orthopedic surgery using the concepts
from the robotic platform work, and the European Community
validated collaborative research program Faros (Functional Accurate
RObotic Surgery).
Connectivity and signal visualization
As a reminder, in 2019 SpineGuard had completed the design of a
new generation of PediGuard products, "DSG Connect", that features
a data transmission capability as well as a software for signal
display and recording on a dedicated tablet. These new products aim
at facilitating adoption by new surgeons and allow for data
recording useful for medical-legal purposes and research on bone
quality measurement.
The CE mark was obtained in late 2019 and the FDA clearance in
February 2021. Limited release surgeries started in 2020 in order
to collect user feedback that will be integrated for the full
launch late in 2021.
Dental implantology – worldwide license and collaboration
with ConfiDent, a subsidiary of Adin
The relevance of the DSG technology in dental implantology was
validated by the CE mark of a first generation product and by the
very promising customer feedback that resulted. The collaboration
continues with excellent dynamism toward the development of
disruptive tools in this sector.
Bone Quality Measurement (BQM)
In 2020 the scientific advisory board of SpineGuard collaborated
with an expert in bone pathologies in order to identify the most
promising applications of the technology and the concept validation
plan.
Strengthening of intellectual property
We recorded in 2020 the international extensions of the Robotic
DSG patent application, and the grant of an Ultrasound patent both
in China and Japan that completes DSG by the determination of the
entry points without using x-rays. Additionally, the "Real Time"
patent was granted in Russia, Singapore, China and most recently in
Israel, providing a greater geographical stronghold as well as the
critical extension of the DSG technology protections. Lastly, the
strategic IP survey process at SpineGuard was upgraded.
2021 First quarter revenue
Global revenue in the first quarter of 2021 was €1,049K vs.
€1,376K in Q1 2020, a 23.8% decrease.
SpineGuard sold 1,360 DSG units in the first quarter of 2021 vs.
1,536 units in Q1 2020.
558 units were sold in the USA vs. 871 units during the same
period in 2020. Exacerbated by the adverse weather conditions in
early February that caused significant logistic issues, the third
wave of COVID-19 strongly impacted business in January and the
first three weeks of February. March showed an encouraging rebound
with a renewed momentum of orders and shipments. Overall, US
revenue decreased 36% as reported (-29% cc) at €700K vs.
€1,088K.
Outside the USA, the positive dynamics of the second-half of
2020 continued and revenue grew 21% at € 348K vs. € 288K in the
first quarter of 2020. Of note, this is the third consecutive
quarter with double digit growth OUS, it was 17% in Q4 and 10% in
Q3 2020.
Flexible financing over 36 months including an incentive
program
Main terms and conditions
The flexible 36 months-financing is provided by Nice &
Green, a private company that specializes in financing solutions
tailored to the requirements of listed companies. SpineGuard and
Nice & Green have worked together since 2017.
The company has entered into this BSAR facility as authorized by
the Shareholders’ Meeting of May 14, 2020 in its 11th and 12th
resolutions. The facility was approved by the Board of Directors on
April 8, 2021 and delegated to the CEO (‘Directeur Général’) the
authority to execute each of the draws contemplated under the
facility agreement.
The facility provides a secured and scheduled financing facility
up to €10M in the form of 500 convertible warrants (BSAR) with a
nominal value of twenty thousand (20,000) euros each that will be
subscribed by Nice & Green.
The facility does not require the establishment of a prospectus
requiring a visa by the AMF.
There will be a minimum of 65 stock days between each draw of 50
BSAR each, altered only by mutual agreement between SpineGuard and
Nice & Green.
The number of shares resulting from the conversion of the BSAR
will be determined by the lowest VWAP 10 days plus a discount of
7%.
Conversion of the BSAR by Nice & Green is at their hand.
The BSAR will not be listed.
The BSAR are numbered from 1 to 500.
Each tranche may be drawn after 65 stock days following the
previous draw. The time between two draws may be reduced in case
market transactions exceed €10M. Draws can be postponed or
reimbursed upon mutual agreement between SpineGuard and Nice &
Green.
The BSAR are non-transferable, except to companies controlled by
Nice & Green.
Cases of default: The agreement includes standard provisions for
cases of defaults under similar contracts that allow the
solicitation of an anticipated reimbursement or a stop of the BSAR
issuances and subscriptions and/or to suspend or refuse to
subscribe the BSAR not yet issued.
Subscription and exercise of the BSAR
The subscription price of each BSAR is of nineteen thousand
(19,000) euros and shall be paid by Nice & Green to SpineGuard
on the subscription date together with the exercise price of one
thousand (1,000) euros. Except in the case of suspension per the
terms and condition of the agreement, each BSAR shall be converted
within 120 days after the subscription date at Nice & Green
discretion.
Conversion of the BSAR:
BSAR can be converted into SpineGuard shares upon the holder
request, at any time, according to the following conversion
formula: N = (PS +PEx) /PE « N »: the number of new ordinary shares
of to be issued under one BSAR conversion « PS »: the subscription
price « PEx »: the exercise price « PE »: the emission price
Example for the 10 BSAR to be converted:
Average Weighted Stock Price for the period: €2.50 x 0.93 =
€2.3000 # of shares to be issued: (190,000 + 10,000) / €2.3000 =
86,956 shares
The new shares issued upon the conversion of the BSAR shall be
immediately eligible for dividends, bear the same right of all
others existing ordinary shares and will trade on Euronext Growth
under Code ISIN FR0011464452 - ALSGD.
