Spectral announces fourth quarter and 2011 results

TORONTO, March 16, 2012 /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 fourth quarter and year ended December 31, 2011.

Fourth Quarter Highlights:

• Continued to enroll patients into the Company's Phase III EUPHRATES 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 enroll approximately 360 patients at 30 U.S. and Canadian sites;
  
  
• Concluded the reporting period with approximately $18.5 million in cash and short term investments;
  
  
• Announced the Company is expanding its U.S. Phase III EUPHRATES trial to Canadian clinical trial sites;
  
  
• Subsequent to quarter end, 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". 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.

"Our EUPHRATES trial remains the most advanced in the area of severe sepsis and is the only currently active Phase III trial. In the past six months, a commercial sepsis product was pulled from the market, and a late stage clinical trial for another product  was  halted due to safety concerns ",  said Dr. Paul Walker, President and CEO of Spectral Diagnostics. "For Spectral, these events reinforce two things. First, there continues to be a large unmet medical need in the area of septic shock. Second, as we continue to enroll patients in our Phase III sepsis trial, we are closer to potentially introducing an exciting new product for severe sepsis and septic shock to the market."

Financial Review

Revenues for the three months ended December 31, 2011 were $628,000 compared to $712,000 for the same period in 2010. For the year ended December 31, 2011, revenues were $2,430,000 compared to $2,981,000 for 2010. Revenues declined from 2010 levels due mainly to the timing and revised terms of certain EAA™ distribution agreements that were renegotiated subsequent to their expiry in the previous year. Also, revenues are predominantly denominated in U.S. and EURO currencies and have been impacted by the continuing strength of the Canadian dollar.

For the three months ended December 31, 2011, the Company reported a loss of $1,940,000 compared to $2,010,000 for the corresponding period in 2010. For the year ended December 31, 2011, the Company reported a loss of $6,713,000, or ($0.07) per share, compared to a loss of $6,498,000 or ($0.10) per share for the corresponding period in 2010.

Cash, cash equivalents and short-term investments on hand at December 31, 2011 were $18,556,000 compared to $15,332,000 at December 31, 2010. Cash was used during the quarter and year ended December 31, 2011 to fund operations and for working capital purposes.

The total number of shares outstanding for the Company was 113,883,394 as at December 31, 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.
Statement of Financial Position
____________________________________________________________________________________________________________

(in thousands of Canadian dollars)

	December 31 2011	December 31 2010	January 1 2010
	$	$	$
Assets
Current assets
Cash and cash equivalents	13,470	10,311	2,944
Short-term investment	5,086	5,021	-
Trade and other receivables	515	595	792
Inventories	295	209	123
Prepayments	407	31	45
	19,773	16,167	3,904
Non-current assets
Property, plant and equipment	419	526	457
Intangible assets	459	602	588
	878	1,128	1,045
Total assets	20,651	17,295	4,949
Liabilities
Current liabilities
Trade and other  payables	1,610	1,322	1,088
Convertible notes payable	-	-	2,336
Deferred revenue	102	101	104
Total liabilities	1,712	1,423	3,528
Equity
Share capital	27,101	17,538	2,524
Contributed surplus	3,864	3,696	3,696
Other equity reserves	8,082	8,033	2,098
Deficit	(20,108)	(13,395)	(6,897)
Total equity	18,939	15,872	1,421
Total liabilities and equity	20,651	17,295	4,949

Spectral Diagnostics Inc.
Statement of Loss and Comprehensive Loss
For the years ended December 31, 2011 and 2010
____________________________________________________________________________________________________________

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

	2011		2010
	$		$
Revenue	2,430		2,981
Other income	109		55
Expenses
Changes in inventories of finished goods and work- in-process	288		363
Raw materials and consumables used	264		289
Employee benefits	2,662		3,284
Consulting and professional fees	3,040		2,466
Management services	1,500		1,000
Regulatory and investor relations	277		222
Travel and entertainment	554		651
Depreciation and amortization	316		644
Foreign exchange loss	2		64
Other expenses	414		419
	9,317		9,402
Operating loss	(6,778)		(6,366)
Finance charge	-		(164)
Finance  income	65		32
Loss and comprehensive loss for the year	(6,713)		(6,498)
Basic and diluted loss per common share	(0.07)		(0.10)
Weighted average number of common shares outstanding	90,869,696		67,210,554

Spectral Diagnostics Inc.
Statement of Changes in Equity
For the years ended December  31, 2011 and 2010
____________________________________________________________________________________________________________

(in thousands of Canadian dollars)

	Issued capital		Contributed surplus	Share-based compensation	Warrants	Deficit	Total equity
	Number	$	$	$	$	$	$
Balance, January 1, 2010	24,118,424	2,524	3,696	1,930	168	(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
Share options exercised	142,500	49	-	-	-	-	49
Settlement of convertible notes payable	4,648,512	1,344	-	-	-	-	1,344
Loss and comprehensive loss for the year	-	-	-	-	-	(6,498)	(6,498)
Share-based compensation	-	-	-	792	-	-	792
Balance, December 31, 2010	80,550,061	17,538	3,696	2,722	5,311	(13,395)	15,872
Private placement	33,333,333	9,563	-	-	-	-	9,563
Loss and comprehensive loss for the year	-	-	-	-	-	(6,713)	(6,713)
Share-based compensation	-	-	-	217	-	-	217
Warrants expired	-	-	168	-	(168)	-	-
Balance, December 31, 2011	113,883,394	27,101	3,864	2,939	5,143	(20,108)	18,939

Spectral Diagnostics Inc.
Statement of Cash Flows
For the years ended December  31, 2011 and 2010
____________________________________________________________________________________________________________

(in thousands of Canadian dollars)

	2011		2010
	$		$
Cash flow provided by (used in)
Operating activities
Loss and comprehensive loss for the year	(6,713)		(6,498)
Adjustments for:
Depreciation on property, plant, and equipment	173		156
Amortization of intangible assets	143		488
Share-based compensation	217		792
Interest on convertible notes payable	-		164
Changes in items of working capital :
Trade and other receivables	80		197
Inventories	(86)		(86)
Prepayments	(376)		14
Trade and other payables	288		234
Deferred revenue	1		(3)
Net cash used in operating activities	(6,273)		(4,542)
Investing activities
Property, plant and equipment expenditures	(66)		(225)
Intangible asset expenditure	-		(502)
Redemption of short-term investment	5,021		-
Purchase of short-term investment	(5,086)		(5,021)
Net cash used in investing activities	(131)		(5,748)
Financing activities
Private placement	9,563		17,608
Share options exercised	-		49
Net cash provided by  financing activities	9,563		17,657
Increase in cash and cash equivalents	3,159		7,367
Cash and cash equivalents, beginning of year	10,311		2,944
Cash and cash equivalents, end of year	13,470		10,311

 

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]