Spectral announces third quarter 2009 results

TORONTO, Nov. 12 /CNW/ - Spectral Diagnostics Inc., (TSX: SDI) today announced its financial results for the third quarter ended September 30, 2009.

"During the quarter, the Company's primary focus was on the U.S. regulatory strategy and commercialization of Toraymyxin(TM) as an effective treatment for severe sepsis. We completed the protocol design for a clinical trial and we are evaluating a number of strategic and financial options that would allow us to start the trial in the first half of 2010," said Dr. Paul Walker, President and CEO of Spectral. "We strongly believe that the Toraymyxin(TM), when used together with our proprietary Endotoxin Activity Assay (EAA(TM)), has the potential to fulfill a significant unmet need for the approximately 125,000 patients who develop severe sepsis or septic shock in the U.S. each year."

Financial Review

For the third quarter ended September 30, 2009, Spectral reported revenues of $815,000, compared to $701,000 for the corresponding period in 2008. For the nine months ended September 30, 2009, revenues were $2,433,000 compared to $2,150,000 for the same 2008 period. Sales of the EAA(TM) diagnostic increased, while royalty and reagent revenues from the Company's proprietary Troponin I products remained consistent with prior year levels.

Operating expenses for the third quarter ended September 30, 2009 were $999,000, compared to $887,000 for the corresponding period in 2008. For the nine months ended September 30, 2009, operating expenses were $3,228,000 compared to $2,841,000 in the same 2008 period. The increase in operating expenses in the first half of the year was entirely due to incremental consulting costs related to the development of the clinical and regulatory pathway for Toraymyxin(TM) and the foreign exchange impact of a rising Canadian dollar against the U.S. currency. Operating expenses related to the existing business remained consistent with prior year levels.

For the third quarter ended September 30, 2009, the Company reported a loss of $429,000 or ($0.01) per share, compared to a loss of $332,000 or ($0.01) per share for the corresponding period in 2008. The third quarter loss included the above-mentioned consulting costs and foreign exchange loss, totaling $128,000. For the nine months ended September 30, 2009, the Company reported a loss of $1,534,000 or ($0.06) per share, compared to a loss of $1,199,000 or ($0.05) per share for the corresponding period in 2008. The year to date loss included the above-mentioned consulting costs and foreign exchange loss, totaling $444,000.

Cash and short term investments as at September 30, 2009 totaled $3,122,000, compared to $4,297,000 as at December 31, 2008. Management expects that the Company will maintain a cash and short term investment balance of approximately $3,000,000 for the rest of 2009.

About Spectral Diagnostics

Spectral is a leader in the battle against sepsis. Spectral's lead product is its Endotoxin Activity Assay (EAA(TM)), the only FDA cleared assay for the measurement of endotoxin. With the growing awareness for the role of endotoxemia in sepsis and the increasing number of therapies being developed to treat endotoxemia, Spectral is well-positioned to promote the adoption of the EAA(TM), which can be used to identify patients, enable therapeutics and monitor treatment. Spectral is listed on TSX under the symbol SDI.

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.
    Balance Sheets - unaudited
    As at September 30, 2009 and December 31, 2008
    -------------------------------------------------------------------------

    (in thousands of dollars)

                                                            2009        2008
                                                               $           $

    Assets

    Current assets
    Cash and cash equivalents                              3,122         297
    Short-term investments                                     -       4,000
    Accounts receivable                                      688         860
    Inventories                                              207         203
    Prepaid expenses                                          68          42
                                                      -----------------------

                                                           4,085       5,402

    Property, plant and equipment                            452         493

    Commercial instruments                                    99         132

    Purchased technology and trademarks                      706       1,058
                                                      -----------------------

                                                           5,342       7,085
                                                      -----------------------
                                                      -----------------------

    Liabilities

    Current liabilities
    Accounts payable and accrued liabilities                 305         540

    Deferred revenue                                         193         322

    Convertible notes payable                              2,295       2,172
                                                      -----------------------

                                                           2,793       3,034
                                                      -----------------------

    Shareholders' Equity

    Common shares                                          2,524       2,524

    Other equity                                           5,748       5,716

    Deficit                                               (5,723)     (4,189)
                                                      -----------------------

                                                           2,549       4,051
                                                      -----------------------

                                                           5,342       7,085
                                                      -----------------------
                                                      -----------------------



