TORONTO, March 07, 2019 (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 fourth quarter and full year ended December 31, 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.
Full Year 2018 and Recent Corporate Highlights
- On January 31, 2018, the Company announced the completion of patient enrollment in the TACT (TULSA-PRO® Ablation Clinical Trial) pivotal study to evaluate the safety and efficacy of TULSA-PRO® to ablate prostate tissue in patients with localized, organ-confined prostate cancer.
- On March 20, 2018, Profound completed a bought deal financing pursuant to a short form prospectus for total gross proceeds of $34.5 million.
- On May 9, 2018, Profound announced that the China Food and Drug Administration approved Sonalleve® for the non-invasive treatment of uterine fibroids.
- On May 21, 2018, Profound announced initial data from the TACT pivotal study, whose primary efficacy endpoint is the proportion of patients achieving a post-treatment prostate-specific antigen (“PSA”) reduction ≥ 75% of their pre-treatment baseline value. The Company reported that the median PSA reduction was 95% (nadir 0.36 ng/ml), with 95% (109 out of 115) patients meeting the PSA endpoint.
- On July 13, 2018, Profound graduated to the Toronto Stock Exchange.
- On July 30, 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%).
- On January 21, 2019, the Company and Siemens Healthcare GmbH (“Siemens”) executed a new co-marketing and co-selling agreement, pursuant to which all prior financial commitments and obligations owed to Siemens under the previous agreement were released and replaced with a one-time, fixed license fee of US$100,000 and a relatively small annual license fee for each TULSA-PRO® system interfaced to a Siemens MRI Scanner.
“We are pleased to report a five-fold increase in fourth quarter 2018 revenue compared to the previous quarter, driven by the pilot launch of Sonalleve® in China and increasing interest in TULSA-PRO® in Europe,” said Arun Menawat, Profound’s CEO. “Profound achieved important milestones in 2018, reporting positive initial data from the TACT pivotal clinical trial in localized prostate cancer as well as clinical outcomes results that suggest TULSA-PRO® could meaningfully benefit BPH patients. We are looking forward to reporting the full 12-month results from the TACT trial, and plan on filing a premarket submission with the FDA for TULSA-PRO® by the end of the second quarter of this year. We also continue to work to obtain additional international marketing approvals for Sonalleve®.”
Summary Fourth Quarter 2018 Results
For the quarter ended December 31, 2018, the Company recorded revenue of $1,708,936, with $1,628,358 from the sale of products and $80,578 from installation and training services. This was slightly higher than the Company’s preliminary unaudited revenue estimate announced on January 3, 2019. Fourth quarter 2018 revenue declined approximately 10% from $1,890,482 in the same three-month period a year ago, but represented more than a five-fold sequential increase compared with $303,664 in the previous quarter.
The Company recorded a net loss for the three months ended December 31, 2018 of $4,858,809, or $0.04 per common share, compared to a net loss of $4,528,993, or $0.06 per common share, for the three months ended December 31, 2017. The increase in net loss was primarily attributed to an increase in R&D expenses of $298,908 and a decrease in gross profit of $298,077. These were partially offset by a decrease in G&A expenses of $105,199, a decrease in selling and distribution expenses of $39,201 and in net finance costs of $190,783.
Expenditures for R&D for the three months ended December 31, 2018 increased $298,908 compared to the three months ended December 31, 2017. Overall, the increase in R&D spending was attributed to new project initiatives. Materials, consulting fees, salaries and benefits, rent and other expenses increased by $273,169, $110,017, $168,137, $21,792 and $129,545, respectively. These costs were higher due to new R&D projects, increased R&D personnel and occupancy costs. Offsetting these amounts was a decrease in clinical trial costs of $402,414 because of the completion of the TACT pivotal clinical trial enrollment initiatives.
