Spectral Announces Second Quarter Results and Provides Corporate Update

TORONTO, Aug. 13, 2021 (GLOBE NEWSWIRE) — Spectral Medical Inc. (“Spectral” or the “Company”) (TSX: EDT), a late stage theranostic company advancing therapeutic options for sepsis and septic shock, as well as commercializing a new proprietary platform targeting the renal replacement therapy market through its wholly-owned subsidiary Dialco Medical Inc. (Dialco), today announced its financial results for the second quarter ended June 30, 2021, and provided a corporate update.

“We are pleased to report continued positive progress, both clinically and operationally, throughout the second quarter,” commented, Chris Seto, CEO of Spectral. “Specifically, our Tigris trial is getting back on track following delays due to the pandemic, with recruitment activities returning to normalized levels as well as onboarding of the remaining clinical trial sites expected to be completed during the third quarter of 2021. We have recently experienced accelerated trial activities, with our sites experiencing heightened patient screening, enrollment, and randomization and currently have a total of 20 patients randomized out of the 150 total patients to be enrolled. There is a significant unmet need for Toraymyxin™ (“PMX”) with over 1.7 million new cases of sepsis each year, in the United States alone, resulting in an estimated 250,000 annual deaths. Spectral’s addressable market, which is comprised of patients suffering from endotoxemic septic shock, represents an estimated 120,000 patients per year. Based on the results of the earlier EUPHRATES trial, we are very encouraged and optimistic about the Tigris trial outcome and look forward to reporting topline data in the first half of 2022.”

“We continue to advance the development and commercialization of our SAMI and DIMI devices through Dialco Medical. We are progressing our DIMI usability trial, which is designed to evaluate the safety of DIMI in the home setting by analyzing delivered dialysis dose and potential adverse events during six weeks of use at home compared to six weeks of use in the hospital setting on the same patients. Towards this end, we have engaged CROMSOURCE, a high quality, ISO-certified international provider of outsourced clinical trial services, as our contract research organization partner for the DIMI IDE trial. Onboarding CROMSOURCE, a recognized global leader in conducting clinical trials, is an important milestone in the trial’s initiation process. We now anticipate site onboarding and commencement of enrollment activities at the beginning of the fourth quarter of 2021 with completion of the study expected during the second half of 2022. DIMI’s versatility addresses many of the barriers to adoption for home hemodialysis, and positions DIMI as the ideal device for multiple segments of chronic dialysis patients. As evidenced by our activities, we are committed to bringing this disruptive innovation to market, thereby empowering more patients and their care partners to transfer in-center dialysis to their homes, which we believe will significantly enhance the quality of life for these patients and reduce the financial burden for payers. Regarding our SAMI device, we continue to invest in building out our field force and commercial infrastructure to further penetrate the market, given that we have both FDA and Health Canada regulatory approvals.”

“We currently have approximately $13 million of cash on hand after completing the most recent financing. This financing provides us adequate funding to execute on a number of key milestones, as we work to position Spectral as a leader within the fields of septic shock and renal replacement therapy,” concluded, Mr. Seto.

Program Update

Tigris Trial

The Tigris trial is getting back on track and patient enrollment is well underway. In anticipation of COVID-19 receding and diminished strain on trial site ICUs, Spectral conducted an investigator meeting in June 2021, which was well attended by the principal investigators, study site staff, and the Company’s clinical team. As a result, Spectral immediately ramped up its Tigris trial initiative and clinical sites have increased activities, including heightened patient screening, enrollment, and randomization. 12 trial sites are now actively screening patients and open for enrollment. Spectral is onboarding additional clinical trial sites, including the University of Michigan, which is now actively screening patients. The Company is in the process of onboarding the remaining clinical trial sites, with all 15 trial sites anticipated to be screening patients by the end of third quarter 2021. Tigris currently has a total of 20 patients randomized to-date out of the 150 total to be enrolled.


