Spectral announces third quarter 2012 results

TORONTO, Nov. 14, 2012 /CNW/ - Spectral Diagnostics Inc., (TSX:SDI) (OTCQX: DIAGF), a Phase III company developing the first theranostic treatment for patients with septic shock, today announced its financial results for the third quarter ended September 30, 2012.

Third Quarter Highlights:

  • Announced that the U.S. Food and Drug Administration approved an amended protocol for Spectral's Phase III EUPHRATES trial, which will now have two planned interim analyses instead of one. Spectral requested the amendment, including the strategy for two interim analyses. The first interim analysis, for safety, will occur when 76 randomized patients have been followed for 28 days. Seventy three patients have been randomized into the trial at 25 sites as of October 31, 2012. The second interim analysis - anticipated in the first half of 2014 - will occur after 184 randomized patients have been followed for 28 days. At the second analysis, the Data Safety Monitoring Board will advise Spectral on the trial's safety and efficacy. Stopping rules for efficacy are included in the second interim analysis.
  • Continued enrolling patients into the Company's Phase III EUPHRATES trial at a per site rate that is higher than previous sepsis trials. Directed by the Company's Endotoxin Activity Assay (EAA™), which is the only FDA-cleared diagnostic for the risk of developing sepsis, Spectral's EUPHRATES trial is currently targeted to enroll 306 evaluable patients at up to 60 sites in North America. Contingent on maintaining current enrolment rates and timely site start ups, the trial should be fully enrolled by the end of 2014.
  • Announced an exclusive distribution agreement with Toray International Italy S.r.l. - a subsidiary of Toray Industries, Inc. - to sell the Company's Endotoxin Activity Assay in combination with Toraymyxin in Saudi Arabia and Turkey. The expansion of commercial jurisdictions with Toray further confirms the outstanding market opportunity for the Company's unique theranostic treatment for septic shock.
  • Concluded the reporting period with approximately $12.2 million in cash, cash equivalents and short- term investments.

"As the enrollment of patients in our Phase III trial progresses, we are closing in on a number of inflection points for our current and prospective investors," said Dr. Paul Walker, President and CEO of Spectral Diagnostics. "In addition, there continues to be a significant unmet medical need in the area of severe sepsis, and we feel we are at the forefront of meeting that need with our theranostic treatment."

Financial Review

Revenue for the three months ended September 30, 2012 was $667,000 compared to $489,000 for the same period in the preceding year. For the nine months ended September 30, 2012 revenue was $1,942,000 compared to $1,802,000 for the same period in 2011.

For the second quarter ended September 30, 2012, the Company reported a loss of $2,077,000 compared to a loss of $1,632,000 for the corresponding period in 2011. For the nine months ended September 30, 2012, Spectral reported a loss of $6,476,000 compared to $4,807,000 for the same period in 2011. The Company's loss was greater for the three and nine months of 2012 due to higher costs for its Phase III EUPHRATES trial.

Cash, cash equivalents and short-term investments on hand at September 30, 2012 were $12.2 million. Cash was used during the quarter ended September 30, 2012 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, 2012.

About Spectral Diagnostics
Spectral is a Phase III company seeking U.S. FDA approval for its lead theranostics product for the treatment of severe sepsis with 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 Japan and Europe, and has been used safely and effectively in more than 100,000 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. 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, and on the OTCQX under the symbol DIAGF. 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 Statement of Financial Position
(in thousands of Canadian dollars)
    September 30
  December 31
    $   $
    Unaudited   Audited
Current assets        
Cash and cash equivalents   7,094   13,470
Short-term investment   5,137   5,086
Trade and other receivables   611   515
Inventories   213   295
Prepayments   162   407
    13,217   19,773
Non-current assets        
Property, plant and equipment   488   419
Intangible assets   441   459
    929   878
Total assets   14,146   20,651
Current liabilities        
Trade and other  payables   1,507   1,610
Deferred revenue   26   102
Total liabilities   1,533   1,712
Share capital   27,101   27,101
Contributed surplus   3,864   3,864
Other equity reserves   8,232   8,082
Deficit   (26,584)   (20,108)
Total equity   12,613   18,939
Total liabilities and equity   14,146   20,651

