ISFIYA, Israel, Aug. 15, 2016 /PRNewswire/ -- Check-Cap Ltd.
(the "Company" or "Check-Cap") (NASDAQ: CHEK, CHEKW), a clinical
stage medical diagnostics company engaged in the development of an
ingestible capsule for preparation-free, colorectal cancer
screening, today provided a corporate update and announced its
financial results for the second quarter and six months ended
June 30, 2016.
"We are encouraged with the progress made in recent months in
advancing both the Check Cap System and other key corporate
objectives," said Bill Densel, CEO
of Check-Cap. "The recent registered direct financing and
grant by the Israeli Office of the Chief Scientist furnishes us
with financial flexibility which we believe provides us with
funding through the end of 2017 for our ongoing clinical program
and U.S. pilot study. We are currently on target to submit
the Check Cap System for CE Marking in the first half of 2017, and
remain focused on bringing our system to market."
Recent Highlights:
- The Company closed a registered direct offering of ordinary
shares and pre-paid warrants with gross proceeds of $5.9 million with a single health-care focused
institutional investor.
- The Company entered into a strategic relationship with GE
Healthcare to develop and validate high-volume manufacturing for
X-ray source production and assembly into Check-Cap's capsule. Upon
successful completion, the parties may discuss collaboration on
execution of a high-volume manufacturing facility and distribution
of the Check-Cap system.
- The Company received an award of a grant in the amount of
NIS 4.8 million (or approximately
$1.25 million) for 2016 from the
Israeli Office of the Chief Scientist (the "OCS").
- The Company was granted two new patents, the first in the US
and the second in Europe that
broaden the intellectual property position covering its core X-ray
technology. These latest additions build on an existing portfolio
which includes 21 granted patents, 2 allowed patents and 35 pending
patent applications.
Financial Results for the Second Quarter Ended June 30, 2016
Research and development expenses, net were $1.1 million in the three months ended
June 30, 2016, compared to
$1.4 million in the same period in
2015. This decrease was primarily due to a $561,000 increase in participation of the OCS
(pro-rated credited to R&D expenses), a $119,000 decrease in subcontractors and materials
and $50,000 decrease in share based
compensation. This decrease was partially offset by an increase of
$423,000 in salary and related
expenses.
General and administrative expenses were $0.9 million in the three months ended
June 30, 2016, compared to
$1.2 million in the same period in
2015. This decrease was primarily due to a decrease in personnel
related cost of $139,000 and other
general and administrative expenses of $107,000.
Operating loss was $2.0 million
for the three months ended June 30,
2016, compared to $2.6 million
in the same period in 2015.
Finance expenses, net were $15,000
in the three months ended June 30,
2016, consisted primarily of $29,000 finance expenses as a result of exchange
rate differences, compared to finance income, net of $132,000 in the same period in 2015, consisted
primarily of $154,000 finance income
as a result of exchange rate differences.
Net loss was $2.0 million in the
three months ended June 30, 2016,
compared to $2.4 million in the same
period in 2015.
Non-GAAP net loss was $1.6 million
in the three months ended June 30,
2016, compared to $2.0 million
in the same period in 2015.
Cash, cash equivalents and short-term bank deposit totaled
$9.4 million at June 30, 2016, compared to $11.7 million at March
31, 2016. Check-Cap's cash balance as of June 30, 2016 does not include the grant from the
OCS or net proceeds from the registered direct offering.
Financial Results for the Six Months Ended June 30, 2016
Research and development expenses, net were $2.9 million in the six months ended June 30, 2016, compared to $2.7 million in the same period in 2015. This
increase was primarily due to the progress made in the development
of the Check-Cap system and to ongoing clinical trial expenses,
including an increase in salaries and related expenses of
$1.1 million due to increased
headcount and a $81,000 increase in
other research and development expenses. This increase was
partially offset by a decrease of $409,000 in share-based compensation and a
$602,000 increase in participation of
the OCS (pro-rated credited to R&D expenses).
General and administrative expenses were $2.0 million in the six months ended June 30, 2016, compared to $3.7 million in the same period in 2015. This
decrease was primarily due to a decrease in share-based
compensation of $1.5 million, a
$131,000 decrease in personnel
related expenses and a $79,000
decrease in other general and administrative related expenses.
Operating loss was $4.9 million
for the six months ended June 30,
2016, compared to $6.4 million
in the same period in 2015.
Finance income, net was $143,000
in the six months ended June 30,
2016, compared to $186,000 in
the same period in 2015.
Net loss was $4.7 million in the
six months ended June 30, 2016,
compared to $6.2 million in the same
period in 2015.
Non-GAAP net loss was $4.0 million
in the six months ended June 30,
2016, compared to $3.7 million
in the same period in 2015.
Net cash used in operating activities was $4.8 million in the six months ended June 30, 2016, compared to $3.8 million in the same period in 2015.
A reconciliation of GAAP results to non-GAAP results is provided
below.
The number of outstanding ordinary shares as of June 30, 2016 was 12,254,479. This number does
not include the ordinary shares that were issued in the registered
direct offering.
