Spectral Announces First Quarter 2012 Results

TORONTO, May 15, 2012 /CNW/ - Spectral Diagnostics Inc., (TSX:SDI) (OTCQX: DIAGF), a Phase III company developing the first theranostic treatment for patients with severe sepsis and septic shock, today announced its financial results for the first quarter ended March 31, 2012.

First Quarter Highlights:

• Announced that its common shares began trading on OTCQX International, the highest tier of the OTC market in the United States, under the symbol "DIAGF". On a long-term basis, Spectral expects to benefit from trading on OTCQX by gaining greater exposure and liquidity in the United States, which represents the major market for its theranostic treatment, and where most of its Phase III EUPHRATES trial sites are located;
  
  
• Continued enrolling patients into the Company's Phase III EUPHRATES trial. 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 the world's first theranostics trial in the area of sepsis. The trial is currently targeted to enroll 306 evaluable patients at 30 U.S. and Canadian sites;
  
  
• Concluded the reporting period with approximately $16 million in cash and short term investments.

"There continues to be a significant unmet medical need in the area of severe sepsis and septic shock," said Dr. Paul Walker, President and CEO of Spectral Diagnostics. "Our EUPHRATES trial remains the most advanced clinical trial in the area of severe sepsis. As we accelerate the enrollment of patients in our Phase III sepsis trial, we are increasing our lead to potentially introduce a new sepsis product to the market. "

Financial Review

Revenues for the three months ended March 31, 2012 were $676,000 compared to $622,000 for the same period in 2011. Revenues increased modestly from 2011 levels due mainly to the impact of certain previously expired contracts that have now been renegotiated.

For the first quarter ended March 31, 2012, the Company reported a loss of $2,248,000 compared to a loss of $1,458,000 for the corresponding period in 2011. The higher loss is due almost entirely to increased clinical trial costs resulting from more trial sites that became operational over the course of the last year. Trial costs continue to be on plan.

Cash, cash equivalents and short-term investments on hand at March 31, 2012 were $15.9 million compared to $18.5 million at December 31, 2011. Cash was used during the quarter ended March 31, 2012 to fund operations and for working capital purposes.

The total number of shares outstanding for the Company was 113,883,394 as at March 31, 2012.

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 Statement of Financial Position
(in thousands of Canadian dollars)
		March 31 2012		December 31 2011
		$		$
		Unaudited		Audited
Assets
Current assets
Cash and cash equivalents		10,877		13,470
Short-term investment		5,102		5,086
Trade and other receivables		781		515
Inventories		259		295
Prepayments		568		407
		17,587		19,773
Non-current assets
Property, plant and equipment		446		419
Intangible assets		453		459
		899		878
Total assets		18,486		20,651
Liabilities
Current liabilities
Trade and other  payables		1,627		1,610
Deferred revenue		76		102
Total liabilities		1,703		1,712
Equity
Share capital		27,101		27,101
Contributed surplus		3,864		3,864
Other equity reserves		8,174		8,082
Deficit		(22,356)		(20,108)
Total equity		16,783		18,939
Total liabilities and equity		18,486		20,651

Spectral Diagnostics Inc. Condensed Interim Statement of Loss and Comprehensive Loss For the three months ended March 31, 2012 and 2011 (Unaudited)
(in thousands of Canadian dollars, except for share and per share data)		2012		2011
		$		$
Revenue		676		622
Other income		36		27
Expenses
Changes in inventories of finished goods and work- in-process		99		44
Raw materials and consumables used		99		61
Employee benefits		765		740
Consulting and professional fees		1,190		460
Management services		375		375
Regulatory and investor relations		123		69
Travel and entertainment		146		110
Depreciation and amortization		51		165
Foreign exchange loss		11		7
Other expenses		117		92
		2,976		2,123
Operating loss		(2,264)		(1,474)
Finance  income		16		16
Loss and comprehensive loss for the period		(2,248)		(1,458)
Basic and diluted loss per common share		(0.02)		(0.02)
Weighted average number of common shares outstanding		113,883,394		80,550,061

Spectral Diagnostics Inc. Condensed Interim Statement of Changes in Equity (Unaudited)
(in thousands of Canadian dollars, except number of shares)
		Issued capital		Contributed surplus	Share-based compensation	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		-	-	-	-	-	(1,458)	(1,458)
Share-based compensation		-	-	-	126	-	-	126
Balance, March 31, 2011		80,550,061	17,538	3,696	2,848	5,311	(14,853)	14,540
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		-	-	-	-	-	(2,248)	(2,248)
Share-based compensation		-	-	-	92	-	-	92
Balance, March 31, 2012		113,883,394	27,101	3,864	3,031	5,143	(22,356)	16,783

Spectral Diagnostics Inc. Condensed Interim Statement of Cash Flows For the three months ended March  31, 2012 and 2011 (Unaudited)
(in thousands of Canadian dollars)		2012		2011
		$		$
Cash flow provided by (used in)
Operating activities
Loss and comprehensive loss for the period		(2,248)		(1,458)
Adjustments for:
Depreciation on property, plant, and equipment		45		33
Amortization of intangible assets		6		124
Share-based compensation		92		126
Changes in items of working capital :
Trade and other receivables		(266)		(47)
Inventories		36		33
Prepayments		(161)		(105)
Trade and other payables		17		(440)
Deferred revenue		(26)		(25)
Net cash used in operating activities		(2,505)		(1,759)
Investing activities
Property, plant and equipment expenditures		(72)		(5)
Redemption of short-term investment		5,086		-
Purchase of short-term investment		(5,102)		-
Net cash used in investing activities		(88)		(5)
Decrease in cash and cash equivalents		(2,593)		(1,764)
Cash and cash equivalents, beginning of period		13,470		10,311
Cash and cash equivalents, end of period		10,877		8,547

 

Anthony Businskas
Executive Vice President and CFO
416-626-3233 ext. 2200

Adam Peeler
Investor Relations
TMX Equicom
416-815-0700 ext. 225
[email protected]