Spectral Medical Announces Third Quarter Results and Provides Corporate Update

Tigris Trial Enrollment Reaches 76 Patients
Crude mortality results continue to exceed expectations

TORONTO, Nov. 09, 2023 (GLOBE NEWSWIRE) — Spectral Medical Inc. (“Spectral” or the “Company”) (TSX: EDT), a late-stage theranostic company advancing therapeutic options for sepsis and septic shock, today announced its financial results for the third quarter ended September 30, 2023 and provided a corporate update.

During the third quarter, the Company continued to experience momentum in Tigris Trial enrollment. Management is pleased to report positive progress on these initiatives to increase Tigris Trial enrollment, specifically:

  • During and subsequent to the third quarter the Company enrolled an additional eleven patients, of which nine or approximately 80% came from new sites opened for enrollment in 2023;
  • 76 patients enrolled to date and the Company continues to close in on its interim target of 90 patients, an important milestone as Spectral’s strategic commercial partner, Baxter (BAX:NYSE), will have the opportunity to view the data as well as provide a second milestone payment to Spectral;
  • Addition of two new trial sites, the Mayo Clinic and Emory Healthcare, subsequent to the third quarter bringing current total trial sites to 20;
  • During the third quarter, full transition from the incumbent CRO, Beaufort was completed;
  • Spectral Medical was featured in an episode of the ‘The Balancing Act’ airing on Lifetime TV (Advancing Therapeutic Options for Sepsis and Endotoxic Septic Shock – The Balancing Act) focused on advancing therapeutic options for sepsis and endotoxic septic shock, which was aired during the quarter; and
  • On September 7, 2023, Spectral completed a private placement of convertible notes for gross proceeds of USD$4,553,000 led by the Company’s strategic investors Baxter and Pinnacle Island LP.

Dr. John Kellum, Chief Medical Officer of Spectral Medical, stated, “We continue to experience patient enrollment momentum supported by new sites we have onboarded during 2023. We continue to make progress opening additional sites, which should positively impact the pace of enrollment. Overall, we are rapidly advancing our Tigris trial and remain highly encouraged by the outlook, given the fact preliminary mortality data continues to exceed our expectations.”

“We are taking measured, yet rapid action to maintain and even increase momentum in patient enrollment with a view to enrolling our interim count of 90 patients, which is expected to play as a major catalyst for the Company,” said Chris Seto, Chief Executive Officer of Spectral Medical. “Based on the pace of patient enrollment in the past number of months, and our activities around site additions, we continue to drive towards the 90 patient interim milestone.”

Financial Review

Revenue for three months ended September 30, 2023, was $397,000 compared to $362,000 for the same period last year, representing an increase of $35,000, or 9.7%. Revenue for six months ended September 30, 2023, was $1,233,000 and $1,114,000 for the same period last year, representing an increase of $119,000, or 10.7%. This increase was mainly due to an increase in proprietary biochemicals product revenue.

Operating expenses for the three months ended September 30, 2023, were $3,658,000, compared to $2,705,000 for the same period in the prior year, an increase of $953, or 35.2%. The change is primarily due to an increase in consulting and professional fees by $265,000 primarily due to increased site and patient fees related to the Tigris trial and Eden observational study. Interest expense increased $167,000 primarily related to the Notes Payable, which was not outstanding in the same period in the prior year. Foreign exchange loss increased by $127,000 over the same period in the prior year, primarily related to FX loss on USD cash balances. Operating expenses for the nine months ended September 30, 2023, were $10,215,000, compared to $7,552,000 for the same period in the preceding year, an increase of $2,663, or 35.2%. The change is due to an increase in share-based compensation of $295,000. In addition, consulting and professional fees increased by $1,240,000 primarily due to increased site and patient fees related to the Tigris trial and Eden observational study. Interest expense increased $410,000 primarily related to the Notes Payable, which was not outstanding in the same period in the prior year. Lastly, loss incurred on joint arrangement was $205,000 which was not incurred for the same period in the prior year.  

Loss for the three months ended September 30, 2023 was $3,391,000, or $0.01 per share, compared to a loss of $3,135,000, or $0.01 per share, for the same quarter last year. The increased loss of $256,000 was due to increased operating expenses, partially offset by a reduction in loss from discontinued operations of $662,000 related to the reduction in Dialco operating expenses. Loss for the nine months ended September 30, 2023 was $9,107,000, or $0.02 per share, compared to a loss of $8,778,000, or $0.01 per share, for the same period last year. The increased loss of $329,000 was due to increased operating expenses, partially offset by a reduction in loss from discontinued operations of $2,215,000 related to the prior Dialco operating expenses.

