Spectral Announces Second Quarter 2012 Results

TORONTO, Aug. 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 second quarter ended June 30, 2012.

Second Quarter Highlights:

• Announced that the United States Food and Drug Administration (FDA) will allow Spectral to double the number of trial sites to sixty in total, for the Company's personalized medicine approach to treating septic shock;
• 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 and internationally.  Sixty two patients have been randomized into the trial as of July 31, 2012.
• Disclosed that the Company's focused approach to patient selection, using a high endotoxin level as entry criteria, has resulted in a composite mortality rate ranging from 35% to 40% in its Phase III trial, compared to a predicted composite mortality of 27.5%. This is positive news, as a challenge faced by recent, unsuccessful sepsis trials has been the low rate of placebo mortality, which may make demonstration of benefit difficult;
• Concluded the reporting period with approximately $14.3 million in cash and short term investments.

"We are very excited about the progress we are making with the EUPHRATES trial," said Dr. Paul Walker, President and CEO of Spectral Diagnostics. "As the enrollment of patients in our Phase III trial progresses, we are increasing our lead to potentially introduce a new sepsis product to a market with a very large unmet medical need."

Financial Review

Revenue for the three months ended June 30, 2012 was $599,000 compared to $691,000 for the same period in the preceding year. For the six months ended June 30, 2012 revenue was $1,275,000 compared to $1,313,000 for the same period in 2011.

For the second quarter ended June 30, 2012, the Company reported a loss of $2,151,000 compared to a loss of $1,717,000 for the corresponding period in 2011. For the six months ended June 30, 2012, Spectral reported a loss of $4,399,000 compared to $3,175,000 for the same period in 2011. The Company's loss was greater for the three and six months of 2012 due to higher costs for its Phase III EUPHRATES trial.

Cash, cash equivalents and short-term investments on hand at June 30, 2012 were $14.3 million. Cash was used during the quarter ended June 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 June 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 second 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 OTQ QX 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)
											June 30				December 31
											2012				2011
											$				$
											Unaudited				Audited
Assets
Current assets
Cash and cash equivalents											9,226				13,470
Short-term investment											5,102				5,086
Trade and other  receivables											640				515
Inventories											245				295
Prepayments											274				407
											15,487				19,773
Non-current assets
Property, plant and equipment											465				419
Intangible assets											447				459
											912				878
Total assets											16,399				20,651
Liabilities
Current liabilities
Trade and other payables											1,645				1,610
Deferred revenue											91				102
Total liabilities											1,736				1,712
Equity
Share capital											27,101				27,101
Contributed surplus											3,864				3,864
Other equity reserves											8,205				8,082
Deficit											(24,507)				(20,108)
Total equity											14,663				18,939
Total liabilities and equity											16,399				20,651

Spectral Diagnostics Inc. Condensed Interim Statement of Loss and Comprehensive Loss For the six months ended June, 2012 and 2011 (Unaudited)
(in thousands of Canadian dollars, except for share and per share data)
						Three months ended						Six months ended
						June 30						June 30
						2012			2011			2012			2011
						$			$			$			$
Revenue						599			691			1,275			1,313
Other income						30			23			66			50
Expenses
Changes in inventories of finished goods and work- in-process						52			94			151			138
Raw materials and consumables used						103			56			202			117
Employee benefits						641			673			1,406			1,413
Consulting and professional fees						1,056			887			2,246			1,347
Management services						375			375			750			750
Regulatory and investor relations						99			68			222			137
Travel and entertainment						313			136			459			246
Depreciation and amortization						55			49			106			214
Foreign exchange (gain) loss						(7)			10			4			17
Other expenses						111			99			228			191
						2,798			2,447			5,774			4,570
Operating loss						(2,169)			(1,733)			(4,433)			(3,207)
Finance income						18			16			34			32
Loss and comprehensive loss for the period						(2,151)			(1,717)			(4,399)			(3,175)
Basic and diluted loss per common share						(0.02)			(0.02)			(0.04)			(0.04)
Weighted average number of common shares outstanding						113,883,394			80,550,061			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)
										Contributed			Share-based
				Issued capital						surplus			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				-			-			-			-			-				(3,175)			(3,175)
Share-based compensation				-			-			-			157			-				-			157
Balance, June 30, 2011				80,550,061			17,538			3,696			2,879			5,311				(16,570)			12,854
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				-			-			-			-			-				(4,399)			(4,399)
Share-based compensation				-			-			-			123			-				-			123
Balance, June 30, 2012				113,883,394			27,101			3,864			3,062			5,143				(24,507)			14,663

Spectral Diagnostics Inc. Condensed Interim Statement of Cash Flows (Unaudited)
(in thousands of Canadian dollars, except number of shares)
					Six months ended
					June 30					June 30
					2012					2011
					$					$
Cash flow provided by (used in)
Operating activities
Loss and comprehensive loss for the period					(4,399)					(3,175)
Adjustments for:
	Depreciation on property, plant, and equipment				94					84
	Amortization of intangible assets				12					130
	Share-based compensation				123					157
Changes in items of working capital :
	Trade and other receivables				(125)					(207)
	Inventories				50					(27)
	Prepayments				133					(78)
	Trade and other payables				35					(58)
	Deferred revenue				(11)					(50)
Net cash used in operating activities					(4,088)					(3,224)
Investing activities
Property, plant and equipment expenditures					(140)					(38)
Short-term investment					(16)					(32)
Net cash used in investing activities					(156)					(70)
Decrease in cash and cash equivalents					(4,244)					(3,294)
Cash and cash equivalents, beginning of period					13,470					10,311
Cash and cash equivalents, end of period					9,226					7,017

SOURCE: Spectral Diagnostics Inc.

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]