  • DIMI Usability Trial
    On June 7, 2021, Dialco announced engaging CROMSOURCE as its Contract Research Organization Partner for its DIMI IDE Trial. CROMSOURCE is an ISO certified international provider of outsourced clinical trial services that has been a trusted partner to pharmaceutical, medical device, and biotechnology companies for more than 20 years.
  • DIMI Commercialization
    In order to support commercial expansion, and in anticipation to the start-up of the DIMI usability trial, Dialco is expanding its field force for sales training and technical support. Dialco currently has field representatives in Ontario and Quebec, as well as Pennsylvania, Florida and Michigan, with recruitment initiatives underway for further expansion.
  • SAMI Commercialization
    SAMI continues to be launched in Canada and the U.S. with successful clinical evaluations ongoing in key hemodialysis centres, as well as expansion of the commercial sales pipeline. As hospitals are experiencing a significant shortage of CRRT machines in COVID-19 affected ICUs, there has been increased activity with respect to the use of SAMI in the treatment of COVID-19 positive patients. The Company has successfully developed remote installation, and set-up on-line training for SAMI.

Financial Review

Revenue for the three-months ended June 30, 2021 was $559,000 compared to $517,000 for the same three-month period last year. For the six-months ended June 30, 2021, revenue was $1,305,000 compared to $1,148,000 in the first half of 2020. The majority of the increase is due to the timing of orders for products and revenue from the exclusive distribution agreement with Baxter International Inc. (“Baxter”).

Operating costs for the quarter ended June 30, 2021, were $3,080,000 compared to $2,466,000 for the corresponding period in 2020, representing an increase of $614,000. Operating costs for the six-months ended June 30, 2021 were $5,471,000, a decrease of $1,051,000 from $6,522,000 for the six-month period ended June 30, 2020. The majority of the decrease relates to a non-recurring fee payable to a financial advisory services firm, which was incurred in the first quarter of 2020, relating to a legacy financial advisory agreement. In addition, clinical development and regulatory program expenses decreased by approximately $399,000, in the six-months ended June 30, 2021 as compared to the same six-month period in the prior year. Clinical activity was limited due to the impact of the COVID-19 pandemic on the Tigris trial. The Company also incurred approximately $275,000 in professional fees in connection with a withdrawn prospectus offering in early March 2020. Lastly, the Company received $250,000 under the Canada Emergency Wage Subsidy Program established to support businesses during the COVID-19 pandemic, which was offset against expenses incurred in the period.

While the Company maintains a low-cost operating structure for its base business operations, the Company anticipates its operating costs to increase for the remainder of 2021. The Company expects its Tigris trial enrollment to increase, combined with incremental costs associated with Dialco’s upcoming usability trial for DIMI and the increase in field resources for the marketing and commercialization activities of its RRT devices.

Loss for the quarter ended June 30, 2021 was $2,521,000 ($0.010 per share) compared to a loss of $1,949,000 ($0.009 per share) for the same quarter last year. Loss for the six-months ended June 30, 2021 was $4,166,000 ($0.017 loss per share) compared to a loss of $5,374,000 ($0.024 loss per share) for the same period last year.

The Company ended the second quarter of 2021 with cash of $4,370,000 compared to $5,807,000 cash on hand as of December 31, 2020.

The total number of common shares outstanding for the Company was 244,213,075 as of June 30, 2021.

Warrant Exercise

For the six-months ended June 30, 2021, 7,457,330 warrants were exercised at a price of $0.45 per warrant. Accordingly, the Company received proceeds of $3,356,000. The Company issued share purchase warrants in connection with its financing that closed on April 23, 2018, which entitled each holder the right to purchase one common share of the Company at an exercise price of $0.45 per share for a three-year period ending April 20, 2021 (“April 2018 Warrants”).

Bought Deal Offering

On July 27, 2021, the Company closed a bought deal offering (“Offering”) resulting in the issuance of 23,530,000 units (“Units”), at a price of $0.425 per Unit. Aggregate gross proceeds of the Offering were approximately $10.0 million. Each Unit consists of one share of the Company and one-half of one share purchase warrant (each whole share purchase warrant a “Warrant”), with each Warrant entitling the holder to acquire one share at a price of $0.50, with an expiry date of July 27, 2024.

The Company also issued a number of compensation options (“Compensation Options”) to the underwriters representing 6.5% of the total number of Units issued under the Offering. Each Compensation Option entitles the holder to acquire one share at an exercise price of $0.486 per share for a 2-year period, expiring July 27, 2023.

The Company has granted an over-allotment option to the Underwriters (“Over-Allotment Option”) to purchase an additional 3,529,500 Units equal to 15% of the Offering. The Over-Allotment Option will be exercisable in whole or in part, at the sole discretion of the Underwriters, for a period of 30 days from July 27, 2021, and can be exercised for additional Units, Warrants and/or shares, or any combination thereof. If the Over-Allotment Option is exercised in full, the total gross proceeds to the Company would be $11.5 million.

