TORONTO, Nov. 07, 2019 (GLOBE NEWSWIRE) -- Profound Medical Corp. (NASDAQ:PROF; TSX:PRN) (“Profound” or the “Company”), the only company to provide customizable, incision-free therapies which combine real-time Magnetic Resonance Imaging (“MRI”), thermal ultrasound and closed-loop temperature feedback control for the radiation-free ablation of diseased tissue, today reported financial results for the three and nine months ended September 30, 2019, and provided an update on its operations.
Recent Corporate Highlights
- On July 9, 2019, Profound announced that it had sold its first TULSA-PRO® system in Japan to Hokuyu Hospital in Sapporo via Japan's Pharmaceutical and Medical Device Act’s expanded access program.
- On August 15, 2019, Profound announced the appointment of accomplished financial executive Steve Forte to its Board of Directors.
- On August 16, 2019, Profound announced that it received 510(k) clearance from the U.S. Food and Drug Administration (“FDA”) to market TULSA-PRO® for ablation of prostate tissue and indicated that it expects to commence the product’s U.S. commercial launch in Q4-2019.
- On September 20, 2019, Profound announced the closing of an offering of units of the Company (the “Units”), including the full exercise of the over-allotment option, for 10,454,546 Units sold at a price of $1.10 per Unit for gross proceeds of $11,500,001.
- On October 16, 2019, Profound effected a 10:1 share consolidation in anticipation of its listing on Nasdaq.
- On October 29, 2019, Profound’s common shares commenced trading on the Nasdaq Capital Market under the symbol “PROF”; in addition, its common shares continue to trade on the Toronto Stock Exchange under the symbol “PRN.”
“The compelling TACT pivotal trial data announced earlier in the year continues to drive TULSA-PRO® adoption in Europe, as reflected by higher third quarter 2019 recurring revenues,” said Arun Menawat, Profound’s CEO. “Since the recent receipt of FDA clearance to market TULSA-PRO® in the United States, our main focus has been on commercialization and we have already visited some 75 U.S. institutions. We are very encouraged by the resounding interest in adopting the technology, such that we expect to have a first commercial TULSA-PRO® site operational and treating patients before year-end.”
Summary Third Quarter 2019 Results
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.
For the quarter ended September 30, 2019, the Company recorded revenue of $682,224, with $528,578 from the sale of products and $153,646 from installation and training services. This represented recurring revenue growth of 125% year-over-year and 17% sequentially over the previous quarter, as there was no new system sales revenue recorded during the Q3-2018, Q2-2019 and Q3-2019 periods.
“Although we have two Sonalleve® purchase orders in hand, both sites have experienced installation delays,” said Dr. Menawat. “Had installation of both systems been completed as anticipated, third quarter revenues would have been approximately $1.9 million. Despite this shift in timing, we do expect to complete delivery of both systems by the end of the year, with related revenue realized in the fourth quarter.”
The Company recorded a net loss for the three months ended September 30, 2019 of $6,269,904, or $0.57 per common share, compared to a net loss of $5,134,966 or $0.48 per common share, for the three months ended September 30, 2018. The increase in net loss was primarily attributed to increases in R&D expenses, G&A expenses and net finance costs of $847,200, $288,559 and $238,715, respectively. This was offset by a decrease in selling and distribution expenses of $22,291 and an increase in gross profits of $224,245.
Expenditures for R&D for the three months ended September 30, 2019 were higher by $847,200 compared to the three months ended September 30, 2018. Clinical trial costs, materials, consulting fees, travel, share based compensation and salaries and benefits and other expenses increased by $59,314, $397,625, $158,783, $38,982, $121,423, $102,719 and $45,826, respectively. These increases were due to increased spending and testing for R&D and FDA regulatory projects, analysis of TACT clinical data and TACT renewal fees, options vesting for employees and increased R&D personnel. Offsetting these amounts were decreases in rent of $107,716, due to the adoption of IFRS 16 resulting in the recognition of lower rental costs. Depreciation expenses increased by $25,731 due to the adoption of IFRS 16 with the depreciation of the right-of-use assets.
G&A expenses for the third quarter of 2019 increased by $288,559 compared to the three months ended September 30, 2018. Share based compensation increased by $225,500 due to options issued to employees. Depreciation expenses increased by $51,659 due to the adoption of IFRS 16 with the depreciation of the right-of-use assets.
Liquidity and Outstanding Share Capital
As at September 30, 2019, the Company had cash of $27,227,299.