General and administrative expenses for the fourth quarter of 2018 were lower by $105,199 compared to the three months ended December 31, 2017. Consulting fees, share-based compensation expense and office and other expense decreased by $132,821, $90,463 and $50,583, respectively, due to issuance of stock options to Company executives and employees in 2017 and lower consulting costs due to less activity transpiring in Q4 2018. These costs were offset by an increase in salaries and benefits of $179,082, due to increased G&A personnel, board members and overall salary increases.
Summary Full Year 2018 Results
For the year ended December 31, 2018, the Company recorded revenue of $2,602,278, with $2,421,331 from the sale of products and $180,947 from installation and training services. This compares to $4,904,550 in the twelve months ended December 31, 2017.
The Company recorded a net loss for the year ended December 31, 2018 of $20,762,989 or $0.21 per Common Share, compared to a net loss of $18,822,342 or $0.31 per Common Share for the year ended December 31, 2017. The increase in net loss was primarily attributed to an increase in R&D expenses of $627,198, an increase in G&A expenses of $721,508, an increase selling and distribution expenses of $165,543, and a decrease in gross profit of $1,048,565. These were offset by a decrease in net finance costs of $778,828.
Expenditures for R&D for the year ended December 31, 2018 were higher by $627,198 compared to the year ended December 31, 2017. Overall, the increase in R&D spending was attributed to the Sonalleve® Transaction, which occurred in Q3 2017. Materials, occupancy costs, salaries and benefits and other expenses increased by $125,035, $110,756, $1,224,691 and $177,625, respectively. These costs were higher compared to the year ended December 31, 2017, due to a higher number of R&D personnel, new initiatives with the Sonalleve® product and a new facility in Finland. Offsetting these amounts was a decrease in clinical trial costs, travel and share based compensation by $1,544,191, $26,194 and $67,403, respectively, resulting from the completion of the TACT Pivotal Clinical Trial enrollment initiatives and the forfeiture of certain share options. Amortization of intangible assets increased by $626,593 due to the Sonalleve® Transaction which represents 12 months amortization in 2018 versus 5 months amortization in 2017.
G&A expenses for the year ended December 31, 2018 were higher by $721,508 compared to the year ended December 31, 2017. Salaries and benefits, travel and office and other increased by $885,846, $60,982 and $28,879, respectively, due to increased number of G&A personnel and board members, bonus payments, salary increases, the inclusion of Sonalleve® operations, increased insurance expenses and travel to customer sites. These costs were offset by a decrease in share-based compensation expense and occupancy costs by $326,501 and $106,427, respectively, on account of decreased share-based compensation expense and lower utility bills and repairs to the facilities. Depreciation expense increased by $167,970 primarily due to leasehold improvements for the new facility that was constructed in the latter part of 2017.
Liquidity and Outstanding Share Capital
As at December 31, 2018, the Company had cash of $30,687,183.
As at March 7, 2019, 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, March 7, 2019, at 4:30 pm.ET during which time the results will be discussed.
| Live Call: | 1-844-602-0380 (Canada and the United States) | ||||
| 1-862-298-0970 (International) | |||||
| Replay: | 1-877-481-4010 (Canada and the United States) | ||||
| Replay ID: | 44363 |
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.
Profound develops and markets customizable therapies for incision- and radiation-free ablation of diseased tissue.
Profound is commercializing TULSA-PRO®, a novel technology that combines real-time MRI, robotically-driven transurethral ultrasound and closed-loop thermal feedback control. TULSA-PRO® is designed to provide predictable and precise ablation of both cancerous and benign prostate tissue while protecting the surrounding anatomy to help preserve the prostate’s normal function. TULSA-PRO® is CE marked and has been limitedly commercially launched in key European and other CE mark jurisdictions. TULSA-PRO® is proving to be a flexible technology in the treatment of a variety of prostate diseases including localized intermediate stage cancer, urinary retention and hematuria in late stage cancer, localized radio-recurrent cancer, and large volume benign prostatic hyperplasia (BPH).
