Profound Medical Announces Third Quarter 2020 Financial Results

Mississauga, Ontario, CANADA


TORONTO, Nov. 05, 2020 (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 third quarter ended September 30, 2020, and provided an update on its operations.

Recent Corporate Highlights

  • On July 21, 2020, Profound closed an underwritten offering of common shares, including the full exercise of the over-allotment option, resulting in the issuance of 3,172,414 common shares at a price of US$14.50, for gross proceeds of approximately US$46 million.

  • As of the end of October 2020, there were six TULSA centers in the United States recruiting patients, an increase from two at the end of Q2-2020.

“The continued execution of our growth plan resulted in a more than four-fold increase in revenue in Q3-2020 compared to the third quarter of 2019,” said Arun Menawat, Profound’s CEO and Chairman. “The recent financing sufficiently strengthened our balance sheet to enable us to make important decisions about strategically and responsibly supporting revenue growth by bolstering our management team, field force, clinical development programs and manufacturing capacity. We look forward to updating investors as we progress.”

Summary Third Quarter 2020 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 third quarter ended September 30, 2020, the Company recorded revenue of $2,980,710 with $2,464,563 from the sale of product, $134,500 from pay per procedure and $381,647 attributable to service revenue. Third quarter 2020 revenue increased approximately 337% from $682,224 in the same three-month period a year ago.

The Company recorded a net loss for the three months ended September 30, 2020 of $8,136,294, or $0.43 per common share, compared to a net loss of $6,269,904 or $0.57 per common share, for the three months ended September 30, 2019. The increase in net loss was primarily attributed to an increase in research and development (“R&D”) expenses of $1,325,088, an increase in general and administrative (“G&A”) expenses of $427,182, an increase in selling and distribution expenses of $706,695 and an increase in net financing costs of $879,005. This was offset by an increase in gross profits of $1,674,852.

Expenditures for R&D for the three months ended September 30, 2020 were $4,749,673, compared to $3,424,585 for the three months ended September 30, 2019. Materials, share based compensation, salaries and benefits and tax credits increased by $1,248,985, $183,215, $209,865, and $47,772, respectively. These increases were due to higher spending on materials and R&D projects for technology improvements and upgrades, options awarded to employees, increased R&D personnel and ineligibility of Scientific Research and Experimental Development (SRED) cash tax credits from the government of Canada. Offsetting these amounts were decreases in consulting fees and travel of $347,658 and $24,345, respectively. These decreases were due to lower spending on consultants as additional employees were hired to replace consultants and lower travel costs due to COVID-19 restrictions.

G&A expenses for the three months ended September 30, 2020 increased by $427,182 compared to the three months ended September 30, 2019. Salaries and benefits, share based compensation, insurance and software expenses increased by $52,740, $236,986, $406,633 and $113,165, respectively, due to increases in salaries, options awarded to employees, insurance costs associated with being Nasdaq listed and software costs due to COVID-19 and annual subscriptions. Offsetting these amounts were decreased consulting fees of $340,205 and travel costs of $26,873, which were due to one-time Nasdaq listing fees incurred in 2019 and COVID-19 travel restrictions. Depreciation expenses decreased by $17,977 due to certain assets being fully depreciated.

Liquidity and Outstanding Share Capital

As at September 30, 2020, the Company had cash of $110,402,232. 

As at November 5, 2020, Profound had an unlimited number of authorized common shares with 19,625,954 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 5, 2020, at 4:30 pm ET during which time the results will be discussed.

Live Call:1-844-407-9500 (Canada and the United States)
 1-862-298-0850 (International)
  
Replay:1-919-882-2331
Replay ID:38213

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 is a commercial-stage medical device company that develops and markets customizable, incision-free therapies for the ablation of diseased tissue.

Profound is commercializing TULSA-PRO®, a 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® has the potential 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, Health Canada approved, and 510(k) cleared by the U.S. Food and Drug Administration.

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. In addition, there is uncertainty about the spread of the COVID-19 virus and the impact it will have on Profound’s operations, the demand for its products, global supply chains and economic activity in general. 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,
2020
$
 December 31,
2019

$
 
   
Assets  
   
Current assets  
Cash110,402,232 19,222,195 
Trade and other receivables6,325,986 4,058,136 
Investment tax credits receivable- 240,000 
Inventory6,590,909 4,764,458 
Prepaid expenses and deposits124,397 1,335,620 
Total current assets123,443,524 29,620,409 
   
Property and equipment799,184 684,718 
Intangible assets2,226,886 3,128,820 
Right-of-use assets1,916,734 2,199,381 
Goodwill3,409,165 3,409,165 
   