Use of Non-GAAP Financial Results
In addition to disclosing financial results calculated in
accordance with U.S. GAAP, the Company's financial results
release contains Non-GAAP financial measures of net loss for the
period that exclude the effects of share-based compensation,
changes in royalties provision and revaluation of warrants to
purchase preferred shares. The Company's management believes the
Non-GAAP financial information provided in this release is useful
to investors' understanding and assessment of the Company's
on-going operations. Management also uses both GAAP and
Non-GAAP information in evaluating and operating business
internally and as such deemed it important to provide all this
information to investors. The Non-GAAP financial measures disclosed
by the Company should not be considered in isolation or as a
substitute for, or superior to, financial measures calculated in
accordance with GAAP, and the financial results calculated in
accordance with GAAP and reconciliations to those financial
statements should be carefully evaluated. Reconciliations between
GAAP measures and Non-GAAP measures are provided later in this
press release.
About Check-Cap
Check-Cap is a clinical-stage medical diagnostics company
developing the world's first ingestible capsule system for
preparation-free, less-invasive colorectal cancer screening.
The capsule utilizes innovative ultra-low dose X-ray and
wireless communication technologies to scan the inside of the colon
as it moves naturally, while the patient follows his or her normal
daily routine. After passage, the system generates a 3D
map of the inner surface of the colon which enables detection of
polyps and cancer. Designed to increase the willingness of
individuals to participate in recommended colorectal cancer
screening, the Check-Cap system addresses many frequently-cited
barriers, including laxative bowel preparation, invasiveness, and
sedation. The Check-Cap system is currently not cleared for
marketing in any jurisdiction.
Legal Notice Regarding Forward-Looking Statements
This press release contains "forward-looking statements."
Words such as "may," "should," "could," "would," "predicts,"
"potential," "continue," "expects," "anticipates," "future,"
"intends," "plans," "believes," "estimates," and similar
expressions, as well as statements in future tense, often signify
forward-looking statements. Forward-looking statements should not
be read as a guarantee of future performance or results and may not
be accurate indications of when such performance or results will be
achieved. Forward-looking statements are based on information that
the Company has when those statements are made or management's good
faith belief as of that time with respect to future events, and are
subject to risks and uncertainties that could cause actual
performance or results to differ materially from those expressed in
or suggested by the forward-looking statements. For a discussion of
these and other risks that could cause such differences and that
may affect the realization of forward-looking statements, please
refer to the "Special Note On Forward-looking Statements" and "Risk
Factors" in the Company's Annual Report on Form 20-F and other
filings with the Securities and Exchange Commission (SEC).
Investors and security holders are urged to read these documents
free of charge on the SEC's web site at
http://www.sec.gov. The Company assumes no obligation to
publicly update or revise its forward-looking statements as a
result of new information, future events or otherwise.
Financial Tables to Follow
CHECK-CAP
LTD.
|
CONSOLIDATED
UNAUDITED BALANCE SHEETS
|
(U.S. dollars in
thousands, except share and per share data)
|
|
|
June
30,
|
|
December
31,
|
|
2016
|
|
2015
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
8,437
|
|
9,392
|
Restricted
cash
|
-
|
|
46
|
Short-term
investments
|
1,003
|
|
4,811
|
Prepaid expenses and
other current assets
|
899
|
|
680
|
Total current
assets
|
10,339
|
|
14,929
|
|
|
|
|
Non-current
assets
|
|
|
|
Property and
equipment, net
|
385
|
|
369
|
Total non-current
assets
|
385
|
|
369
|
|
|
|
|
|
|
|
|
Total
assets
|
10,724
|
|
15,298
|
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
accruals
|
|
|
|
Trade
|
491
|
|
577
|
Other
|
239
|
|
245
|
Other current
liabilities
|
12
|
|
13
|
Employees and payroll
accruals
|
703
|
|
1,238
|
|
|
|
|
Total current
liabilities
|
1,445
|
|
2,073
|
|
|
|
|
Non-current
liabilities
|
|
|
|
Royalties
provision
|
564
|
|
577
|
Total non-current
liabilities
|
564
|
|
577
|
|
|
|
|
Shareholders'
equity
|
|
|
|
Share
capital
|
623
|
|
599
|
Ordinary share of NIS
0.2 par value-Authorized: 57,500,000 shares at December 31,
2015 and June 30, 2016; Issued and outstanding: 11,811,709 and
12,254,479 shares at December 31, 2015 and June 30, 2016,
respectively
|
|
|
|
Additional paid-in
capital
|
46,939
|
|
46,164
|
Accumulated
deficit
|
(38,847)
|
|
(34,115)
|
Total
shareholders' equity
|
8,715
|
|
12,648
|
|
|
|
|
|
|
|
|
Total liabilities
and shareholders' equity
|
10,724
|
|
15,298
|
|
|
|
|
CHECK-CAP
LTD.
