Profound Medical Corp. Announces First Quarter 2017 Financial Results

Records First-Time Revenues From TULSA-PRO® Pilot Sales

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| Source: Profound Medical Inc.

TORONTO, May 09, 2017 (GLOBE NEWSWIRE) -- Profound Medical Corp. (TSXV:PRN) (OTCQX:PRFMF) (“Profound” or the “Company”) an emerging medical device company focused on prostate care, today reported financial results for the three months ended March 31, 2017. All amounts, unless specified otherwise, are expressed in Canadian dollars and are presented in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, applicable to the preparation of interim financial statements, including IAS-34, Interim Financial Reporting.

Corporate Highlights

  • On January 17, 2017, the Company announced the appointment of Dr. Kenneth Galbraith, an accomplished life sciences industry veteran, to its Board of Directors.
     
  • On March 9, 2017, Profound announced that its common shares were eligible for trading on the OTCQX® Best Market under the symbol “PRFMF,” effective March 13, 2017. On April 18, 2017, the Company announced that it had secured Depository Trust Company, or DTC, eligibility for its common shares on the OTCQX.
     
  • On March 20, 2017, Profound announced the first sale of a TULSA-PRO® system in Finland to the Turku University Hospital. The deal was completed in collaboration with Royal Philips, which is working in partnership with Profound to commercialize the TULSA-PRO® system in Europe.
     
  • On March 27, 2017 the Company announced the first TULSA-PRO® patient paid procedure was successfully conducted at the ALTA Klinik (“ALTA”) in Bielefeld, Germany. Dr. Agron Lumiani, founder of ALTA, a leading German radiologist and early adopter of MRI diagnostics and MRI-targeted prostate biopsy, administered the procedure.

“The first quarter of 2017 represents a transformative period in Profound’s history, and builds on the momentum we established in 2016,” commented Dr. Arun Menawat, Profound’s CEO. “Not only did the Company record revenue for the first time, but we also announced the first TULSA-PRO® paid procedure in Germany and our entry into the Finnish market. Taken together, these milestones demonstrate the growing interest in the TULSA-PRO® procedure as an attractive option for patients with localized prostate cancer. We look forward to updating our stakeholders as we progress.”

Profound is currently conducting a pilot commercial launch of its TULSA-PRO® system in key European and other CE mark jurisdictions. The Company is also sponsoring a multicenter, prospective FDA-registered clinical trial, TACT, which is designed to further demonstrate the safety and effectiveness of this innovative technology.  If successful, TACT is expected to support Profound's application to the U.S. Food and Drug Administration for approval to market the TULSA-PRO® system in the United States.

Summary First Quarter 2017 Results

For the quarter ended March 31, 2017, the Company recorded revenues for the first time totalling $591,517, with $552,918 from sale of products and $38,599 from installation and training services, related to the commercial launch of the TULSA-PRO® system in Europe.

The Company recorded a net loss for the three months ended March 31, 2017 of $4,114,782 or $0.07 per common share, compared with a net loss of $3,836,219 or $0.10 per common share, for the three months ended March 31, 2016. For the three months ended March 31, 2017, the net loss was primarily attributed to R&D expenses of $1,883,129, G&A expenses of $1,118,014, selling and distribution expense of $1,150,499 and the interest and accretion expense of $297,224 partially offset by the interest income of $48,565.

For the three months ended March 31, 2016, the net loss was primarily attributed to R&D expenses of $2,507,599, G&A expenses of $934,784, selling and distribution expense of $160,439 and the interest and accretion expense of $283,961 partially offset by the interest income of $50,564.

Expenditures for R&D for the three months ended March 31, 2017 were lower by $624,470 compared to the three months ended March 31, 2016. The decrease in R&D spending reflects the advanced stages of development of the Company’s product and the ramp-up of commercial operations. Material expenses and contractor expenses were lower by $963,074 and $52,936, respectively. These costs decreased compared to the quarter ended March 31, 2016 due to lower development initiatives associated with the Company’s TACT Pivotal Trial. Offsetting this amount was higher clinical trial costs of $391,097, resulting from ongoing activities related to the initiation of clinical sites visits, enrollment initiatives and patient treatment for the TACT Pivotal trial.