As at November 7, 2019, Profound had an unlimited number of authorized common shares with 11,852,749 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 7, 2019, 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 | |
| Replay ID: | 55908 |
The call will also be broadcast live and archived on the Company's website at www.profoundmedical.com under "Webcasts" in the Investors section.
About Profound Medical Corp.
Profound develops and markets customizable, incision-free therapies for the ablation of diseased tissue.
Profound is commercializing TULSA-PRO®, a novel technology that combines real-time MRI, robotically-driven transurethral ultrasound and closed-loop temperature feedback control. TULSA-PRO® is designed to provide customizable and predictable radiation-free ablation of a surgeon-defined prostate volume while actively protecting the urethra and rectum to help preserve the patient’s natural functional abilities. TULSA-PRO® is demonstrating to be a flexible technology in customizable prostate ablation, including intermediate stage cancer, localized radio-recurrent cancer, retention and hematuria palliation in locally advanced prostate cancer, and the transition zone in large volume benign prostatic hyperplasia (BPH). TULSA-PRO® is CE marked and received 510(k) clearance from the U.S. Food and Drug Administration in August 2019.
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 National Medical Products 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. Interim Condensed Consolidated Balance Sheets (Unaudited) | ||||||
| September 30, 2019 $ | December 31, 2018 $ | |||||
| Assets | ||||||
| Current assets | ||||||
| Cash | 27,227,299 | 30,687,183 | ||||
| Trade and other receivables | 1,474,636 | 2,686,112 | ||||
| Investment tax credits receivable | 240,000 | 480,000 | ||||
| Inventory | 3,650,609 | 3,631,623 | ||||
| Prepaid expenses and deposits | 414,613 | 434,871 | ||||
| Total current assets | 33,007,157 | 37,919,789 | ||||
| Property and equipment | 784,766 | 1,207,357 | ||||
| Intangible assets | 3,417,232 | 4,013,561 | ||||
| Right-of-use assets | 2,297,088 | - | ||||
| Goodwill | 3,409,165 | 3,409,165 | ||||
| Total assets | 42,915,408 | 46,549,872 | ||||
| Liabilities | ||||||
| Current liabilities | ||||||
| Accounts payable and accrued liabilities | 2,735,984 | 3,912,350 | ||||
| Deferred revenue | 606,218 | 312,558 | ||||
| Long-term debt | 4,613,931 | 1,339,583 | ||||
| Provisions | 115,776 | 1,352,017 | ||||
| Other liabilities | 651,170 | 567,296 | ||||
| Derivative financial instrument | 223,084 | 98,203 | ||||
| Lease liabilities | 216,984 | - | ||||
| Income taxes payable | - | 297,353 | ||||
| Total current liabilities | 9,163,147 | 7,879,360 | ||||
| Long-term debt | 7,539,690 | 10,615,662 | ||||
| Deferred revenue | 434,613 | 379,044 | ||||
| Provisions | 26,894 | 49,319 | ||||
| Other liabilities | 233,010 | 1,000,153 | ||||
| Lease liabilities | 2,218,980 | - | ||||
| Total liabilities | 19,616,334 | 19,923,538 | ||||
| Shareholders’ Equity | ||||||
| Share capital | 130,395,091 | 120,932,404 | ||||
| Contributed surplus | 18,954,077 | 16,756,294 | ||||
| Accumulated other comprehensive loss | (136,128 | ) | (28,703 | ) | ||
| Deficit | (125,913,966 | ) | (111,033,661 | ) | ||
| Total Shareholders’ Equity | 23,299,074 | 26,626,334 | ||||
| Total Liabilities and Shareholders’ Equity | 42,915,408 | 46,549,872 | ||||
| Profound Medical Corp. Interim Condensed Consolidated Statements of Loss and Comprehensive Loss (Unaudited) | ||||||||
| Three months ended September 30, 2019 $ | Three months ended September 30, 2018 $ | Nine months ended September 30, 2019 $ | Nine months ended September 30, 2018 $ | |||||
| Revenue | ||||||||
| Products | 528,578 | 249,548 | 2,342,199 | 792,973 | ||||
| Services | 153,646 | 54,116 | 389,922 | 100,369 | ||||
| 682,224 | 303,664 | 2,732,121 | 893,342 | |||||