|
CONSOLIDATED
UNAUDITED STATEMENTS OF OPERATIONS
|
(U.S. dollars in
thousands, except share and per share data)
|
|
|
Six months ended
June 30,
|
|
Three months ended
June 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
Research and
development expenses, net
|
2,883
|
|
2,697
|
|
1,081
|
|
1,375
|
General and
administrative expenses
|
1,992
|
|
3,700
|
|
894
|
|
1,193
|
Operating
loss
|
4,875
|
|
6,397
|
|
1,975
|
|
2,568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance income
(expenses), net
|
143
|
|
186
|
|
(15)
|
|
132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the
period
|
4,732
|
|
6,211
|
|
1,990
|
|
2,436
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per ordinary
share (in USD) Basic and diluted
|
0.36
|
|
0.62
|
|
0.15
|
|
0.18
|
|
|
|
|
|
|
|
|
Weighted average
number of ordinary shares outstanding - basic and diluted (in
thousands)
|
13,277
|
|
10,503
|
|
13,274
|
|
13,266
|
CHECK-CAP
LTD.
|
CONSOLIDATED
UNAUDITED STATEMENTS OF CASH FLOWS
|
(U.S. dollars in
thousands, except share and per share data)
|
|
|
Six months
ended June
30,
|
|
|
2016
|
|
2015
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
Net loss for the
period
|
(4,732)
|
|
(6,211)
|
|
Adjustments required to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
Revaluation of fair
value of warrants to purchase preferred share
|
-
|
|
(174)
|
|
Depreciation and
amortization
|
63
|
|
38
|
|
Share-based
compensation
|
794
|
|
2,690
|
|
Financial income,
net
|
(64)
|
|
93
|
|
|
|
|
|
|
Changes in assets
and liabilities items:
|
|
|
|
|
Decrease in prepaid
and other current assets and non-current assets
|
(219)
|
|
(206)
|
|
Increase (decrease)
in trade accounts payable, accruals and other current
liabilities
|
(93)
|
|
298
|
|
Decrease in employees
and payroll accruals
|
(535)
|
|
(363)
|
|
Increase (decrease)
in royalties provision
|
(13)
|
|
28
|
|
Net cash used in
operating activities
|
(4,799)
|
|
(3,807)
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
Purchase of property
and equipment
|
(79)
|
|
(105)
|
|
Decrease in
restricted deposit
|
46
|
|
-
|
|
proceeds from
short-term bank deposit, net
|
3,811
|
|
-
|
|
Net cash provided
by (used in) investing activities
|
3,778
|
|
(105)
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
Receipt of short-term
loan from bank
|
-
|
|
1,000
|
|
Repayment of
short-term loan from bank
|
-
|
|
(1,000)
|
|
Issuance of ordinary
shares upon exercise of stock options by employees
|
-
|
|
16
|
|
Exercise of warrants
into ordinary shares
|
5
|
|
29
|
|
Issuance of ordinary
shares in the IPO, net of issuance
expenses
|
-
|
|
10,947
|
|
Issuance of ordinary
shares in the private placement, net of issuance expenses
|
-
|
|
11,021
|
|
Net cash provided
by financing activities
|
5
|
|
22,013
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
61
|
|
-
|
|
Net increase
(decrease) in cash and cash equivalents
|
(955)
|
|
18,008
|
|
Cash and cash
equivalents at the beginning of the period
|
9,392
|
|
1,075
|
|
Cash and cash
equivalents at the end of the period
|
8,437
|
|
19,083
|
|
CHECK-CAP
LTD.
|
SUPPLEMENTAL
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
|
(U.S.
dollars in thousands)
|
|
|
Six months ended
June 30,
|
|
Three months ended
June 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
GAAP net loss for the
period
|
(4,732)
|
|
(6,211)
|
|
(1,990)
|
|
(2,436)
|
Share-based
compensation (1)
|
794
|
|
2,690
|
|
358
|
|
423
|
Changes in
royalties
|
(13)
|
|
28
|
|
11
|
|
21
|
Financial income
related to revaluation of fair value of preferred shares
warrants
|
-
|
|
(174)
|
|
-
|
|
-
|
Non-GAAP net loss
for the period
|
(3,951)
|
|
(3,667)
|
|
(1,621)
|
|
(1,992)
|
|
|
|
|
|
|
|
|
(1) Share-based
compensation:
|
|
|
|
|
|
|
|
Research and
development expenses, net
|
162
|
|
572
|
|
66
|
|
116
|
General and
administrative expenses
|
632
|
|
2,118
|
|
292
|
|
307
|
|
794
|
|
2,690
|
|
358
|
|
423
|
CONTACT:
Investors
David Carey
Lazar Partners Ltd.
212-867-1768
dcarey@lazarpartners.com
Vivian Cervantes
PCG Advisory
212-554-5482
vivian@pcgadvisory.com
Media
Erich Sandoval or Rob Sawyer
Lazar Partners Ltd.
213-908-6226 or 212-843-0209
esandoval@lazarpartners.com
rsawyer@lazarpartners.com
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/check-cap-reports-second-quarter-2016-financial-results-300313571.html
SOURCE Check-Cap Ltd.