The Company concluded the third quarter of 2023 with cash of $5,031,000 compared to $8,414,000 of cash on hand as of December 31, 2022.  

The total number of common shares outstanding for the Company was 278,576,261 at September 30, 2023.

About Spectral        

Spectral is a Phase 3 company seeking U.S. FDA approval for its unique product for the treatment of patients with septic shock, Toraymyxin™ (“PMX”). PMX is a therapeutic hemoperfusion device that removes endotoxin, which can cause sepsis, from the bloodstream and is guided by the Company’s Endotoxin Activity Assay (EAA™), the only FDA cleared diagnostic for the risk of developing sepsis.

PMX is approved for therapeutic use in Japan and Europe, and has been used safely and effectively on more than 340,000 patients to date. In March 2009, Spectral obtained the exclusive development and commercial rights in the U.S. for PMX, and in November 2010, signed an exclusive distribution agreement for this product in Canada. In July 2022, the U.S. FDA granted Breakthrough Device Designation for PMX for the treatment of endotoxic septic shock. Approximately 330,000 patients are diagnosed with septic shock in North America each year.

Spectral is listed on the Toronto Stock Exchange under the symbol EDT. 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 company’s ability to raise capital and the availability of funds and resources to pursue R&D projects, the recruitment of additional clinical trial sites, the rate of patient enrollment, the successful and timely completion of clinical studies, the success of Baxter’s commercialization efforts, 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.

For further information, please contact:

Ali Mahdavi David Waldman/Natalya Rudman Blair McInnis
Capital Markets & Investor Relations US Investor Relations CFO
Spinnaker Capital Markets Inc. Crescendo Communications, LLC Spectral Medical Inc.
416-962-3300 212-671-1020 416-626-3233
am@spinnakercmi.com edt@crescendo-ir.com bmcinnis@spectraldx.com
     

Spectral Medical Inc.
Condensed Interim Consolidated Statements of Financial Position
In CAD (000s), except for share and per share data
(Unaudited)

  September 30,
2023
December 31,
2022
 
  $   $  
     
Assets    
Current assets    
Cash 5,031   8,414  
Trade and other receivables 720   1,056  
Inventories 304   340  
Prepayments and other assets 912   276  
  6,967   10,086  
Non-current assets    
Right-of-use-asset 598   464  
Property and equipment 165   237  
Intangible asset 192   211  
Investment in iDialco 794   998  
Total assets 8,716   11,996  
     
Liabilities    
Current liabilities    
Trade and other payables 2,314   3,167  
Current portion of contract liabilities 757   696  
Current portion of lease liability 121   96  
  3,192   3,959  
Non-current liability    
Lease liability 535   420  
Non-current portion of contract liabilities 3,509   4,011  
Notes payable 11,631   6,129  
Total liabilities 18,867   14,519  
     
Shareholders’ deficiency    
Share capital 87,061   87,050  
Contributed surplus 8,916   8,773  
Share-based compensation 10,197   8,908  
Warrants 2,526   2,490  
Deficit (118,851 ) (109,744 )
Total shareholders’ deficiency (10,151 ) (2,523 )
Total liabilities and shareholders’ deficiency 8,716   11,996  


Spectral Medical Inc.
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
In CAD (000s), except for share and per share data
(Unaudited)

  Three-
months
ended
September
30, 2023
Three-
months
ended
September
30, 2022
Nine-
months
ended
September
30, 2023
Nine-
months
ended
September
30, 2022
 
  $   $   $   $
 
         
Revenue 397   362   1,233   1,114  
         
Expenses        
Changes in inventories of finished goods
and work-in-process
  71     160  
Raw materials and consumables used 305   121   722   357  
Salaries and benefits 987   891   2,918   2,555  
Consulting and professional fees 1,198   933   3,300   2,060  
Regulatory and investor relations 109   123   414   442  
Travel and entertainment 63   78   245   197  
Facilities and communication 81   81   245   218  
Insurance 102   119   290   357  
Depreciation and amortization 57   55   172   171  
Interest expense 173   6   429   19  
Foreign exchange (gain) loss 146   19   (89 ) 30  
Share-based compensation 340   217   1,300   1,005  
Other expense (income) 56   (9 ) 64   19  
Net Loss on joint arrangement 41     205    
  3,658   2,705   10,215   7,552  
Loss and comprehensive loss for the year
from continuing operations
(3,261 ) (2,343 ) (8,982 )

