Spectral Announces Third Quarter Results

TORONTO, Nov. 10, 2011 /CNW/ - Spectral Diagnostics Inc., (TSX:SDI), a Phase III company developing the first theranostic treatment for patients with severe sepsis and septic shock, today announced its financial results for the third quarter ended September 30, 2011.

Third Quarter Highlights:

  • Received approval from the U.S. FDA to increase the total number of clinical sites in its EUPHRATES trial from the current 15, to a total of 30. International sites may now also be included in the trial. 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 first theranostics trial in the area of sepsis. The trial is targeted to enrol approximately 360 patients at 30 U.S. and Canadian sites over a period of up to 30 months, with interim analysis expected at the midpoint of the trial around the end of 2012.

  • In conjunction with Medwell Capital Corp. (TSX-V: MWC), announced that the two companies completed their plan of arrangement pursuant to which Medwell acquired a further 33,333,333 Spectral common shares for $10 million, at a subscription price of $0.30 per share.  Pursuant to the arrangement, Medwell also distributed 54,282,834 Spectral Shares to its shareholders, representing approximately $16.3 million in value based on the $0.30 Spectral Share subscription price.

  • Announced the publication of a study utilizing Spectral's Endotoxin Activity Assay (EAA™) to identify children at high risk of complications from open heart surgery. The study, which was published in the online version of the American Journal of Respiratory and Critical Care Medicine (AJRCCM), showed that intestinal injury, endotoxemia and activation of endotoxin signaling pathways are prevalent in children with congenital heart disease.

  • Concluded the reporting period with approximately $20 million in cash and short term investments.

  • Subsequent to quarter end, announced it is expanding its U.S. Phase III EUPHRATES trial to Canadian clinical trial sites.

"With Eli Lilly's recent worldwide withdrawal of Xigris, its product for the treatment of severe sepsis, regrettably there are few effective therapeutic treatment options available for the more than 250,000 patients diagnosed with severe sepsis and septic shock in the U.S. each year," said Dr. Paul Walker, President and CEO of Spectral Diagnostics. "We worked diligently in our third quarter to fill that market need by continuing to move our fully funded, Phase III EUPHRATES trial closer to completion."

Financial Review

Revenues for the three months ended September 30, 2011 were $489,000 compared to $759,000 for the same period in 2010. For the nine months ended September 30, 2011, revenues were $1,802,000 compared to $2,269,000 for the same prior year period. Revenues were lower in the first nine months of 2011 primarily due to a decline in sales of the Company's EAA™ diagnostic and related instrumentation resulting from the timing and terms of certain renegotiated distribution contracts. In addition, U.S. denominated royalty revenues were impacted by the strengthening Canadian dollars.

For the three months ended September 30, 2011, the Company reported a loss of $1,615,000 ($0.02 per share), compared to $1,257,000 for the corresponding period in 2010. For the nine months ended September 30, 2011, the Company reported a loss of $4,773,000 or ($0.06) per share, compared to a loss of $4,488,000 or ($.07) per share for the corresponding period in 2010.

Cash, cash equivalents and short-term investments on hand at September 30, 2011 were $20,249,000, compared to $15,332,000 at December 31, 2010. Cash was used during the nine month period ended September 30, 2011 to fund operations and for working capital purposes.

The total number of shares outstanding for the Company was 113,883,394 as at September 30, 2011.

About Spectral Diagnostics

Spectral is a Phase III company seeking U.S. FDA approval for its lead theranostics product for the treatment of septic shock. Toraymyxin 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 first theranostics trial in the area of sepsis.

Toraymyxin has been approved for therapeutic use in 18 countries, and has been used safely and effectively in more than 80,000 patients to date. In March, 2009, Spectral obtained the exclusive development and commercial rights in the U.S. for Toraymyxin, and in November, 2010, signed an exclusive distribution agreement for this product in Canada, where it is approved for sale by Health Canada. More than 250,000 patients are diagnosed with severe sepsis and septic shock in North America each year, representing a greater than $1 billion market opportunity for Spectral. Spectral is listed on the Toronto Stock Exchange under the symbol SDI. 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 Diagnostics Inc.
Condensed Interim Financial Statements

September 30, 2011
(Unaudited)

These unaudited condensed interim financial statements have been prepared by management of Spectral Diagnostics Inc. and have not been reviewed by the Company's auditors.