General and administrative expenses for the three months ended March 31, 2017 were higher by $183,230 compared to the three months ended March 31, 2016. Salaries and benefit expenses increased by $212,294, primarily related to a separate payment payable to a former executive officer. In addition, rent expense increased by $42,140 due to relocation to a larger office facility. These costs were offset by lower share-based compensation of $122,332 primarily related to forfeiture of options.  In addition, office and other expenses were higher compared to the quarter ended March 31, 2016 by $33,131. These costs are reduced primarily due to the realignment of sales activities, which are classified under sales and distribution.

Selling and distribution expenses for the three months ended March 31, 2017 were higher by $990,060 compared to the three months ended March 31, 2016. The increase is largely attributable to recognizing commissions payable on commercial sales of $61,840 and a provision of $417,834 related to the estimated shortfall of revenue share payments compared to the minimum amounts contractually required. In addition, salaries and benefits increased by $221,042 compared to the quarter ended March 31, 2016, resulting from additional direct sales force personnel. Professional and consulting fees, marketing and travel expenses increased by $100,136, $90,070 and $67,620, respectively. These increases relate directly to marketing-related efforts.

Liquidity and Outstanding Share Capital

As of March 31, 2017, the Company had cash of $16,892,035, compared to $20,833,061 as of December 31, 2016.

As at May 9, 2017, Profound had an unlimited number of authorized common shares with 55,344,139 common shares issued and outstanding.

For complete financial results, please see our filings at www.sedar.com and our website at www.profoundmedical.com

Conference Call Details

Profound Medical is pleased to invite all interested parties to participate in a conference call today, May 9, 2017, at 4:30 p.m. ET during which time the results will be discussed.

   
Live Call: 1-800-860-2442 (Canada and the United States)
  1-412-858-4600 (International)
   
Replay: 1-877-481-4010 (Canada and the United States)
  1-919-882-2331 (International)
Replay ID: 10353
   

The call will also be broadcast live and archived on the Company's website at profoundmedical.com under "Investor Presentations" in the Investor Relations section.

About Profound Medical Corp.

The Profound Medical team is committed to the effort to achieve a new therapeutic standard in prostate cancer. For the millions of men currently living with prostate cancer, and the thousands more who are diagnosed with it every year, current treatment options often mean having to make difficult choices based on potential side effects that can significantly impact quality of life.  Our mission is to profoundly change the standard of care by creating a tomorrow where clinicians can confidently ablate cancerous prostate tissue with precision, while actively protecting critical anatomy from potential side effects; a tomorrow where patients have access to a safe, fast and effective treatment option, so they can quickly return to their daily lives.

Established in 2008, Profound Medical is commercializing a novel technology, TULSA-PRO® system, which combines real-time Magnetic Resonance Imaging with transurethral, robotically-driven therapeutic ultrasound and closed-loop thermal feedback control that is designed to provide precise ablation of the prostate while simultaneously protecting critical surrounding anatomy from potential side effects. TULSA-PRO® system is CE Mark and Profound is sponsoring a multicenter, prospective FDA-registered clinical trial, TACT Pivotal Clinical Trial, which is designed to further demonstrate the safety and effectiveness of this innovative technology.

Forward-Looking Statements

This release includes forward-looking statements regarding Profound and its business which may include, but is not limited to, the expectations regarding the efficacy of Profound’s technology in the treatment of prostate cancer. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "is expected", "expects", "scheduled", "intends", "contemplates", "anticipates", "believes", "proposes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Such statements are based on the current expectations of the management of Profound. The forward-looking events and circumstances discussed in this release, may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting the company, including risks regarding the pharmaceutical industry, economic factors, the equity markets generally and risks associated with growth and competition. Although Profound has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Profound undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, other than as required by law.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange), nor the OTCQX accepts responsibility for the adequacy or accuracy of this release.