(6,438

)

Income (loss) from discontinued
operations
(130 ) (792 )

(125

)

(2,340

)

Loss and comprehensive loss for the year (3,391 ) (3,135 ) (9,107 ) (8,778 )
Basic and diluted loss from continuing
operations per common share
(0.01 ) (0.00 )

(0.02

)

(0.01 )
Basic and diluted income (loss) from
discontinued operations per common share
(0.00 ) (0.00 )

(0.00

)

(0.00 )
Basic and diluted loss per common
share
(0.01 ) (0.01 ) (0.02 ) (0.02 )
Weighted average number of common
shares outstanding – basic and diluted
278,604,718   268,283,387  

278,569,902

 
268,064,079
 


Spectral Medical Inc.
Condensed Interim Consolidated Statements of Changes in Shareholders’ Deficiency
In CAD (000s)
(Unaudited)

  Number of
shares
  Share
Capital
  Contributed
surplus
 

Share-based
compensation

  Warrants Deficit Total
Shareholders’
(deficiency)

 
      $   $   $   $   $   $
 
Balance, January 1, 2022 267,886,408   84,357   7,985   7,984   2,251   (98,494 ) 4,083  
Share options exercised 268,797   157     (69 )     88  
RSUs released 284,072   174     (174 )      
Warrants expired     788     (788 )    
Loss and comprehensive loss for the period           (8,778 ) (8,778 )
Share-based compensation       1,005       1,005  
Balance, Sep 30, 2022 268,439,277   84,688   8,773   8,746   1,463   (107,272 ) (3,602  
Bought deal offering 10,061,250   2,313       1,027     3,340  
RSU Released 47,277   49     (30 )     19  
Loss and comprehensive loss for the period           (2,472 ) (2,472  
Share-based compensation       192       192  
Balance, December 31, 2022 278,547,804   87,050   8,773   8,908   2,490   (109,744 ) (2,523  

Balance, January 1, 2023 278,547,804 87,050 8,773 8,908   2,490   (109,744 ) (2,523 )
RSUs released 28,457 11 (11 )      
Warrants issued   179     179  
Warrants expired 143   (143 )    
Loss and comprehensive loss
for the period
    (9,107 ) (9,107 )
Share-based compensation 1,300       1,300  
Balance, September 30, 2023 278,576,261 87,061 8,916 10,197   2,526   (118,851 ) (10,151 )


Spectral Medical Inc.
Condensed Interim Consolidated Statements of Cash Flows
In CAD (000s)
(Unaudited)        

  Nine-months ended
Sep 30, 2023
Nine-months ended
Sep 30, 2022
 
  $   $  
Cash flow provided by (used in)    
     
Operating activities    
Loss and comprehensive loss for the period (9,107 ) (8,778 )
Adjustments for:    
Depreciation on right-of-use asset 73   71  
Depreciation on property and equipment 72   123  
Amortization of intangible asset 19   13  
Amortization of deferred financing Fees 147    
Interest expense 429   19  
Unrealized foreign exchange gain (38 ) (33 )
Share-based compensation 1,479   1,005  
Write down of property and equipment to fair value   91  
Loss on investment in iDialco 205    
Changes in items of working capital:    
Trade and other receivables 336   129  
Inventories 36   (367 )
Prepayments and other assets (636 ) 77  
Trade and other payables (1,253 ) 493  
Contract liabilities (648 ) (485 )
Net cash used in operating activities (8,886 ) (7,642 )
     
Investing activities    
Property and equipment acquisitions   (90 )
Net cash used in investing activities   (90 )
     
Financing activities    
Lease liability payments 110   (88 )
Note payable 6,213    
Financing charges paid (820 )  
Share options exercised   88  
Net cash provided by financing activities 5,503    
     
Decrease in cash (3,383 ) (7,732 )
Effects of exchange rate changes on cash   33  
Cash, beginning of period 8,414   8,890  
Cash, end of period 5,031   1,191  

 

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