Prepares for First Sonalleve® Shipment to China

TORONTO, Nov. 08, 2018 (GLOBE NEWSWIRE) -- Profound Medical Corp. (TSX:PRN; OTCQX:PRFMF) (“Profound” or the “Company”), the only company to provide a therapeutics platform that provides the precision of real-time Magnetic Resonance (“MR”) imaging combined with the safety and ablation power of directional and focused ultrasound technology for the incision-free ablation of diseased tissue, today reported financial results for the three and nine months ended September 30, 2018. 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.

Recent Corporate Highlights

  • On July 13, 2018, Profound graduated to the Toronto Stock Exchange.
     
  • On July 31, 2018, the Company announced that it had entered into a term loan agreement with CIBC.
     
  • On September 27, 2018, Dr. Jurgen Futterer presented three-year clinical outcomes and a subgroup analysis of Benign Prostatic Hyperplasia (“BPH”) patients enrolled in the previously-reported prospective Phase I Safety & Feasibility Study of TULSA-PRO® (Chin et al, Eur Urol 2016) at the German Society For Urology 70th Annual Congress 2018. The analysis examined lower urinary tract symptoms in a subgroup of nine of the Phase I study patients who had at least moderately symptomatic BPH, based on International Prostate Symptoms Score (“IPSS”) of ≥ 12, in addition to their cancer at baseline. At 12 months after TULSA, IPSS improved by 9.8 ± 7.1 (58 ± 34%) from 16.1 ± 3.8 to 6.3 ± 5.0 (paired t-test p=0.0033), similar to levels reached with modern surgical therapies, and with at least a moderate (> 5 point) reduction experienced by 8/9 patients (89%).

“We are pleased to report that, following the first sale of a Sonalleve® system in China after receiving CFDA approval for the non-invasive treatment of uterine fibroids, we are now preparing to ship the system in the current quarter,” said Arun Menawat, Profound’s CEO. “We expect that the initial commercial launch of Sonalleve® in China, combined with growing interest from European doctors, clinics and patients in TULSA-PRO®, will increase our sales momentum during the remainder of 2018 and into 2019.”

Summary Third Quarter 2018 Results

For the quarter ended September 30, 2018, the Company recorded revenue of $303,664, with $249,548 from the sale of products and $54,116 from installation and training services.  The third quarter 2018 revenue compared to $1,452,773 in the same three-month period a year ago.  The decrease was due to a lack of new system sales in the third quarter of 2018.

The Company recorded a net loss for the three months ended September 30, 2018 of $5,134,966, or $0.05 per common share, compared to a net loss of $5,520,074, or $0.09 per common share, for the three months ended September 30, 2017. The decrease in net loss was primarily attributed to a $235,299 decrease in R&D expenses and a $725,111 decrease in net finance costs. These were partially offset by a $133,573 increase in G&A expenses, a $192,269 increase in selling and distribution expenses and a $216,760 decrease in gross profit.

Expenditures for R&D for the three months ended September 30, 2018 deceased $235,299 compared to the three months ended September 30, 2017. Overall, the decrease in R&D spending was attributed to improved product quality and completion of clinical trial enrolment. Clinical trial costs, travel and rent decreased by $378,482, $39,433 and $45,612, due to the completion of the TACT pivotal clinical trial enrolment initiatives, less travel incurred for said clinical trials. These costs were offset by an increase in material costs of $127,334. Amortization of intangible assets increased by $84,048 due to the Sonalleve® transaction and amortization of the acquired intangible assets.

General and administrative expenses for the third quarter of 2018 were higher by $133,573 compared to the three months ended September 30, 2017. Share-based compensation expense and rent decreased by $186,580 and $48,314, due to issuance of stock options to Company executives and employees in 2017. These costs were offset by an increase in salaries and benefits, and in consulting fees by $202,500 and $190,109, respectively, associated with the addition of G&A personnel and board members, salary increases and TSX graduation fees. Depreciation expense decreased by $24,155, primarily due to property and equipment being fully depreciated.