Profound has completed enrollment in a multicenter, prospective clinical trial, TACT, which, if successful, is expected to support its application to the U.S. Food and Drug Administration for approval to market TULSA-PRO® in the United States.
Profound is also commercializing Sonalleve®, an innovative therapeutic platform that is CE marked for the treatment of uterine fibroids and palliative pain treatment of bone metastases. Sonalleve® has also been approved by the China Food and Drug Administration for the non-invasive treatment of uterine fibroids. The Company is in the early stages of exploring additional potential treatment markets for Sonalleve® where the technology has been shown to have clinical application, such as non-invasive ablation of abdominal cancers and hyperthermia for cancer therapy.
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. Consolidated Balance Sheets As at December 31, 2018 and 2017 | ||||||
| 2018 $ | 2017 $ | |||||
| Assets | ||||||
| Current assets | ||||||
| Cash | 30,687,183 | 11,103,223 | ||||
| Trade and other receivables | 2,686,112 | 4,251,658 | ||||
| Investment tax credits receivable | 480,000 | 240,000 | ||||
| Inventory | 3,631,623 | 1,431,157 | ||||
| Prepaid expenses and deposits | 434,871 | 576,028 | ||||
| Total current assets | 37,919,789 | 17,602,066 | ||||
| Property and equipment | 1,207,357 | 1,726,150 | ||||
| Intangible assets | 4,013,561 | 5,141,998 | ||||
| Goodwill | 3,409,165 | 3,409,165 | ||||
| Total assets | 46,549,872 | 27,879,379 | ||||
| Liabilities | ||||||
| Current liabilities | ||||||
| Accounts payable and accrued liabilities | 3,912,350 | 5,081,704 | ||||
| Deferred revenue | 312,558 | 132,364 | ||||
| Long-term debt | 1,339,583 | 4,701,214 | ||||
| Provisions | 1,352,017 | 93,222 | ||||
| Other liabilities | 567,296 | 534,958 | ||||
| Derivative financial instrument | 98,203 | - | ||||
| Income taxes payable | 297,353 | 72,779 | ||||
| Total current liabilities | 7,879,360 | 10,616,241 | ||||
| Long-term debt | 10,615,662 | 443,875 | ||||
| Deferred revenue | 379,044 | 108,952 | ||||
| Provisions | 49,319 | 988,239 | ||||
| Other liabilities | 1,000,153 | 1,580,933 | ||||
| Total liabilities | 19,923,538 | 13,738,240 | ||||
| Shareholders’ Equity | ||||||
| Share capital | 120,932,404 | 98,365,770 | ||||
| Contributed surplus | 16,756,294 | 6,103,970 | ||||
| Accumulated other comprehensive loss | (28,703 | ) | (57,929 | ) | ||
| Deficit | (111,033,661 | ) | (90,270,672 | ) | ||
| Total Shareholders’ Equity | 26,626,334 | 14,141,139 | ||||
| Total Liabilities and Shareholders’ Equity | 46,549,872 | 27,879,379 | ||||
| Profound Medical Corp. Consolidated Statements of Loss and Comprehensive Loss For the years ended December 31, 2018 and 2017 | ||||||
| 2018 $ | 2017 $ | |||||
| Revenue | ||||||
| Products | 2,421,331 | 4,663,986 | ||||
| Services | 180,947 | 240,564 | ||||
| Total revenue | 2,602,278 | 4,904,550 | ||||
| Cost of sales | 1,778,501 | 3,032,208 | ||||
| Gross profit | 823,777 | 1,872,342 | ||||
| Expenses | ||||||
| Research and development - net of investment tax credits of $240,000 (2017 – $240,000) | 10,265,388 | 9,638,190 | ||||
| General and administrative | 6,656,723 | 5,935,215 | ||||
| Selling and distribution | 4,091,347 | 3,925,804 | ||||
| Total expenses | 21,013,458 | 19,499,209 | ||||