Spectral Diagnostics Inc.
Condensed Interim Statement of Loss and Comprehensive Loss
For the nine months ended September 30, 2012 and 2011
(in thousands of Canadian dollars, except for share and per share data)
    Three months ended    Nine  months ended
    September  30   September 30
    2012 2011   2012 2011
    $ $   $ $
Revenue   667 489   1,942 1,802
Other income   25 19   91 69
Changes in inventories of finished goods and
work- in-process
  64 63   208 201
Raw materials and consumables used   135 59   344 176
Employee benefits   598 575   2,004 1,988
Consulting and professional fees   1,352 700   3,598 2,047
Management services   173 375   923 1,125
Regulatory and investor relations   112 68   334 205
Travel and entertainment   153 176   612 422
Depreciation and amortization   57 49   163 263
Foreign exchange (gain)loss   16 (18)   20 (1)
Other expenses   127 110   355 301
    2,787 2,157   8,561 6,727
Operating loss   (2,095) (1,649)   (6,528) (4,856)
Finance  income   18 17   52 49
Loss and comprehensive loss for the period   (2,077) (1,632)   (6,476) (4,807)
Basic and diluted loss per common share   (0.02) (0.02)   (0.06) (0.06)
Weighted average number of common shares

Spectral Diagnostics Inc.
Condensed Interim Statement of Changes in Equity
(in thousands of Canadian dollars, except number of shares)
    Issued capital   Contributed
Warrants Deficit Total  equity
    Number $ $ $ $ $ $
Balance, January 1, 2011    80,550,061 17,538 3,696 2,722 5,311 (13,395) 15,872
Loss and comprehensive loss for
the period
  - - - - - (4,807) (4,807)
Private placement   33,333,333 9,607 - - - - 9,607
Share-based compensation   - - - 188 - - 188
Balance, September  30, 2011   113,883,394 27,145 3,696 2,910 5,311 (18,202) 20,860
Balance, January 1, 2012    113,883,394 27,101 3,864 2,939 5,143 (20,108) 18,939
Loss and comprehensive loss for
the period
  - - - - - (6,476) (6,476)
Share-based compensation   - - - 150 - - 150
Balance, September 30, 2012   113,883,394 27,101 3,864 3,089 5,143 (26,584) 12,613

Spectral Diagnostics Inc.
Condensed Interim Statement of Cash Flows
For the nine months ended September  30, 2012 and 2011
(in thousands of Canadian dollars)
    Nine months ended
    September 30   September 30
    2012   2011
    $   $
Cash flow provided by (used in)        
Operating activities        
Loss and comprehensive loss for the period   (6,476)   (4,807)
Adjustments for:        
  Depreciation on property, plant, and equipment   145   127
  Amortization of intangible assets   18   136
  Share-based compensation   150   188
Changes in items of working capital :        
  Trade and other receivables   (96)   (36)
  Inventories   82   (31)
  Prepayments   245   (35)
  Trade and other payables   (103)   (116)
  Deferred revenue   (76)   (76)
Net cash used in operating activities   (6,111)   (4,650)
Investing activities        
Property, plant and equipment expenditures   (214)   (40)
Redemption of short-term investment   5,086    
Purchase of short-term investment   (5,137)    
Short-term investment   -   (32)
Net cash used in investing activities   (265)   (72)
Financing activities        
Private placement   -   9,607
Net cash provided by financing activities   -   9,607
Decrease in cash and cash equivalents   (6,376)   4,885
Cash and cash equivalents, beginning of period   13,470   10,311
Cash and cash equivalents, end of period   7,094   15,196



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

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