Liquidity and Outstanding Share Capital

As at September 30, 2018, the Company had cash of $35,212,269. 

As at November 8, 2018, Profound had an unlimited number of authorized common shares with 108,054,939 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, November 8, 2018, at 4:30 pm.ET during which time the results will be discussed.

Live Call:1-877-407-9210 (Canada and the United States)
 1-201-689-8049 (International)
  
Replay:1-877-481-4010 (Canada and the United States)
Replay ID:40417

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

About Profound Medical Corp.

The Profound Medical Corp. team is committed to creating the powerful combination of real-time MR-guidance as the imaging platform and ultrasound as the energy source for delivering non-invasive ablative tools to clinicians.  These key technology pillars, linked with intelligent software and robotics, have the potential to fulfill unmet needs of patients and clinicians in many anatomies and disease states, including prostate cancer, uterine fibroids, and bone metastases.  Our mission is to “profoundly” change the standard of care by creating a tomorrow where clinicians can confidently ablate tissue with precision; a tomorrow where patients have access to safe and effective treatment options, so they can quickly return to their daily lives.

Profound is commercializing a novel technology, TULSA-PRO®, 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® is CE marked and Profound is currently conducting a pilot commercial launch of the technology in key European and other CE mark jurisdictions.  The Company is also sponsoring a multicenter, prospective FDA-registered clinical trial, TACT, which, if successful, is expected to support its application to the U.S. Food and Drug Administration for clearance to market TULSA-PRO® in the United States.

Profound Medical is also commercializing Sonalleve®, an innovative therapeutic platform that combines real-time MR imaging and thermometry with thermal ultrasound to enable precise and incision-free ablation of diseased tissue.  Sonalleve® is CE marked for the treatment of uterine fibroids and palliative pain treatment of bone metastases.  The technology was also recently approved by the Chinese Food and Drug Administration for the non-invasive treatment of uterine fibroids.  The Company is also in the early stages of exploring additional potential treatment markets for Sonalleve®, such as non-invasive ablation of abdominal cancers and hyperthermia for cancer therapy, where the technology has been shown to have clinical application.

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, uterine fibroids and palliative pain treatment. 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.

For further information, please contact:

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


Profound Medical Corp.
Interim Condensed Consolidated Balance Sheets
(Unaudited)

  September 30,
2018
$
  December 31,
2017
$
 
     
Assets    
     
Current assets    
Cash 35,212,269  11,103,223 
Trade and other receivables 1,141,775  4,251,658 
Investment tax credits receivable 420,000  240,000 
Inventory 3,281,895  1,431,157 
Prepaid expenses and deposits 530,977  576,028 
     
  40,586,916  17,602,066 
     
Property and equipment  1,308,527  1,726,150 
     
Intangible assets  4,295,670  5,141,998 
     
Goodwill 3,409,165  3,409,165 
     
  49,600,278  27,879,379 
Liabilities    
     
Current liabilities    
Accounts payable and accrued liabilities 2,764,887  5,081,704 
Deferred revenue 524,815  241,316 
Long-term debt 129,521  4,701,214 
Provisions 1,171,977  93,222 
Other liabilities 690,709  534,958 
Derivative financial instrument 123,552  - 
Income taxes payable 165,924  72,779 
     
  5,571,385  10,725,193 
     
Long-term debt 11,663,354  443,875 
     
Provisions  82,159  988,239 
     
Other liabilities  1,173,595  1,580,933 
     
  18,490,493  13,738,240 
Shareholders’ Equity    
     
Share capital  120,932,404  98,365,770 
     
Contributed surplus 16,423,643  6,103,970 
     
Accumulated other comprehensive loss (71,410) (57,929)
     
Deficit (106,174,852) (90,270,672)
     
  (31,109,785) 14,141,139 
     
  (49,600,278) 27,879,379 
     


Profound Medical Corp.
Interim Condensed Consolidated Statements of Loss and Comprehensive Loss
(Unaudited)