U.S. Listing Update

Management and the Board believe a senior U.S. listing aligns with the goals of the business and its stakeholders, and the Company continues to prepare for a potential listing on a senior U.S. exchange.

About Spectral

Spectral is a Phase 3 company seeking U.S. FDA approval for its unique product for the treatment of patients with septic shock, Toraymyxin™ (“PMX”). PMX is a therapeutic hemoperfusion device that removes endotoxin, which can cause sepsis, from the bloodstream and is guided by the Company’s Endotoxin Activity Assay (EAA™), the only FDA cleared diagnostic for the risk of developing sepsis.

PMX is approved for therapeutic use in Japan and Europe, and has been used safely and effectively on more than 300,000 patients to date. In March 2009, Spectral obtained the exclusive development and commercial rights in the U.S. for PMX, and in November 2010, signed an exclusive distribution agreement for this product in Canada. Approximately 330,000 patients are diagnosed with severe sepsis and septic shock in North America each year.

Spectral, through its wholly owned subsidiary, Dialco Medical Inc., is also commercializing a new set of proprietary platforms addressing renal replacement therapy (RRT) across the dialysis spectrum. SAMI is targeting the acute RRT market, while DIMI is targeting the chronic RRT market.  Dialco is currently pursuing regulatory approval for U.S. in-home use of DIMI, which is based on the same RRT platform as SAMI, but will be intended for home hemodialysis use.  DIMI recently received its FDA 510k clearance for use in hospital and clinical settings, and obtained its Health Canada license for use within Canadian hospitals, clinics and in home.

Spectral is listed on the Toronto Stock Exchange under the symbol EDT. For more information, please visit www.spectraldx.com.

Forward-looking statement

Information in this news release that is not current or historical factual information may constitute forward-looking information within the meaning of securities laws. Implicit in this information, particularly in respect of the future outlook of Spectral and anticipated events or results, are assumptions based on beliefs of Spectral’s senior management as well as information currently available to it. While these assumptions were considered reasonable by Spectral at the time of preparation, they may prove to be incorrect. Readers are cautioned that actual results are subject to a number of risks and uncertainties, including the availability of funds and resources to pursue R&D projects, the successful and timely completion of clinical studies, the ability of Spectral to take advantage of business opportunities in the biomedical industry, the granting of necessary approvals by regulatory authorities as well as general economic, market and business conditions, and could differ materially from what is currently expected.

The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this statement.

For further information, please contact:

Mr. Chris Seto Mr. Ali Mahdavi David Waldman/Natalya Rudman
CEO Capital Markets & Investor Relations US Investor Relations
Spectral Medical Inc. Spinnaker Capital Markets Inc. Crescendo Communications, LLC
416-626-3233 ext. 2004 416-962-3300 212-671-1020
cseto@spectraldx.com  am@spinnakercmi.com edt@crescendo-ir.com

Spectral Medical Inc.
Condensed Interim Consolidated Statements of Financial Position
(in thousands of Canadian dollars)
  June 30,
    December 31,
  $     $  
Current assets      
Cash 4,370     5,807  
Trade and other receivables 291     260  
Inventories 296     348  
Prepayments and other assets 733     389  
  5,690     6,804  
Non-current assets      
Right-of-use-asset 578     625  
Property and equipment 548     488  
Intangible asset 237     246  
Total assets 7,053     8,163  
Current liabilities      
Trade and other payables 1,193     2,141  
Current portion of contract liabilities 693     676  
Current portion of lease liability 89     85  
  1,975     2,902  
Non-current liability      
Lease liability 536     582  
Non-current portion of contract liabilities 5,014     5,348  
Total liabilities 7,525     8,832  
Shareholders’ deficiency      
Share capital 76,853     71,870  
Contributed surplus 7,985     7,981  
Share-based compensation 7,778     6,771  
Warrants 787     2,418  
Deficit (93,875 )   (89,709 )
Total shareholders’ deficiency (472 )   (669 )
Total liabilities and shareholders’ deficiency 7,053     8,163  

Spectral Medical Inc.
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
(in thousands of Canadian dollars, except for share and per share data)
  Three-months ended
June 30,

