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Spectral Announces Second Quarter Results and Provides Corporate Update

TORONTO, Aug. 12, 2022 (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, 2022 and provided a corporate update.

Chris Seto, CEO of Spectral Medical, stated, "We continue to advance our Tigris trial, evaluating PMX for endotoxemia and septic shock. To date, we have randomized 40 patients out of the total 150 patients required and we have 14 active trial sites enrolling patients. We are also working with the FDA in order to potentially permit an increase in the maximum number of participating sites from 15 to 25 in order to accelerate patient enrollment. Based on the encouraging data received thus far, we believe PMX has the potential to address a significant unmet medical need that is currently estimated at $1.6 billion in the United States alone, as well as provide hope for the approximately 120,000 patients each year who suffer from endotoxemic septic shock with an estimated 50% mortality rate. Importantly, the FDA recently granted PMX Breakthrough Device Designation, which is expected to help expedite the regulatory review process. We are also working closely with Baxter, our exclusive commercial partner in the U.S. and Canada, in order to prepare for commercialization."

"During the quarter, we appointed Sam Amory as Dialco President. Sam brings decades of experience in the medical device and dialysis fields. Sam has overseen a number of new product launches and built out successful sales teams, all of which we believe will positively impact the development of our pipeline. Following his appointment, our SAMI device was selected by ARC Dialysis, the largest inpatient dialysis provider in South Florida, for inpatient dialysis services. More recently, our SAMI device was selected and added to the approved products list for the United States Department of Veterans Affairs (VA), which provides healthcare services to veterans. Our selection is strong validation of SAMI's safety, efficacy, and ease of use. Overall, we are making significant progress, and we intend to build upon these accomplishments throughout the remainder of the year," concluded, Mr. Seto.

Financial Review

Revenue for the three-months ended June 30, 2022 was $286,000 compared to $559,000 for the same three-month period in the prior year. For the six-months ended June 30, 2022, revenue was $770,000 compared to $1,305,000 for the same period in 2021, representing a decrease of $535,000, or 41%. The decrease in product revenue was mainly due to the timing of orders in addition to supply chain constraints related to sourcing materials for the EAA diagnostic device.

Operating costs for the three-months ended June 30, 2022, were $3,241,000, compared to $3,080,000 for the same period in the preceding year, an increase of $161,000, or 5%. For the six-months ended June 30, 2022, operating costs were $6,413,000 compared to $5,471,000 for the same period in 2021, an increase of $942,000.
While the Company continues to maintain a low cost operating structure for its base business operations, it anticipates its operating costs to increase throughout 2022 as Spectral's Tigris trial enrolment is expected 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 three-months ended June 30, 2022 was $2,955,000 ($0.011 per share) compared to a loss of$2,521,000 ($0.010 per share) for the same quarter last year. The loss for the six-months ended June 30, 2022 was $5,643,000 ($0.021 loss per share) compared to a loss of $4,166,000 ($0.017 loss per share) for the first six months of 2021.

The Company concluded the second quarter of 2022 with cash of $3,466,000 compared to $8,890,000 cash on hand as of December 31, 2021.

The total number of common shares outstanding for the Company was 268,154,992 at June 30, 2022.

Corporate Highlights During & Subsequent to the Second Quarter Ended June 30, 2022

The Company's primary focus continues to be working towards obtaining FDA approval of the PMX treatment; developing the SAMI market; and obtaining regulatory clearance and commercialization of the DIMI platform for home and peritoneal dialysis use.



Management Team

On May 16, 2022, the Company announced the appointment of Samuel Amory as President of Dialco. Mr. Amory is responsible for the operations of Dialco, including the commercialization of its SAMI and DIMI devices. Mr. Amory brings decades of experience in the medical device and dialysis fields. Since 2005, he served as Vice President of the US Renal Therapies division at B. Braun Medical, a leader in fluid therapy and pain management.

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, Toraymyxintm ("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 (EAAtm), 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 340,000 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. In July 2022, the U.S. FDA granted Breakthrough Device Designation for PMX for the treatment of endotoxemic septic shock. Approximately 330,000 patients are diagnosed with 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:
Blair McInnisAli MahdaviDavid Waldman/Natalya Rudman
CFOCapital Markets & Investor RelationsUS Investor Relations
Spectral Medical Inc.Spinnaker Capital Markets Inc.Crescendo Communications, LLC

Spectral Medical Inc.
Condensed Interim Consolidated Statements of Financial Position
In CAD (000s)