| Cost of sales | 395,001 | 240,686 | 1,172,423 | 598,020 | ||||
| Gross profit | 287,223 | 62,978 | 1,559,698 | 295,322 | ||||
| Operating Expenses | ||||||||
| Research and development - net of investment tax credits of $nil (2018 – $180,000) | 3,424,585 | 2,577,385 | 9,288,686 | 7,442,075 | ||||
| General and administrative | 2,054,099 | 1,765,540 | 5,154,535 | 5,305,273 | ||||
| Selling and distribution – net of revenue share obligation reversal | 873,761 | 896,052 | 1,499,285 | 2,956,179 | ||||
| Total operating expenses | 6,352,445 | 5,238,977 | 15,942,506 | 15,703,527 | ||||
| Operating Loss | 6,065,222 | 5,175,999 | 14,382,808 | 15,408,205 | ||||
| Other income and expense | ||||||||
| Finance costs | 269,613 | 81,468 | 921,518 | 715,037 | ||||
| Finance income | (104,631 | ) | (155,201 | ) | (357,302 | ) | (312,362 | ) |
| 164,982 | (73,733 | ) | 564,216 | 402,675 | ||||
| Loss before income taxes | 6,230,204 | 5,102,266 | 14,947,024 | 15,810,880 | ||||
| Income taxes | 39,700 | 32,700 | 93,700 | 93,300 | ||||
| Net loss for the period | 6,269,904 | 5,134,966 | 15,040,724 | 15,904,180 | ||||
| Other comprehensive loss | ||||||||
| Item that may be reclassified to profit or loss | ||||||||
| Foreign currency translation adjustment - net of tax of nil | (49,193 | ) | 28,176 | (107,425 | ) | 13,481 | ||
| Net loss and comprehensive loss for the period | 6,220,711 | 5,163,142 | 14,933,299 | 15,917,661 | ||||
| Loss per share | ||||||||
| Basic and diluted net loss per share | 0.57 | 0.48 | 1.39 | 1.63 | ||||
| Profound Medical Corp. Interim Condensed Consolidated Statements of Cash Flows (Unaudited) | ||||
| Nine months ended September 30, 2019 $ | Nine months ended September 30, 2018 $ | |||
| Operating activities | ||||
| Net loss for the period | (15,040,724 | ) | (15,904,180 | ) |
| Adjustments to reconcile net loss to net cash flows from operating activities: | ||||
| Depreciation of property and equipment | 365,604 | 416,071 | ||
| Amortization of intangible assets | 846,329 | 846,328 | ||
| Depreciation of right-of-use assets | 305,389 | - | ||
| Share-based compensation | 1,050,583 | 753,549 | ||
| Interest and accretion expense | 1,028,680 | 770,714 | ||
| Change in deferred rent | - | 26,718 | ||
| Deferred revenue | 349,229 | 283,499 | ||
| Change in fair value of derivative financial instrument | 124,881 | (71,270 | ) | |
| Change in fair value of contingent consideration | (371,561 | ) | (106,976 | ) |
| Changes in non-cash working capital balances | ||||
| Investment tax credits receivable | 240,000 | (180,000 | ) | |
| Trade and other receivables | 1,211,476 | 3,109,883 | ||
| Prepaid expenses and deposits | (189,742 | ) | 45,051 | |
| Inventory | (18,986 | ) | (1,850,738 | ) |
| Accounts payable and accrued liabilities | (1,223,625 | ) | (2,328,746 | ) |
| Provisions | (1,209,347 | ) | 172,675 | |
| Income taxes payable | (297,353 | ) | 93,145 | |
| Net cash flow used in operating activities | (12,829,167 | ) | (13,924,277 | ) |
| Investing activities | ||||
| Purchase of intangible assets | (250,000 | ) | - | |
| Total cash used in investing activities | (250,000 | ) | - | |
| Financing activities | ||||
| Issuance of common shares | 11,500,001 | 34,500,000 | ||
| Transaction costs paid | (895,513 | ) | (2,472,498 | ) |
| Proceeds from bank loan | - | 12,500,000 | ||
| Bank loan costs paid | - | (714,134 | ) | |
| Payment of other liabilities | (16,203 | ) | (165,456 | ) |
| Payment of long-term debt and interest | (735,717 | ) | (5,719,845 | ) |
| Proceeds from share options exercised | 5,399 | 105,256 | ||
| Payment of lease liabilities | (238,684 | ) | - | |
| Total cash from financing activities | 9,619,283 | 38,033,323 | ||
| Net change in cash during the period | (3,459,884 | ) | 24,109,046 | |
| Cash – Beginning of period | 30,687,183 | 11,103,223 | ||
| Cash – End of period | 27,227,299 | 35,212,269 | ||