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Profound Medical Announces Second Quarter 2019 Financial Results

/EIN News/ -- TORONTO, Aug. 14, 2019 (GLOBE NEWSWIRE) -- Profound Medical Corp. (TSX:PRN; OTCQX:PRFMF) (“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 months ended June 30, 2019, and provided an update on its operations.

Recent Corporate Highlights

  • On April 4, 2019, Profound announced positive topline results from the TACT (TULSA-PRO® Ablation Clinical Trial) pivotal study designed to support its application to the U.S. Food and Drug Administration (“FDA” or the “Agency”) for 510(k) clearance to market TULSA-PRO® in the United States. In the TACT trial, all primary efficacy and safety endpoints, as well as all key secondary endpoints, were achieved.
     
  • On April 11, 2019, the Company hosted its first Analyst & Investor Day in New York, NY. The program featured presentations on TULSA-PRO® from key opinion leaders in the United States who have gained first-hand experience with the technology as investigators for the TACT trial and from current commercial users in Europe. In addition, leading global researchers and clinicians presented on both current and potential future applications for Sonalleve®.
     
  • On April 17, 2019, Profound announced that the first prostate cancer treatment using a first-of-its-kind installation combining its TULSA-PRO® system with Philips’ newest digital MR solution, the Ingenia Elition, was performed in Trier, Germany.
     
  • On May 5, 2019, Dr. Scott Eggener, Chief Investigator of the TACT study, and Director of the Prostate Cancer Program at the University of Chicago, shared detailed results from TACT during a late-breaking abstract presentation as part of the plenary session programming at the American Urological Association’s (“AUA”) 2019 Annual Meeting being held in Chicago, IL.
     
  • On May 6, 2019, Profound announced that its 510(k) application for TULSA-PRO® had cleared the FDA's acceptance review. The application is currently undergoing a substantive review by the Agency.
     
  • On June 13, 2019, the Company announced that all six nominees for its board of directors were elected and all matters put forward before shareholders were approved by the requisite majority of votes cast at its Annual and Special Meeting of Shareholders.
     
  • On July 9, 2019, Profound announced that it had sold its first TULSA-PRO® system in Japan to Hokuyu Hospital in Sapporo. The sale was made via Japan's Pharmaceutical and Medical Device Act’s expanded access program.  

“This was a pivotal quarter for Profound, marked by TACT’s compelling clinical trial data, positive TULSA-PRO® and Sonalleve® user feedback from leading researchers and clinicians at our first Analyst & Investor Day event, the strong reception that TULSA-PRO® received at AUA, and the filing of our 510(k) application for TULSA-PRO® with the FDA,” said Arun Menawat, Profound’s CEO.

Summary Second 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 June 30, 2019, the Company recorded revenue of $574,109, with $465,840 from the sale of products and $108,269 from installation and training services. While second quarter 2019 revenue increased approximately 169% from $213,343 in the same three-month period a year ago, the Company noted that its Q2-2019 sales levels were negatively impacted by the lag time between product ordering and shipment.

“Despite triple-digit percentage growth over the comparable period in 2018, revenue for the 2019 second quarter was still below our internal expectation. This was due to some unfortunate timing, as a Sonalleve® system order slipped into Q3,” commented Dr. Menawat. “Had this shipment been completed in Q2-2019, revenues would have been approximately $1.2 million. Fortunately, with the recognition of this revenue anticipated in the third quarter, along with our growing sales pipeline of both TULSA-PRO® and Sonalleve®  products, we remain very well positioned and expect increasing commercial traction throughout the remainder of 2019.”

The Company recorded a net loss for the three months ended June 30, 2019 of $5,844,134, or $0.05 per common share, compared to a net loss of $5,831,028, or $0.05 per common share, for the three months ended June 30, 2018. The increase in net loss was primarily attributed to an increase in research and development (“R&D”) expenses of $838,446, an increase in selling and distribution expenses of $41,644 and an increase in net finance costs of $30,181. This was offset by a decrease in general and administrative (“G&A”) expenses of $650,206 and an increase in gross profits of $242,959

Expenditures for R&D for the three months ended June 30, 2019 were higher by $838,446 compared to the three months ended June 30, 2018. Clinical trial costs, materials, share based compensation and salaries and benefits increased by $219,569, $294,225, $33,986, and $244,263, respectively. These increases were due to increased spending and testing for R&D and U.S. regulatory projects, analysis of TACT clinical data, options awarded to employees, increased R&D personnel and a $60,000 decrease in investment tax credits because of lower eligibility for refundable tax credits.  Offsetting these amounts were decreases in rent of $57,456 due to the adoption of IFRS 16 resulting in the recognition of lower rental costs. Depreciation expenses increased by $26,762 due to the adoption of IFRS 16 with the depreciation of the right-of-use assets.

G&A expenses for the second quarter of 2019 decreased by $650,206 compared to the three months ended June 30, 2018. Salaries and benefits, consulting fees and travel decreased by $386,996, $386,594 and $24,337, respectively due to no bonuses being awarded to management this quarter, lower G&A project initiatives and decreased travel to customer sites. These costs were offset by an increase in share based compensation of $111,817, due to options awarded to various employees. Depreciation expense increased by $59,759 due to the adoption of IFRS 16 with the depreciation of the right-of-use assets.

Liquidity and Outstanding Share Capital

As at June 30, 2019, the Company had cash of $20,493,470. 

As at August 14, 2019, Profound had an unlimited number of authorized common shares with 108,072,939 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, August 14, 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:   1-919-882-2331
Replay ID:   50000


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 CE marked and commercially launched in key European and other CE mark jurisdictions. 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).

In April 2019, Profound announced positive topline results from a multicenter, prospective clinical trial, TACT, which is expected to support its recent application to the FDA for 510(k) clearance to market TULSA-PRO® in the United States. 