Profound Medical Corp.
Interim Condensed Consolidated Balance Sheets
As at March 31, 2017 and December 31, 2016

   March 31,
2017
$
 December 31,
2016
$
      
Assets    
     
Current assets    
Cash 16,892,035  20,833,061 
Trade and other receivables 728,590  266,336 
Investment tax credits receivable 330,000  264,000 
Inventory 864,680  416,823 
Prepaid expenses and deposits 737,723  696,909 
     
  19,553,028  22,477,129 
     
Property and equipment 927,556  953,029 
     
Intangible assets 284,159  262,685 
     
  20,764,743  23,692,843 
     
Liabilities    
     
Current liabilities    
Accounts payable and accrued liabilities 2,351,518  1,771,427 
Customer deposits -  259,293 
Deferred revenue 47,154   
Long-term debt 4,290,366  2,877,050 
Provisions 16,698  - 
Other liability 25,000  39,357 
     
  6,730,736  4,947,127 
     
Long-term debt 2,624,950  3,760,826 
     
Provisions  458,553  39,619 
     
Other liability 120,410  109,044 
     
  9,934,649  8,856,616 
     
Shareholders’ Equity    
     
Share capital 83,305,277  83,272,678 
     
Contributed surplus 3,079,253  3,000,563 
     
Accumulated other comprehensive income 8,676  11,316 
     
Deficit (75,563,112) (71,448,330)
     
  10,830,094  14,836,227 
     
  20,764,743  23,692,843 
     
     

Profound Medical Corp.
Interim Condensed Consolidated Statement of Loss and Comprehensive Loss
For the period ended March 31, 2017 and 2016

  Three months
ended
March 31,
2017
$
 Three months
ended
March 31,
2016
$
     
Revenue    
Products 552,918  - 
Services 38,599  - 
     
  591,517  - 
     
Cost of sales 311,225  - 
     
Gross profit 280,292  - 
     
Expenses    
Research and development 1,883,129  2,507,599 
General and administrative 1,118,014  934,784 
Selling and distribution 1,150,499  160,439 
     
Total operating expenses 4,151,642  3,602,822 
     
Finance costs 289,700  283,961 
     
Finance income (48,565) (50,564)
     
Net finance costs 241,135  233,397 
     
Loss before income taxes 4,112,485  3,836,219 
     
Income tax expense 2,297  - 
     
Net loss for the period 4,114,782  3,836,219 
     
Item that may be reclassified to profit or loss    
Foreign currency translation adjustment 2,640  2,887 
     
Net loss and comprehensive loss for the period 4,117,422  3,839,106 
     
Basic and diluted weighted average shares outstanding 55,314,825  39,473,327 
     
Basic and diluted net loss per common share 0.07  0.10 
       
       

Profound Medical Corp.
Interim Condensed Consolidated Statement of Cash Flows
For the period ended March 31, 2017 and 2016

  Three months
ended
March 31,
2017
$
 Three months
ended
March 31,
2016
$
     
Cash provided by (used in)    
     
Operating activities    
Net loss for the period (4,114,782) (3,836,219)
Depreciation of property and equipment 54,001  25,316 
Amortization of intangible assets 12,351  625 
Share-based compensation 100,564  209,114 
Non-cash interest and accretion expense 296,124  283,961 
Deferred revenue 47,154   
Net change in non-cash working capital balances    
Trade and other receivables (462,254) (52,894)
Investment tax credits receivable (66,000) (55,000)
Inventory (447,857) - 
Prepaid expenses and deposits (40,814) (232,009)
Accounts payable and accrued liabilities 577,451  433,856 
Customer deposits (259,293) - 
Provisions 435,632  - 
     
  (3,867,723) (3,223,250)
     
Investing activities    
Purchase of intangible assets (33,825) (42,176)
Purchase of property and equipment (28,528) (51,755)
     
  (62,353) (93,931)
     
Financing activities    
Payment of long-term debt (21,675) (221,675)
Proceeds from share options exercised 10,725  - 
     
  (10,950) (221,675)
     
Decrease in cash during the period (3,941,026) (3,538,856)
     
Cash - Beginning of period 20,833,061  10,522,520 
     
Cash - End of period 16,892,035  6,983,664 


Contacts

For further information, please contact:

Stephen Kilmer
Investor Relations
skilmer@profoundmedical.com
T: 647.872.4849

Or

Rashed Dewan
Vice President, Finance
T: 647.476.1350