    Spectral Diagnostics Inc.
    Statements of Operations, Comprehensive Loss and Deficit - unaudited
    For the nine months ended September 30, 2009 and 2008
    -------------------------------------------------------------------------
    (in thousands of dollars, except share and per share data)

                                      3 Months Ended          9 Months Ended
                                        September 30            September 30
                                    2009        2008        2009        2008
                                       $           $           $           $

    Sales                            815         701       2,433       2,150

    Cost of sales                    232         171         582         560
                             ----------------------- ------------------------

    Gross margin                     583         530       1,851       1,590
                             ----------------------- ------------------------

    Operating expenses
    Selling, general and
     administrative                  748         729       2,566       2,295
    Amortization                     155         160         478         478
    Foreign exchange loss (gain)      59         (28)        111         (26)
    Stock-based compensation          32          22          32          65
    Research and product
     development, net of tax
     credits                           5           4          41          29
                             ----------------------- ------------------------

                                     999         887       3,228       2,841
                             ----------------------- ------------------------

    Loss before the following       (416)       (357)     (1,377)     (1,251)

    Interest expense on
     convertible notes payable       (41)        (41)       (123)       (123)

    Other net investment (loss)
     income                           28          66         (34)        175

                             ----------------------- ------------------------


    Loss and comprehensive loss
     for the period                 (429)       (332)     (1,534)     (1,199)

    Deficit - Beginning of
     period                       (5,294)     (3,554)     (4,189)     (2,687)

                             ----------------------- ------------------------
    Deficit - End of period       (5,723)     (3,886)     (5,723)     (3,886)
                             ----------------------- ------------------------
                             ----------------------- ------------------------

    Basic and diluted loss per
     common share                  (0.01)      (0.01)      (0.06)      (0.05)
                             ----------------------- ------------------------
                             ----------------------- ------------------------

    Weighted average number
     of common shares
     outstanding              24,118,424  24,118,424  24,118,424  24,118,424
                             ----------------------- ------------------------
                             ----------------------- ------------------------



    Spectral Diagnostics Inc.
    Statements of Cash Flows - unaudited
    For the nine months ended September 30, 2009 and 2008
    -------------------------------------------------------------------------

    (in thousands of dollars)

                                      3 Months Ended          9 Months Ended
                                        September 30            September 30
                                    2009        2008        2009        2008
                                       $           $           $           $
    Cash provided by (used in)

    Operating activities
    Loss and comprehensive
     loss for the period            (429)       (332)     (1,534)     (1,199)
    Items not affecting cash
      Amortization                   155         160         478         478
      Amortization of commercial
       instruments included in
       cost of sales                  22           6          65          18
      Stock-based compensation
       expense                        32          22          32          65
      Interest on convertible
       notes payable                  41          41         123         123
      Unrealized loss on
       short-term investments          -           -          91           -
    Changes in non-cash working
     capital                         (54)        139         (93)        (28)
                             ----------------------- ------------------------
                                    (233)         36        (838)       (543)
                             ----------------------- ------------------------

    Financing activities
    Bank indebtedness                  -        (195)          -           -
                             ----------------------- ------------------------

    Investing activities
    Purchase of property, plant
     and equipment                   (31)        (32)        (85)       (147)
    Purchase of commercial
     instruments                      (7)          -         (32)        (22)
    Decrease in short-term
     investments                   2,945         359       3,909         258
    Decrease in deferred
     revenue                         (43)         (3)       (129)        (11)
                             ----------------------- ------------------------
                                   2,864         324       3,663         (78)
                             ----------------------- ------------------------

    Increase (decrease) in
     cash and cash equivalents
     during the period             2,631         165       2,825        (465)
                             ----------------------- ------------------------

    Cash and cash equivalents
     - Beginning of period           491           8         297         638
                             ----------------------- ------------------------

    Cash and cash equivalents
     - End of period               3,122         173       3,122         173
                             ----------------------- ------------------------
                             ----------------------- ------------------------
    

%SEDAR: 00002006E

SOURCE Spectral Diagnostics Inc.

For further information: For further information: Dr. Paul Walker, President & CEO, (416) 626-3233 ex. 2100; Casey Gurfinkel, Investor Relations, (416) 815-0700 ext. 283, cgurfinkel@equicomgroup.com

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