| Finance costs | 826,312 | 1,249,084 | ||||
| Finance income | (483,788 | ) | (127,732 | ) | ||
| Net finance costs | 342,524 | 1,121,352 | ||||
| Loss before income taxes | 20,532,205 | 18,748,219 | ||||
| Income tax expense | 230,784 | 74,123 | ||||
| Net loss attributable to shareholders for the year | 20,762,989 | 18,822,342 | ||||
| Other comprehensive loss (income) | ||||||
| Item that may be reclassified to profit or loss | ||||||
| Foreign currency translation adjustment - net of tax | 29,226 | (69,245 | ) | |||
| Net loss and comprehensive loss for the year | 20,792,215 | 18,753,097 | ||||
| Basic and diluted weighted average shares outstanding | 100,395,649 | 61,404,141 | ||||
| Basic and diluted loss per common share | 0.21 | 0.31 | ||||
| Profound Medical Corp. Consolidated Statements of Cash Flows For the years ended December 31, 2018 and 2017 | ||||||
| 2018 $ | 2017 $ | |||||
| Cash provided by (used in) | ||||||
| Operating activities | ||||||
| Net loss for the year | (20,762,989 | ) | (18,822,342 | ) | ||
| Depreciation of property and equipment | 546,001 | 371,320 | ||||
| Amortization of intangible assets | 1,128,437 | 500,518 | ||||
| Share-based compensation | 1,086,199 | 1,338,330 | ||||
| Interest and accretion expense | 1,028,843 | 1,347,825 | ||||
| Change in deferred rent | 7,108 | 123,627 | ||||
| Deferred revenue | 450,286 | 241,316 | ||||
| Change in fair value of derivative financial instrument | (96,619 | ) | - | |||
| Change in fair value of contingent consideration | (325,253 | ) | 82,578 | |||
| Transaction costs related to business acquisition | - | 716,767 | ||||
| Net change in non-cash working capital balances | ||||||
| Investment tax credits receivable | (240,000 | ) | 24,000 | |||
| Trade and other receivables | 1,565,546 | (3,985,322 | ) | |||
| Prepaid expenses and deposits | 141,157 | 120,881 | ||||
| Inventory | (2,200,466 | ) | (1,014,334 | ) | ||
| Accounts payable and accrued liabilities | (1,167,336 | ) | 3,245,048 | |||
| Provisions | 319,875 | 1,041,842 | ||||
| Customer deposits | - | (259,293 | ) | |||
| Income taxes payable | 224,574 | 72,779 | ||||
| Total cash used in operating activities | (18,294,637 | ) | (14,854,460 | ) | ||
| Investing activities | ||||||
| Cash acquired in business acquisition | - | 183,988 | ||||
| Transaction costs related to business acquisition | - | (716,767 | ) | |||
| Purchase of intangible assets | - | (34,080 | ) | |||
| Purchase of property and equipment | - | (430,569 | ) | |||
| Total cash used in investing activities | - | (997,428 | ) | |||
| Financing activities | ||||||
| Issuance of common shares | 34,500,000 | 10,000,000 | ||||
| Transaction costs paid on issuance of common shares | (2,472,498 | ) | (1,086,132 | ) | ||
| Proceeds from bank loan | 12,500,000 | - | ||||
| Bank loan costs paid | (735,698 | ) | - | |||
| Payment of long-term debt and interest | (5,851,489 | ) | (2,877,050 | ) | ||
| Payment of other liabilities | (166,975 | ) | (15,069 | ) | ||
| Proceeds from share options exercised | 105,257 | 100,301 | ||||
| Total cash provided by financing activities | 37,878,597 | 6,122,050 | ||||
| Increase (decrease) in cash during the year | 19,583,960 | (9,729,838 | ) | |||
| Cash - Beginning of year | 11,103,223 | 20,833,061 | ||||
| Cash - End of year | 30,687,183 | 11,103,223 | ||||