The number of shares issued pursuant the BSAR conversions will
be communicated by the Company on its web site under the category
of regulated information relative to the existing number of shares
and their associated voting rights. Should the case of significant
conversion of BSAR occur, thus with a potential impact on the stock
price, the Company will proceed to an ad-hoc communication in
respect. Nice & Green policy is not to be part of the
governance of the companies in which it has invested. Therefore, it
will not require any seat at SpineGuard’s Board of Directors.
Nice & Green does not act as a financial intermediary and
invests its own equity resources. Therefore, while Nice & Green
has no constraints for a fast sell of the converted BSAR, it has no
intention of remaining a long-term shareholder.
Theoretical effect of the issuance of the BSAR
The theoretical effect of the issue of the BSAR for a total
nominal amount of € 10,000,000 would be as follows:
Incidence of the issue on a 1% stake of a
shareholder:
Equity per share (%)
Base non diluted
Base diluted (1)
Number of shares
Before the issue of the BSAR
1.00%
0.90%
25,129,579
After the issue of 500 BSAR
0.85%
0.78%
29,477,405
The calculation of the number of new issued shares and its
subsequent dilution for the shareholders has been made on the base
of an exercise price of €2.3000 per share resulting in a total of
4,347,826 newly created shares for the 750 BSAR
Effect of the issue on the equity per share: base is the
net equity per the financial statements as of 31 December 2020
i.e., € -9K and of the total issued shares on the effective date of
the financing i.e. 25,129,579 shares:
Equity per share (in euros)
Base non diluted
Base diluted (1)
Number of shares
Before the issue of the BSAR
(€0.00)
(€0.00)
25,129,579
After the issue of 500 BSAR
(€0.00)
(€0.00)
29,477,405
(1) Calculations are made on the assumption that all warrants,
stock-options and free shares are exercised prior to the issue of
the BSAR.
Profit-sharing program
Nice & Green has embedded a profit-sharing scheme designed
to grant SpineGuard a stake of the potential financial gains made
by Nice & Green. It consists in a cash allowance to SpineGuard
as a percentage of realized gains from the sale by Nice & Green
of shares issued from the BSAR conversion.
Such a scheme comes out from the principle where the proper use
of the resources transferred by Nice & Green to SpineGuard will
bring a favorable impact on the value creation, will improve
liquidity, and will make the trading of the shares easier.
2021 Perspectives
SpineGuard is focusing on the following priorities while
investing selectively to remain close to breakeven:
- Boost commercial activities with the launch of the DSG-Connect
visual interface.
- Accelerate the implementation of the DSG digital technology in
the surgical robotic field through the deployment of AI algorithms,
new scientific evidence, and additional patents.
- Intensify the collaboration with ConfiDent ABC for the dental
application and co-develop a new generation of products embedding
the DSG technology.
- Affirm the company’s technological shift and sign new strategic
partnerships in particular for the use of DSG technology in the
robotic field.
Next financial press release: 2021 half-year revenue on
July 7, 2021
About SpineGuard® Founded in 2009 in France and the USA
by Pierre Jérôme and Stéphane Bette, SpineGuard is an innovative
company deploying its proprietary radiation-free real time sensing
technology DSG® (Dynamic Surgical Guidance) to secure and
streamline the placement of implants in the skeleton. SpineGuard
designs, develops and markets medical devices that have been used
in over 80,000 surgical procedures worldwide. Sixteen studies
published in peer-reviewed scientific journals have demonstrated
the multiple benefits DSG® offers to patients, surgeons, surgical
staff and hospitals. Building on these solid fundamentals and
several strategic partnerships, SpineGuard has expanded its
technology platform in a disruptive innovation: the « smart »
pedicle screw launched late 2017 and is broadening the scope of
applications in dental implantology and surgical robotics. DSG® was
co-invented by Maurice Bourlion, Ph.D., Ciaran Bolger, M.D., Ph.D.,
and Alain Vanquaethem, Biomedical Engineer.
For further information, visit www.spineguard.com
Disclaimer The SpineGuard securities may not be offered
or sold in the United States as they have not been and will not be
registered under the Securities Act or any United States state
securities laws, and SpineGuard does not intend to make a public
offer of its securities in the United States. This is an
announcement and not a prospectus, and the information contained
herein does and shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of the
securities referred to herein in the United States in which such
offer, solicitation or sale would be unlawful prior to registration
or exemption from registration.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210408005480/en/
SpineGuard Pierre Jérôme Chairman and CEO Tél. : +33 1 45
18 45 19 p.jerome@spineguard.com
Manuel Lanfossi Chief Financial Officer
m.lanfossi@spineguard.com
Europe / NewCap Investor Relations & Financial
Communication Mathilde Bohin / Pierre Laurent Tél. : +33 1 44 71 94
94 spineguard@newcap.eu
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