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 Food and Drug 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 Sheet
(Unaudited)

    June 30,
2019
$
  December 31,
2018
$
         
Assets        
         
Current assets        
Cash   20,493,470     30,687,183  
Trade and other receivables   2,934,283     2,686,112  
Investment tax credits receivable   480,000     480,000  
Inventory   3,611,346     3,631,623  
Prepaid expenses and deposits   161,685     434,871  
Total current assets   27,680,784     37,919,789  
         
Property and equipment   914,848     1,207,357  
Intangible assets   3,449,342     4,013,561  
Right-of-use assets   2,408,572     -  
Goodwill   3,409,165     3,409,165  
         
Total assets   37,862,711     46,549,872  
         
Liabilities        
         
Current liabilities        
Accounts payable and accrued liabilities   2,339,451     3,912,350  
Deferred revenue   420,741     312,558  
Long-term debt   3,475,358     1,339,583  
Provisions   87,741     1,352,017  
Other liabilities   614,285     567,296  
Derivative financial instrument   152,423     98,203  
Lease liabilities   211,599     -  
Income taxes payable   164,079     297,353  
Total current liabilities   7,465,677     7,879,360  
         
Long-term debt   8,562,737     10,615,662  
Deferred revenue   658,026     379,044  
Provisions   45,162     49,319  
Other liabilities   432,545     1,000,153  
Lease liabilities   2,279,037     -  
         
Total liabilities   19,443,184     19,923,538  
         
Shareholders’ Equity        
         
Share capital   120,942,484     120,932,404  
Contributed surplus   17,208,040     16,756,294  
Accumulated other comprehensive loss   (86,935 )   (28,703 )
Deficit   (119,644,062 )   (111,033,661 )
         
Total Shareholders’ Equity   18,419,527     26,626,334  
         
Total Liabilities and Shareholders’ Equity   37,862,711     46,549,872  


Profound Medical Corp.
Interim Condensed Consolidated Statement of Loss and Comprehensive Loss
(Unaudited)

    Three
months
ended
June 30,
2019
$
  Three
months
ended
June 30,
2018
$
  Six
months

ended
June 30,
2019
$
  Six
months

ended
June 30,
2018
$
                 
Revenue                
Products   465,840     170,931     1,813,621     543,425  
Services   108,269     42,412     236,276     46,253  
    574,109     213,343     2,049,897     589,678  
Cost of sales   244,066     126,259     777,422     357,334  
Gross profit   330,043     87,084     1,272,475     232,344  
                 
Operating Expenses                
Research and development   3,186,355     2,347,909     5,864,101     4,864,690  
General and administrative   1,586,323     2,236,529     3,100,436     3,539,733  
Selling and distribution   1,154,869     1,113,225     625,524     2,060,127  
Total operating expenses   5,927,547     5,697,663     9,590,061     10,464,550  
                 
Operating Loss   5,597,504     5,610,579     8,317,586     10,232,206  
                 
Other income and expense                
Finance costs   337,220     313,606     651,905     633,569  
Finance income   (110,790 )   (117,357 )   (252,671 )   (157,161 )
    226,430     196,249     399,234     476,408  
Loss before tax   5,823,934     5,806,828     8,716,820     10,708,614  
                 
Income taxes     20,200     24,200     54,000     60,600  
                 
Net loss for the period   5,844,134     5,831,028     8,770,820     10,769,214  
                 
Other comprehensive loss                
Item that may be reclassified to profit or loss                
Foreign currency translation adjustment - net of tax   (11,843 )   57,943     (58,232 )   14,695  
Net loss and comprehensive loss for the period   5,832,291     5,888,971     8,712,588     10,783,909  
Loss per share                 
Basic and diluted net loss per share    0.05      0.05      0.08      0.12  



Profound Medical Corp.
Interim Condensed Consolidated Statement of Cash Flows
(Unaudited)

    Six months
ended
June 30,
2019
$
  Six months
ended
June 30,
2018
$
         
Operating activities        
Net loss for the period   (8,770,820 )   (10,769,214 )
Adjustments to reconcile net loss to net cash flows from operating activities:        
Depreciation of property and equipment   257,299     284,167  
Amortization of intangible assets   564,219     564,219  
Depreciation of right-of-use assets   204,126     -  
Share-based compensation   456,427     476,931  
Interest and accretion expense   681,258     522,215  
Change in deferred rent   -     20,670  
Deferred revenue   387,165     28,520  
Change in fair value of derivative financial instrument   54,220     -  
Change in fair value of contingent consideration   (208,911 )   (24,546 )
Changes in non-cash working capital balances        
Investment tax credits receivable   -     (120,000 )
Trade and other receivables   (248,171 )   3,227,089  
Prepaid expenses and deposits   63,186     (93,660 )
Inventory   20,277     (1,144,721 )
Accounts payable and accrued liabilities   (1,612,144 )   (2,320,795 )
Provisions   (1,219,114 )   151,263  
Income taxes payable   (133,274 )   62,089  
Net cash flow used in operating activities   (9,504,257 )   (9,135,773 )
         
Financing activities        
Issuance of common shares   -     34,500,000  
Transaction costs paid   -     (2,455,695 )
Payment of other liabilities   (16,203 )   (164,389 )
Payment of long-term debt and interest   (534,709 )   (1,953,822 )
Proceeds from share options exercised   5,399     102,375  
Payment of lease liabilities   (143,943 )   -  
Total cash (used in) from financing activities   (689,456 )   30,028,469  
         
Net change in cash during the period   (10,193,713 )   20,892,696  
Cash – Beginning of period   30,687,183     11,103,223  
Cash – End of period   20,493,470     31,995,919  

 

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