TORONTO, Canada – August 14, 2020 – Spectral Medical Inc., (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, 2020.
Financial Review
Revenue for the three-months ended June 30, 2020 was $517,000 compared to $1,041,000 for the same three-month period last year. For the six-months ended June 30, 2020, revenue was $1,148,000 compared to $1,588,000 in the first half of 2019. The majority of the decrease is due to the timing of orders for product revenue and the non-recurring technology transfer revenue. This was mitigated by an increase in royalty revenue, and revenue from the exclusive distribution agreement with Baxter International Inc. (“Baxter”).
Operating costs for the quarter-ended June 30, 2020, were $2,466,000 compared to $2,093,000 for the corresponding period in 2019. Operating costs for the six-months ended June 30, 2020 were $6,522,000, an increase of $2,889,000 from $3,633,000 for the six-month period ended June 30, 2019. The increase is a result of the ramping up of the Company’s Phase III clinical trial, whereby costs vary depending on the timing and level of patient enrolment. In addition, there was an increase in share compensation expense, due to options being granted earlier in 2020 that had higher share option valuations compared to the share option valuation for share options issued in 2019. Salaries and benefits also increased by approximately $189,000 for the six-months ended June 30, 2020 due to the addition of the Company’s CFO, who joined in August, 2019. Furthermore, as previously stated, the Company incurred one-time costs associated with a legacy financial advisory services agreement relating to the commercial transaction agreement completed with Baxter and the withdrawn prospectus offering in March 2020. Lastly, there was a 4% decline in the CAD/USD exchange rate in the period from March 31, 2020 to June 30, 2020, which resulted in a foreign exchange loss in the second quarter, reversing the foreign exchange gain recorded in the first quarter of 2020. The CAD/USD exchange rate was relatively consistent throughout 2019.
The Company continues to maintain a low cost operating structure for its base business operations.
For the three-months ended June 30, 2020, the Company reported a loss of $1,949,000 ($0.009 loss per share) compared to a loss of $1,052,000 ($0.005 loss per share) for the three-months ended June 30, 2019. Loss for the six-months ended June 30, 2020 was $5,374,000 ($0.024 loss per share) compared to a loss of $2,045,000 ($0.009 loss per share) for the same period last year.
The Company concluded the second quarter of 2020 with cash of $10,230,000 compared to $1,435,000 cash on hand as of December 31, 2019. This cash balance reflects the non-refundable US$5,000,000 (CA$6,629,000) upfront rights payment from Baxter, which was received in the first quarter, as well as the net proceeds of $4,397,000 received on the public offering, reduced by operating cash outflows. Based on current operating plans, Spectral expects to have cash to fund its 2020 business plan.
The total number of common shares outstanding for the Company was 236,605,745 as at June 30, 2020.
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.