Spectral Diagnostics Inc.
Condensed Interim Statement of Financial Position
(unaudited)


(in thousands of Canadian dollars)

      September 30 2011   December 31 2010
    $   $
         
Assets        
Current assets        
Cash and cash equivalents   15,196   10,311
Short-term investment   5,053   5,021
Trade and other  receivables   631   595
Inventories   240   209
Prepayments   66   31
    21,186   16,167
Non-current assets        
Property, plant and equipment   439   526
Intangible assets   466   602
    905   1,128
         
Total assets   22,091   17,295
         
Liabilities        
Current liabilities        
Trade and other payables   1,206   1,322
Deferred revenue   25   101
Total liabilities   1,231   1,423
         
Equity        
Share capital   27,145   17,538
Contributed surplus   3,696   3,696
Other equity reserves   8,187   8,033
Deficit   (18,168)   (13,395)
    20,860   15,872
         
Total liabilities and equity   22,091   17,295

 

Spectral Diagnostics Inc.
Condensed Interim Statement of Loss and Comprehensive Loss
For the three and nine months ended September 30, 2011 and 2010
(unaudited)


(in thousands of Canadian dollars, except for share and per share data)

     Three months ended
September 30
  Nine  months ended
September 30
    2011 2010   2011 2010
    $ $   $ $
             
Revenue   489 759   1,802 2,269
               
Other income   19 22   69 30
             
Expenses            
Changes in inventories of finished goods and work in progress   63 102   224 303
Raw materials and consumables used   59 68   153 157
Employee benefits   558 503   1,954 2,369
Consulting and professional fees   700 585   2,040 1,699
Management services   375 250   1,125 750
Regulatory and investor relations   68 63   212 171
Travel and entertainment   176 146   422 395
Depreciation and amortization   49 162   263 477
Foreign exchange (gain)loss   (18) 35   (1) 48
Other expenses   110 97   301 309
    2,140 2,011   6,693 6,678
             
Operating loss   (1,632) (1,230)   (4,822) (4,379)
             
Interest on convertible notes payable   - (41)   - (123)
Investment income   17 14   49 14
             
Loss and comprehensive loss for the period   (1,615) (1,257)   (4,773) (4,488)
             
             
Basic and diluted loss per common share   (0.02) (0.02)   (0.06) (0.07)
             
Weighted average number of common shares outstanding   88,158,757 75,844,484   83,114,164 64,281,721

 

Spectral Diagnostics Inc.
Condensed Interim Statement of Changes in Equity
For the nine months ended September 30, 2011 and 2010
(unaudited)


(in thousands of Canadian dollars, except number of shares)

    Issued capital Contributed surplus Other equity reserves Deficit Total  equity
    Number $ $ $ $ $
Balance, January 1, 2010    24,118,424 2,524 3,696 2,098 (6,897) 1,421
Private placement   48,750,000 12,465   5,143   17,608
Settlement of convertible notes payable   2,890,625 1,156       1,156
Stock options exercised   142,500 49       49
Loss and comprehensive loss for the period           (4,488) (4,488)
Share-based compensation         792   792
Balance, September 30, 2010   75,901,549 16,194 3,696 8,033 (11,385) 16,538
Settlement of convertible notes payable   4,648,512 1,344       1,344
Loss and comprehensive loss for the period           (2,010) (2,010)
Balance, December 31, 2010   80,550,061 17,538 3,696 8,033 (13,395) 15,872
Loss and comprehensive loss for the period           (4,773) (4,773)
Private placement        33,333,333 9,607       9,607
Share-based compensation         154   154
Balance, September 30, 2011   113,883,394 27,145 3,696 8,187 (18,168) 20,860

 

Spectral Diagnostics Inc.
Condensed Interim Statement of Cash Flows
For the nine months ended September  30, 2011 and 2010
(unaudited)


(in thousands of Canadian dollars)


    Nine months ended September 30
    2011 2010
    $ $
       
Cash flow provided by (used in)      
       
Operating activities      
Loss and comprehensive loss for the period   (4,773) (4,488)
   Adjustments for:      
          Depreciation on property, plant, and equipment   127 113
          Amortization of intangible assets   136 364
         Share-based compensation   154 792
           Interest on convertible notes payable   - 123
  Changes in items of working capital :      
      Trade and other receivables   (36) 27
     Inventories   (31) (128)
      Prepayments   (35) (40)
     Trade and other payables   (116) (306)
      Deferred revenue   (76) (78)
Net cash generated from operating activities   (4,650) (3,621)
       
Investing activities      
Short-term investment   (32) (5,000)
Property, plant and equipment expenditures   (40) (125)
Intangible assets expenditures   - (502)
Net cash generated from financing activities   (72) (5,627)
       
Financing activities      
Private placement   9,607 17,608
Stock options exercised   - 49
Net cash generated from financing activities   9,607 17,657
Increase in cash and cash equivalents   4,885 8,409
Cash and cash equivalents, beginning of period   10,311 2,944
Cash and cash equivalents, end of period   15,196 11,353



 

 

 

SOURCE Spectral Diagnostics Inc.

For further information:

Anthony Businskas
Executive Vice President and CFO
416-626-3233 ext. 2200
Adam Peeler
Investor Relations
TMX Equicom
416-815-0700 ext. 225
apeeler@equicomgroup.com

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Spectral Diagnostics Inc.

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