Spectral Medical Inc. Closes $10 Million Offering of Units

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

TORONTO, July 27, 2021 (GLOBE NEWSWIRE) —  Spectral Medical Inc. (TSX: EDT) (“Spectral” or the “Company“), 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., has closed its previously announced bought deal offering (the “Offering“) of units of the Company (the “Units“). Aggregate gross proceeds of the Offering were approximately $10 million.

The Offering was conducted by Paradigm Capital Inc., as sole Canadian underwriter and bookrunner, and A.G.P./Alliance Global Partners, as the exclusive U.S. placement agent for the Offering (together, the “Underwriters“), and consisted of the sale of 23,530,000 Units, at a price of $0.425 per Unit. Each Unit consisted of one common share of the Company (a “Common Share“) and one-half of one Common Share purchase warrant of the Company (each whole Common Share purchase warrant a “Warrant“), with each Warrant entitling the holder thereof to acquire one Common Share at a price of $0.50 for a period of 36 months from today’s date.

The Underwriters received a cash commission equal to 6.5% of the gross proceeds of the Offering and the Company also issued the Underwriters such number of compensation options (“Compensation Options“) as is equal to 6.5% of the Units issued under the Offering, with each Compensation Option entitling the holder to acquire one Common Share at a price of $0.486 for a period of 24 months from today’s date.

The Company intends to use the net proceeds from the Offering for its Phase III registration trial for its PMX treatment for endotoxemic septic shock, patient enrolment into the DIMI usability trial, product development and regulatory approval for the DIMI device, an observational study in support of Tigris, and for general corporate and working capital purposes, as more fully described in the prospectus supplement (the “Prospectus Supplement“) of the Company dated July 23, 2021.

The securities issued pursuant to the Offering were qualified for distribution pursuant to the Prospectus Supplement and a short form base shelf prospectus (the “Base Shelf Prospectus“) dated July 3, 2020, filed in each of the provinces and territories of Canada other than Québec, and offered and sold elsewhere outside of Canada on a private placement basis. The Prospectus Supplement, Base Shelf Prospectus, and the documents incorporated by reference therein, are available on the Company’s issuer profile on SEDAR at www.sedar.com.

This press release does not constitute an offer to sell or a solicitation of an offer to buy the Units in any jurisdiction, nor will there be any offer or sale of the Units in any jurisdiction in which such offer, solicitation or sale would be unlawful. The Units have not and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act“) or any U.S. state securities laws, and therefore will not be offered or sold within the United States except pursuant to applicable exemptions from the registration requirements of the U.S. Securities Act and applicable state securities laws.

The issuance of Units to insiders pursuant to the Offering is considered to be a related party transaction under Multilateral Instrument 61-101. The Company is relying on exemptions from the formal valuation and minority shareholder approval requirements provided under sections 5.5(a) and 5.7(a) of Multilateral Instrument 61-101 on the basis that participation in the Offering by insiders does not exceed 25% of the fair market value of the Company’s market capitalization. A material change report in connection with the participation of insiders in the Offering will be filed less than 21 days in advance of the closing of the Offering, which the Company deemed reasonable in the circumstances so as to be able to avail itself of potential financing opportunities and complete the Offering in an expeditious manner.

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 or forward-looking statements within the meaning of securities laws and includes, without limitation, statements regarding the anticipated use of proceeds from the Offering. 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, including but not limited to the ongoing impact of COVID-19.

Actual results could differ materially from what is currently expected, and readers are cautioned not to place undue reliance on these forward-looking statements. Except as required by law, the Company disclaims any obligation to update or revise any forward-looking statements. Reference is also made to the other risks and uncertainties that may affect the Company which are more fully described in Spectral’s Annual Information Form dated March 25, 2021, the Base Shelf Prospectus, the Prospectus Supplement and other filings of Spectral with the securities regulatory authorities which are available at www.sedar.com.

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

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