Spectral Announces Second Quarter Results and Provides Corporate Update
12 Aug 2022
Financial StatementAcquisition
Spectral Announces Second Quarter Results and Provides Corporate Update
TORONTO, Aug. 12, 2022 (GLOBE NEWSWIRE) -- 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 second quarter ended June 30, 2022 and provided a corporate update.
Chris Seto, CEO of Spectral Medical, stated, “We continue to advance our Tigris trial, evaluating PMX for endotoxemia and septic shock. To date, we have randomized 40 patients out of the total 150 patients required and we have 14 active trial sites enrolling patients. We are also working with the FDA in order to potentially permit an increase in the maximum number of participating sites from 15 to 25 in order to accelerate patient enrollment. Based on the encouraging data received thus far, we believe PMX has the potential to address a significant unmet medical need that is currently estimated at $1.6 billion in the United States alone, as well as provide hope for the approximately 120,000 patients each year who suffer from endotoxemic septic shock with an estimated 50% mortality rate. Importantly, the FDA recently granted PMX Breakthrough Device Designation, which is expected to help expedite the regulatory review process. We are also working closely with Baxter, our exclusive commercial partner in the U.S. and Canada, in order to prepare for commercialization.”
“During the quarter, we appointed Sam Amory as Dialco President. Sam brings decades of experience in the medical device and dialysis fields. Sam has overseen a number of new product launches and built out successful sales teams, all of which we believe will positively impact the development of our pipeline. Following his appointment, our SAMI device was selected by ARC Dialysis, the largest inpatient dialysis provider in South Florida, for inpatient dialysis services. More recently, our SAMI device was selected and added to the approved products list for the United States Department of Veterans Affairs (VA), which provides healthcare services to veterans. Our selection is strong validation of SAMI’s safety, efficacy, and ease of use. Overall, we are making significant progress, and we intend to build upon these accomplishments throughout the remainder of the year,” concluded, Mr. Seto.
Financial Review
Revenue for the three-months ended June 30, 2022 was $286,000 compared to $559,000 for the same three-month period in the prior year. For the six-months ended June 30, 2022, revenue was $770,000 compared to $1,305,000 for the same period in 2021, representing a decrease of $535,000, or 41%. The decrease in product revenue was mainly due to the timing of orders in addition to supply chain constraints related to sourcing materials for the EAA diagnostic device.
Operating costs for the three-months ended June 30, 2022, were $3,241,000, compared to $3,080,000 for the same period in the preceding year, an increase of $161,000, or 5%. For the six-months ended June 30, 2022, operating costs were $6,413,000 compared to $5,471,000 for the same period in 2021, an increase of $942,000.
While the Company continues to maintain a low cost operating structure for its base business operations, it anticipates its operating costs to increase throughout 2022 as Spectral’s Tigris trial enrolment is expected to increase, combined with incremental costs associated with Dialco’s upcoming usability trial for DIMI and the increase in field resources for the marketing and commercialization activities of its RRT devices.
Loss for the three-months ended June 30, 2022 was $2,955,000 ($0.011 per share) compared to a loss of$2,521,000 ($0.010 per share) for the same quarter last year. The loss for the six-months ended June 30, 2022 was $5,643,000 ($0.021 loss per share) compared to a loss of $4,166,000 ($0.017 loss per share) for the first six months of 2021.
The Company concluded the second quarter of 2022 with cash of $3,466,000 compared to $8,890,000 cash on hand as of December 31, 2021.
The total number of common shares outstanding for the Company was 268,154,992 at June 30, 2022.
Corporate Highlights During & Subsequent to the Second Quarter Ended June 30, 2022
The Company’s primary focus continues to be working towards obtaining FDA approval of the PMX treatment; developing the SAMI market; and obtaining regulatory clearance and commercialization of the DIMI platform for home and peritoneal dialysis use.