  June 30,
 December 31,
  $ $ 
Current assets   
Cash 3,466 8,890 
Trade and other receivables 100 205 
Inventories 463 293 
Prepayments and other assets 1,141 875 
  5,170 10,263 
Non-current assets   
Right-of-use-asset 485 532 
Property and equipment 382 532 
Intangible asset 219 228 
Total assets 6,256 11,555 
Current liabilities   
Trade and other payables 1,410 1,522 
Current portion of contract liabilities 668 689 
Current portion of lease liability 94 92 
  2,172 2,303 
Non-current liability   
Lease liability 443 490 
Non-current portion of contract liabilities 4,345 4,679 
Total liabilities 6,960 7,472 
Shareholders' (deficiency) equity   
Share capital 84,509 84,357 
Contributed surplus 8,773 7,985 
Share-based compensation 8,688 7,984 
Warrants 1,463 2,251 
Deficit (104,137)(98,494)
Total shareholders' (deficiency) equity (704)4,083 
Total liabilities and shareholders' equity 6,256 11,555 

Spectral Medical Inc.
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
In CAD (000s), except for share and per share data

June 30,
June 30,
June 30,
June 30,
  $ $ $ $ 
Revenue 286 559 770 1,305 
Changes in inventories of finished goods and work-in-process 47 106 83 172 
Raw materials and consumables used 177 90 289 165 
Salaries and benefits 1,303 1,554 3,096 2,814 
Consulting and professional fees 1,018 618 1,696 1,162 
Regulatory and investor relations 140 138 320 274 
Travel and entertainment 118 34 203 60 
Facilities and communication 155 76 245 146 
Insurance 119 97 238 194 
Depreciation and amortization 71 72 144 152 
Interest expense on lease liability 6 7 13 14 
Foreign exchange loss 10 53 12 94 
Other (income) expense (6)66 (9)90 
Write down of property and equipment to fair value 83 174 83 174 
Gain on disposal of property and equipment - (5)- (40)
  3,241 3,080 6,413 5,471 
Loss and comprehensive loss for the period (2,955)(2,521)(5,643)(4,166)
Basic and diluted loss per common share (0.011)(0.010)(0.021)(0.017)
Weighted average number of common shares outstanding ? basic and diluted 268,147,683 243,543,981 268,064,079 240,323,764 

Spectral Medical Inc.
Condensed Interim Consolidated Statements of Changes in Shareholders' Equity
In CAD (000s)

  Number of shares Share Capital Contributed surplus 

Share-based compensation
 Warrants Deficit Total Shareholders' (deficiency) equity 
    $ $ $ $ $ $ 
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)
Bought deal offering 23,530,000 7,406 - - 1,464 - 8,870 
Share options exercised 143,333 98 - (46)- - 52 
Loss and comprehensive loss for the period - - - - - (4,619)(4,619)
Share-based compensation - - - 252 - - 252 
Balance, December 31, 2021 267,886,408 84,357 7,985 7,984 2,251 (98,494)4,083 

Balance, January 1, 2022 267,886,408 84,357 7,985 7,984 2,251 (98,494)4,083 
Share options exercised 219,546 121 - (53)- - 68 
RSUs released 49,038 31 - (31)- - - 
Warrants expired - - 788 - (788)- (788)
Loss and comprehensive loss for the period - - - - - (5,643)(5,643)
Share-based compensation - - - 788 - - 788 
Balance, June 30, 2022 268,154,992 84,509 8,773 8,688 1,463 (104,137)(704)

Spectral Medical Inc.
Condensed Interim Consolidated Statements of Cash Flows
In CAD (000s)

  Six-months ended
June 30, 2022
 Six-months ended
June 30, 2021
  $ $ 
Cash flow provided by (used in)   
Operating activities   
Loss and comprehensive loss for the period (5,643)(4,166)
Adjustments for:   
Depreciation on right-of-use asset 47 47 
Depreciation on property and equipment 88 96 
Amortization of intangible asset 9 9 
Interest expense on lease liability 13 14 
Unrealized foreign exchange (gain) loss on cash (7)105 
Share-based compensation 788 1,007 
Write down of property and equipment to fair value 83 174 
Gain on disposal of property and equipment - (40)
Changes in items of working capital:   
Trade and other receivables 105 (31)
Inventories (170)52 
Prepayments and other assets (266)(344)
Trade and other payables (112)(948)
Contract liabilities (355)(317)
Net cash used in operating activities (5,420)(4,342)
Investing activities   
Proceeds on disposal of property and equipment - 77 
Property and equipment acquisitions (21)(367)
Net cash used in investing activities (21)(290)
Financing activities   
Lease liability payments (58)(56)
Share options exercised 68 - 
Warrants exercised - 3,356 
Net cash provided by financing activities 10 1,410 
Decrease in cash (5,431)(1,332)
Effects of exchange rate changes on cash 7 (105)
Cash, beginning of period 8,890 5,807 
Cash, end of period 3,466 4,370 

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