  Six-months ended
June 30,

  2021   2020   2021   2020  
  $   $   $   $  
Revenue 559   517   1,305   1,148  
Changes in inventories of finished goods and work-in-process 106   8   172   12  
Raw materials and consumables used 90   171   165   304  
Salaries and benefits 1,554   1,061   2,814   2,491  
Consulting and professional fees 618   682   1,162   3,194  
Regulatory and investor relations 138   85   274   231  
Travel and entertainment 34   15   60   103  
Facilities and communication 76   81   146   167  
Insurance 97   62   194   124  
Depreciation and amortization 72   74   152   144  
Interest expense on lease liability 7   9   14   17  
Foreign exchange loss (gain) 53   226   94   (254 )
Other expense (income) 66     90   (3 )
Write down of property and equipment to fair value 174     174    
Gain on disposal of property and equipment (5 ) (8 ) (40 ) (8 )
  3,080   2,466   5,471   6,522  
Loss and comprehensive loss for the period (2,521 ) (1,949 ) (4,166 ) (5,374 )
Basic and diluted loss per common share (0.010 ) (0.009 ) (0.017 ) (0.024 )
Weighted average number of common shares outstanding – basic and diluted 243,543,981   229,226,624   240,323,764   228,330,467  

Spectral Medical Inc.
Condensed Interim Consolidated Statements of Changes in Shareholders’ (Deficiency) Equity
(in thousands of Canadian dollars)
  Notes Issued capital
  Warrants   Deficit   Total
    Number $ $ $   $   $   $  
Balance, January 1, 2020   225,876,683 66,837 7,981 6,183   1,870   (80,611 ) 2,260  
Public offering   8,500,000 3,526   788     4,314  
Share options exercised   1,129,062 677 (248 )     429  
Warrants exercised   1,100,000 735   (240 )   495  
Loss and comprehensive loss for the period       (5,374 ) (5,374 )
Share-based compensation   662       662  
Balance, June 30, 2020   236,605,745 71,775 7,981 6,597   2,418   (85,985 ) 2,786  
Share options exercised   150,000 95 (44 )     51  
Loss and comprehensive loss for the period       (3,724 ) (3,724 )
Share-based compensation   218       218  
Balance, December 31, 2020   236,755,745 71,870 7,981 6,771   2,418   (89,709 ) (669 )

Balance, January 1, 2021   236,755,745 71,870 7,981 6,771   2,418   (89,709 ) (669 )
Warrants exercised   7,457,330 4,983   (1,627 )   3,356  
Warrants expired   4   (4 )    
Loss and comprehensive loss for the period       (4,166 ) (4,166 )
Share-based compensation   1,007       1,007  
Balance, June 30, 2021   244,213,075 76,853 7,985 7,778   787   (93,875 ) (472 )

Spectral Medical Inc.
Condensed Interim Consolidated Statements of Cash Flows
(in thousands of Canadian dollars)
  Six-months ended June 30,
  2021     2020  
  $     $  
Cash flow provided by (used in)      
Operating activities      
Loss and comprehensive loss for the period (4,166 )   (5,374 )
Adjustments for:      
Depreciation on right-of-use asset 47     47  
Depreciation on property and equipment 96     89  
Amortization of intangible asset 9     8  
Interest expense on lease liability 14     17  
Unrealized foreign exchange loss on cash 105     27  
Share-based compensation 1,007     662  
Write down of property and equipment to fair value 174      
Gain on disposal of property and equipment (40 )   (8 )
Changes in items of working capital:      
Trade and other receivables (31 )   (130 )
Inventories 52     (72 )
Prepayments and other assets (344 )   (354 )
Contract asset     519  
Trade and other payables (948 )   1,611  
Contract liabilities (317 )   6,354  
Net cash (used in) provided by operating activities (4,342 )   3,396  
Investing activities      
Proceeds on disposal of property and equipment 77     10  
Property and equipment expenditures (367 )   (132 )
Net cash used in investing activities (290 )   (122 )
Financing activities      
Proceeds from public offering     5,100  
Transaction costs paid     (422 )
Lease liability payments (56 )   (54 )
Share options exercised     429  
Warrants exercised 3,356     495  
Net cash provided by financing activities 3,300     5,548  
(Decrease) increase in cash (1,332 )   8,822  
Effects of exchange rate changes on cash (105 )   (27 )
Cash, beginning of period 5,807     1,435  
Cash, end of period 4,370     10,230  

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