Tigris
PMX: FDA Breakthrough Device Designation
On July 11, 2022, the Company announced that the FDA granted Breakthrough Device designation for the Company’s PMX device. The goal of the Breakthrough Device Program is to provide patients and health care providers with timely access to medical devices by speeding up their development, assessment, and review, while preserving the statutory standards for premarket approval, 510(k) clearance, and De Novo marketing authorization, consistent with the Agency’s mission to protect and promote public health.
Total of 40 patients randomized to date out of the 150 total patients to be enrolled in the Tigris trial. Patient screening activities at the sites is increasing and results to date of those enrolled in the study continue to exceed expectations.
Recently, University of Michigan randomized their first patient and the clinical staff at U of M witnessed immediate improvement in the patient’s status following administration of PMX and was transferred out of the intensive care unit sooner than expected with full discharge from the hospital in under two weeks from admission.
Tigris Sites
There are currently 14 Tigris sites onboarded and actively enrolling patients. The Company is continuing to consider additional clinical trial sites to allow for the replacement of low performing sites. This would provide maximum potential from fifteen active sites to be screening and enrolling. In addition, we are seeking FDA approval to increase the maximum number of sites from 15 to 25. If permitted we believe this would further accelerate patient enrollment.
Timing
The Company continues to focus on finalizing the Tigris trial within the reasonably shortest timelines. Assuming there is no significant recurrence of COVID-19 cases in our Tigris site ICUs, the Company targets finalizing its Tigris trial enrollment in mid-2023.
In 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 labelling 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 Tigris study, which provides another tool to support enrollment.
The Company has on boarded 4 EDEN sites and enrolled 17 patients into the observational study.
Dialco
DIMI Usability Trial
The Dialco team is focused on the DIMI usability trial to obtain FDA clearance for in home use and expects first patient enrollment in Q422 with study duration of approximately 18 - 24 months. We continue to work towards formalizing participating trial sites, however our progress continues to experience delays due in part to staffing in dialysis clinics still lagging in the wake of COVID-19, and availability of eligible clinics and hospitals with home dialysis programs
SAMI 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. Recently, ARC Dialysis, the largest inpatient dialysis provider in South Florida, selected the SAMI device for inpatient dialysis services following an extensive clinical evaluation of the technology. In addition, the SAMI device was selected and added to the approved products list for the United States Department of Veterans Affairs (VA), which provides healthcare services to veterans. The Company expects to continue to generate revenue in 2022 pursuant to its existing commercial arrangements for SAMI machines and disposables.
On May 16, 2022, the Company announced the appointment of Samuel Amory as President of Dialco. Mr. Amory is responsible for the operations of Dialco, including the commercialization of its SAMI and DIMI devices. Mr. Amory brings decades of experience in the medical device and dialysis fields. Since 2005, he served as Vice President of the US Renal Therapies division at B. Braun Medical, a leader in fluid therapy and pain management.
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, 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: Blair McInnisAli MahdaviDavid Waldman/Natalya RudmanCFOCapital Markets & Investor RelationsUS Investor RelationsSpectral Medical Inc.Spinnaker Capital Markets Inc.Crescendo Communications, LLC416-626-3233416-962-3300212-671-1020bmcinnis@spectraldx.comam@spinnakercmi.comedt@crescendo-ir.com
Condensed Interim Consolidated Statements of Financial Position
In CAD (000s)
June 30,
2022 December 31,
