Spectral Medical Inc.
TSX : EDT
OTCQX : EDTXF

Spectral Medical Inc.

August 12, 2016 08:00 ET

Spectral Announces Second Quarter Results

TORONTO, ONTARIO--(Marketwired - Aug. 12, 2016) - Spectral Medical Inc., (TSX:EDT) (OTCQX:EDTXF), a Phase III company developing the first treatment for patients with septic shock guided by a companion diagnostic, today announced its unaudited financial results for the second quarter ended June 30, 2016.

Financial Review

Revenue for the three months ended June 30, 2016 was $870,000 compared to $818,000 for the same period in the preceding year. For the six months ended June 30, 2016 revenues were $1,932,000 compared to $1,695,000 in the first half of 2015. Revenues for both the quarter and the year were consistent with prior year levels and this trend is expected to continue for the remainder of the year.

Operating costs for the quarter ended June 30, 2016 amounted to $4,393,000 compared to $3,242,000 in 2015. Operating costs for the six months ended were $8,462,000, an increase of $2,088,000 from $6,374,000 for the first six months of 2015. The increase is almost entirely attributable to higher costs for the EUPHRATES trial, resulting from completion of patient enrolment, collection of data, and preparation of its final submission to the U. S. Food and Drug Administration (FDA). Trial related expenses are expected to decline significantly starting in the third quarter. Apart from clinical trial activities, the Company continues to maintain a low cost operating structure for its base business operations.

For the three months ended June 30, 2016, the Company reported a loss of $3,498,000 ($0.02 per share) compared to a loss of $2,400,000 ($0.01 per share) for the three months ended June 30, 2015. The loss for the six months ended June 30, 2016 was $6,492,000 ($0.03 per share) compared to $4,722,000 ($0.03 per share) for the same six month period in the prior year.

The Company concluded the second quarter of 2016 with cash on hand of $10,044,000 compared to $6,369,000 as of December 31, 2015.

The total number of shares outstanding for the Company was 206,733,209 as at June 30, 2016.

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. Directed by the Company's Endotoxin Activity Assay (EAA™), the only FDA cleared diagnostic for the risk of developing sepsis, Spectral's EUPHRATES trial is the world's only active and most innovative Phase III study in the area of septic shock.

PMX has been approved for therapeutic use in Japan and Europe, and has been used safely and effectively on more than 150,000 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 350,000 patients are diagnosed with severe sepsis and septic shock in North America each year, representing a greater than $3 billion market opportunity for Spectral. Spectral is listed on the Toronto Stock Exchange under the symbol EDT, and on the OTCQX under the symbol EDTXF. 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.

Spectral Medical Inc.
Condensed Interim Consolidated Statements of Financial Position
(Unaudited)
(in thousands of Canadian dollars)
June 30 December 31
2016 2015
$ $
Assets
Current assets
Cash 10,044 6,369
Trade and other receivables 752 630
Inventories 436 243
Prepayments and other assets 264 141
11,496 7,383
Non-current assets
Property and equipment 714 717
Intangible asset 347 359
1,061 1,076
Total assets 12,557 8,459
Liabilities
Current liabilities
Trade and other payables 3,387 2,850
Deferred revenue 105 176
Total liabilities 3,492 3,026
Equity
Share capital 62,915 53,058
Contributed surplus 7,849 7,849
Other equity reserves 3,990 3,723
Deficit (65,689 ) (59,197 )
Total equity 9,065 5,433
Total liabilities and equity 12,557 8,459
Spectral Medical Inc.
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
For the six months ended June 30, 2016 and 2015
(Unaudited)
(in thousands of Canadian dollars, except for share and per share data)
Three months ended Six months ended
June 30 June 30
2016 2015 2016 2015
$ $
Revenue 870 818 1,932 1,695
Expenses
Changes in inventories of finished goods and work- in-process 58 56 83 80
Raw materials and consumables used 95 107 298 207
Employee benefits 969 906 2,210 1,910
Product development 67 - 67 -
Consulting and professional fees 2,555 1,670 4,610 3,242
Regulatory and investor relations 191 138 326 308
Travel and entertainment 261 189 470 392
Depreciation and amortization 49 44 91 87
Foreign exchange loss (gain) 15 4 30 (13 )
Other expenses 133 128 277 252
4,393 3,242 8,462 6,465
Operating loss (3,523 ) (2,424 ) (6,529 ) (4,770 )
Finance income 25 24 38 48
Loss and comprehensive loss for the period (3,498 ) (2,400 ) (6,492 ) (4,722 )
Basic and diluted loss per common share (0.02 ) (0.01 ) (0.03 ) (0.03 )
Weighted average number of commonshares outstanding 206,733,209 190,803,548 202,334,393 185,307,431
Spectral Medical Inc.
Condensed Interim Consolidated Statements of Changes in Equity
For the six months ended June 30, 2016 and 2015
(Unaudited)
(in thousands of Canadian dollars)
Issued capital Contributed
surplus
Share-based
compensation
Warrants Deficit Total equity
Number $ $ $ $ $ $
Balance, January 1, 2015 179,737,241 46,879 7,849 3,542 - (49,450 ) 8,820
Private placement 11,049,464 6,021 - - - 6,021
Shares repurchased under NCIB (90,000 ) (23 ) (32 ) (55 )
Share options exercised 355,950 231 - (99 ) - 132
Loss and comprehensive loss for the period - - - - - (4,722 ) (4,722 )
Share-based compensation - - - 228 - - 228
Balance, June 30, 2015 191,052,655 53,108 7,849 3,671 - (54,204 ) 10,424
Balance, January 1, 2016 190,771,405 53,058 7,849 3,723 - (59,197 ) 5,433
Bought deal prospectus offering 15,106,804 9,399 - - - - 9,399
Share options exercised 855,000 458 - (192 ) - - 266
Loss and comprehensive loss for the period - - - - - (6,492 ) (6,492 )
Share-based compensation - - - 459 - - 459
Balance, June 30, 2016 206,733,209 62,915 7,849 3,990 - (65,689 ) 9,065
Spectral Medical Inc.
Condensed Interim Consolidated Statements of Cash Flows
For the six months ended June 30, 2016 and 2015
(Unaudited)
(in thousands of Canadian dollars)
Six months ended
2016 2015
$ $
Cash flow provided by (used in)
Operating activities
Loss and comprehensive loss for the period (6,492 ) (4,722 )
Adjustments for:
Depreciation on property and equipment 79 75
Amortization of intangible asset 12 12
Share-based compensation 459 228
Loss on disposal of property and equipment 4
Changes in items of working capital :
Trade and other receivables (122 ) (197 )
Inventories (193 ) (101 )
Prepayments and other assets (123 ) (135 )
Trade and other payables 537 (110 )
Deferred revenue (71 ) (75 )
Net cash used in operating activities (5,910 ) (5,025 )
Investing activities
Property and equipment expenditures (80 ) (191 )
Net cash used in investing activities (80 ) (191 )
Financing activities
Bought deal prospectus offering 9,399 -
Private placement - 6,021
Share options exercised 266 132
Shares repurchased under NCIB - (55 )
Net cash provided by financing activities 9,665 6,098
Increase in cash 3,675 882
Cash, beginning of period 6,369 10,054
Cash, end of period 10,044 10,936

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