Total assets131,795,493 39,042,493 
   
Liabilities  
   
Current liabilities  
Accounts payable and accrued liabilities2,401,240 3,933,114 
Deferred revenue565,991 654,763 
Long-term debt- 5,144,461 
Warranty provision205,077 134,956 
Other liabilities104,848 286,858 
Derivative financial instrument496,843 254,769 
Lease liabilities388,723 258,685 
Income taxes payable241,797 15,763 
Total current liabilities4,404,519 10,683,369 
   
Long-term debt- 6,719,924 
Deferred revenue1,006,379 829,784 
Warranty provision28,509 19,005 
Lease liabilities1,841,771 2,125,873 
   
Total liabilities7,281,178 20,377,955 
   
Shareholders’ Equity  
   
Share capital257,999,788 130,266,880 
Contributed surplus16,511,270 19,580,338 
Accumulated other comprehensive gain/(loss)160,265 (117,188)
Deficit(150,157,008)(131,065,492)
   
Total Shareholders’ Equity124,514,315 18,664,538 
   
Total Liabilities and Shareholders’ Equity131,795,493 39,042,493 
     


Profound Medical Corp.
Interim Condensed Consolidated Statements of Loss and Comprehensive Loss
(Unaudited)
 
 
 Three
months
ended
September 30,
2020
$
Three
months
ended
September 30,
 2019
$
 Nine
months
ended
September 30,
2020
$
 Nine
months
ended
September 30,
2019
$
 
     
Revenue    
Products2,464,563528,578 4,953,903 2,342,199 
Services381,647153,646 734,795 389,922 
Pay per procedure134,500- 273,453 - 
 2,980,710682,224 5,962,151 2,732,121 
Cost of sales 1,018,635395,001 2,829,635 1,172,423 
Gross profit 1,962,075287,223 3,132,516 1,559,698 
     
Operating Expenses     
Research and development4,749,6733,424,585 9,972,757 9,288,686 
General and administrative2,481,2812,054,099 7,809,595 5,154,535 
Selling and distribution1,580,456873,761 4,210,273 1,499,285 
Total operating expenses8,811,4106,352,445 21,992,625 15,942,506 
     
Operating Loss6,849,3356,065,222 18,860,109 14,382,808 
     
Net finance (income)/costs 1,043,987164,982 (328,100)564,216 
     
Loss before income taxes7,893,3226,230,204 18,532,009 14,947,024 
     
Income taxes242,97239,700 559,507 93,700 
     
Net loss for the period8,136,2946,269,904 19,091,516 15,040,724 
     
Other comprehensive loss (income)    
Item that may be reclassified to profit or loss    
Foreign currency translation adjustment - net of tax of $nil (2019 - $nil)118,064(49,193)277,453 (107,425)
Net loss and comprehensive loss for the period8,254,3586,220,711 19,368,969 14,933,299 
     
Loss per share     
Basic and diluted net loss per share0.430.57 1.16 1.39 
        


Profound Medical Corp.
Interim Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
 
 Nine months
ended
September 30,
2020
$
 Nine months
ended
September 30,
 2019
$
 
   
Operating activities  
Net loss for the period(19,091,516)(15,040,724)
Adjustments to reconcile net loss to net cash flows from operating activities:  
Depreciation of property and equipment333,269 365,604 
Amortization of intangible assets901,934 846,329 
Depreciation of right-of-use assets306,548 305,389 
Share-based compensation2,803,146 1,050,583 
Interest and accretion expense727,886 1,028,680 
Deferred revenue87,823 349,229 
Change in fair value of derivative financial instrument242,074 124,881 
Change in fair value of contingent consideration51,712 (371,561)
Foreign exchange on cash(345,200)- 
Changes in non-cash working capital balances  
Investment tax credits receivable240,000 240,000 
Trade and other receivables(2,267,850)1,211,476 
Prepaid expenses and deposits1,211,223 (189,742)
Inventory(2,251,280)(18,986)
Accounts payable and accrued liabilities(1,286,992)(1,223,625)
Provisions79,625 (1,209,347)
Income taxes payable226,034 (297,353)
Net cash flow used in operating activities(18,031,564)(12,829,167)
   
Investing activities  
Purchase of intangible assets- (250,000)
Total cash used in investing activities- (250,000)
   
Financing activities  
Issuance of common shares113,950,328 11,500,001 
Transaction costs paid(8,561,086)(895,513)
Payment of other liabilities(233,722)(16,203)
Payment of long-term debt and interest(12,497,993)(735,717)
Proceeds from share options exercised1,582,567 5,399 
Proceeds from warrants exercised14,888,885 - 
Payment of lease liabilities(262,578)(238,684)
Total cash from financing activities108,866,401 9,619,283 
   
Net change in cash during the period90,834,837 (3,459,884)
Foreign exchange on cash345,200 - 
Cash – Beginning of period19,222,195 30,687,183 
Cash End of period110,402,232 27,227,299