2021 $ $ Assets Current assets Cash 3,466 8,890 Trade and other receivables 100 205 Inventories 463 293 Prepayments and other assets 1,141 875 5,170 10,263 Non-current assets Right-of-use-asset 485 532 Property and equipment 382 532 Intangible asset 219 228 Total assets 6,256 11,555 Liabilities Current liabilities Trade and other payables 1,410 1,522 Current portion of contract liabilities 668 689 Current portion of lease liability 94 92 2,172 2,303 Non-current liability Lease liability 443 490 Non-current portion of contract liabilities 4,345 4,679 Total liabilities 6,960 7,472 Shareholders’ (deficiency) equity Share capital 84,509 84,357 Contributed surplus 8,773 7,985 Share-based compensation 8,688 7,984 Warrants 1,463 2,251 Deficit (104,137)(98,494)Total shareholders’ (deficiency) equity (704)4,083 Total liabilities and shareholders’ equity 6,256 11,555
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
In CAD (000s), except for share and per share data
(Unaudited)
Three-
months
ended
June 30,
2022 Three-
months
ended
June 30,
2021 Six-months
ended
June 30,
2022 Six-months
ended
June 30,
2021 $ $ $ $ Revenue 286 559 770 1,305 Expenses Changes in inventories of finished goods and work-in-process 47 106 83 172 Raw materials and consumables used 177 90 289 165 Salaries and benefits 1,303 1,554 3,096 2,814 Consulting and professional fees 1,018 618 1,696 1,162 Regulatory and investor relations 140 138 320 274 Travel and entertainment 118 34 203 60 Facilities and communication 155 76 245 146 Insurance 119 97 238 194 Depreciation and amortization 71 72 144 152 Interest expense on lease liability 6 7 13 14 Foreign exchange loss 10 53 12 94 Other (income) expense (6)66 (9)90 Write down of property and equipment to fair value 83 174 83 174 Gain on disposal of property and equipment - (5)- (40) 3,241 3,080 6,413 5,471 Loss and comprehensive loss for the period (2,955)(2,521)(5,643)(4,166) Basic and diluted loss per common share (0.011)(0.010)(0.021)(0.017)Weighted average number of common shares outstanding – basic and diluted 268,147,683 243,543,981 268,064,079 240,323,764
Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
In CAD (000s)
(Unaudited)
Number of shares Share Capital Contributed surplus
Share-based compensation Warrants Deficit Total Shareholders’ (deficiency) equity $ $ $ $ $ $ Balance, January 1, 2021 236,755,745 71,870 7,981 6,771 2,418 (89,709)(669)Warrants exercised 7,457,330 4,983 - - (1,627)- 3,356 Warrants expired - - 4 - (4)- - Loss and comprehensive loss for the period - - - - - (4,166)(4,166)Share-based compensation - - - 1,007 - - 1,007 Balance, June 30, 2021 244,213,075 76,853 7,985 7,778 787 (93,875)(472)Bought deal offering 23,530,000 7,406 - - 1,464 - 8,870 Share options exercised 143,333 98 - (46)- - 52 Loss and comprehensive loss for the period - - - - - (4,619)(4,619)Share-based compensation - - - 252 - - 252 Balance, December 31, 2021 267,886,408 84,357 7,985 7,984 2,251 (98,494)4,083
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)- (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)
Condensed Interim Consolidated Statements of Cash Flows
In CAD (000s)
(Unaudited)
Six-months ended
June 30, 2022 Six-months ended
June 30, 2021 $ $ Cash flow provided by (used in) Operating activities Loss and comprehensive loss for the period (5,643)(4,166)Adjustments for: Depreciation on right-of-use asset 47 47 Depreciation on property and equipment 88 96 Amortization of intangible asset 9 9 Interest expense on lease liability 13 14 Unrealized foreign exchange (gain) loss on cash (7)105 Share-based compensation 788 1,007 Write down of property and equipment to fair value 83 174 Gain on disposal of property and equipment - (40)Changes in items of working capital: Trade and other receivables 105 (31)Inventories (170)52 Prepayments and other assets (266)(344)Trade and other payables (112)(948)Contract liabilities (355)(317)Net cash used in operating activities (5,420)(4,342) Investing activities Proceeds on disposal of property and equipment - 77 Property and equipment acquisitions (21)(367)Net cash used in investing activities (21)(290) Financing activities Lease liability payments (58)(56)Share options exercised 68 - Warrants exercised - 3,356 Net cash provided by financing activities 10 1,410 Decrease in cash (5,431)(1,332)Effects of exchange rate changes on cash 7 (105)Cash, beginning of period 8,890 5,807 Cash, end of period 3,466 4,370
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