  Three months
ended
September 30,
 2018
$
  Three months
ended
September 30,
2017
$
  Nine months
ended
September 30,
 2018
$
  Nine months
ended
September 30,
2017
$
 
         
Revenue        
Products 249,548  1,452,773  792,973  2,925,536 
Services 54,116  12,639  100,369  88,532 
         
  303,664  1,465,412  893,342  3,014,068 
         
Cost of sales 240,686  1,185,674  598,020  1,968,258 
         
Gross profit 62,978  279,738  295,322  1,045,810 
         
Expenses        
Research and development – net of investment tax credits 2,577,385  2,812,684  7,442,075  7,113,785 
General and administrative 1,765,540  1,631,967  5,305,273  4,478,566 
Selling and distribution 896,052  703,783  2,956,179  2,751,435 
         
  5,238,977  5,148,434  15,703,527  14,343,786 
         
Finance costs  81,468  659,902  715,037  1,080,038 
         
Finance income (155,201) (8,524) (312,362) (89,318)
         
Net finance (income) costs (73,733) 651,378  402,675  990,720 
         
Loss before income taxes 5,102,266  5,520,074  15,810,880  14,288,696 
         
Income tax expense 32,700  -  93,300  4,653 
         
Net loss attributable to shareholders for the period 5,134,966  5,520,074  15,904,180  14,293,349 
         
Other comprehensive loss (income)        
Item that may be classified to profit or loss        
Foreign currency translation adjustment - net of tax 28,176  (3,674) 13,481  14,522 
         
Net loss and comprehensive loss for the period 5,163,142  5,516,400  15,917,661  14,307,871 
         
Basic and diluted weighted average shares outstanding  108,044,656  61,614,117  97,814,500  57,456,823 
         
Basic and diluted net loss per common share   0.05    0.09    0.16    0.25 


Profound Medical Corp.
Interim Condensed Consolidated Statements of Cash Flows
(Unaudited)

  Nine months
ended
September 30,
2018
$
  Nine months
ended
September 30,
2017
$
 
     
Cash provided by (used in)    
     
Operating activities    
Net loss for the period (15,904,180) (14,293,349)
Depreciation of property and equipment 416,071  271,225 
Amortization of intangible assets 846,328  218,408 
Share-based compensation 753,549  973,336 
Interest and accretion expense 770,714  1,135,008 
Change in deferred rent 26,718  96,026 
Change in fair value of derivative financial instrument (71,270) - 
Change in fair value of contingent consideration (106,977) 52,342 
Transaction costs related to business acquisition -  716,767 
Net change in non-cash working capital balances    
Prepaid expenses and deposits 45,051  55,082 
Accounts payable and accrued liabilities (2,328,746) 2,892,346 
Provisions 172,675  685,317 
Inventory (1,850,738) (645,623)
Investment tax credits receivable (180,000) 84,000 
Trade and other receivables 3,109,883  (2,309,834)
Deferred revenue 283,499  149,298 
Customer deposits -  (259,293)
Income taxes payable 93,145  - 
     
  (13,924,277) (10,274,970)
     
Investing activities    
Transaction costs related to business acquisition -  (716,767)
Purchase of intangible assets -  (34,080)
Purchase of property and equipment -  (414,949)
     
  -  (1,165,796)
     
Financing activities    
Issuance of common shares 34,500,000  10,000,000 
Transaction costs paid (2,472,498) (748,196)
Proceeds from bank loan 12,500,000  - 
Bank loan costs paid (714,134) - 
Payment of long-term debt and interest (5,719,845) (2,429,230)
Payment of other liabilities (165,456) (7,742)
Proceeds from share options exercised 105,256  100,301 
     
  38,033,323  6,915,133 
     
Increase (decrease) in cash during the period 24,109,046  (4,525,633)
     
Cash - Beginning of period 11,103,223  20,833,061 
     
Cash - End of period 35,212,269  16,307,428