ISFIYA, Israel, March 9, 2017 /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 fourth quarter and fiscal year ended
December 31, 2016.
"We continue to advance our clinical and regulatory objectives
through initiation in January of our trial to support CE Marking
for the C-Scan® system," said Bill
Densel, CEO of Check-Cap. "Submission of our CE Mark
application is expected during the first half of this year, and we
plan to initiate a pilot trial in the U.S. in the second half of
the year. We believe that 2017 will be a pivotal year for the
company."
Financial Results for the Fourth Quarter Ended December 31, 2016
Research and development expenses, net were $1.6 million in the three months ended
December 31, 2016, equal to the same
period in 2015.
General and administrative expenses were $813,000 in the three months ended December 31, 2016, compared to $1.5 million in the same period in 2015. This
decrease was primarily due to a decrease in salary and related
expenses of $246,000, a decrease in
share based compensation of $315,000
and a decrease in professional fees of $275,000. This decrease was partially offset by
an increase of $160,000 in other
general and administrative expenses.
Operating loss was $2.4 million
for the three months ended December 31,
2016, compared to $3.1 million
in the same period in 2015.
Finance income, net was $40,000 in
the three months ended December 31,
2016, compared to $82,000 in
the same period in 2015.
Net loss was $2.4 million in the
three months ended December 31, 2016,
compared to $3.0 million in the same
period in 2015.
Non-GAAP net loss was $2.3 million
in the three months ended December 31,
2016, compared to $2.4 million
in the same period in 2015.
Cash, cash equivalents and short-term bank deposit totaled
$11.6 million at December 31, 2016, compared to $13.5 million at September
30, 2016.
Financial Results for the Full Year Ended December 31, 2016
Research and development expenses, net were $5.5 million in the year ended December 31, 2016, compared to $5.8 million in the same period in 2015. This
decrease was primarily due to a $770,000 increase in grants from the National
Authority for Technology and Innovation (NATI), formerly known as
the Office of the Chief Scientist (OCS) in 2016, a $556,000 decrease in share-based compensation,
primarily due to the absence in 2016 of a $448,000 share-based compensation expense
recorded in 2015 associated with the one-time grant of options to
certain members of the Company's management, and a $368,000 decrease in fees to subcontractors and
consultants in 2016 as the Company increased the number of research
and development employees in 2016. The decrease in research
and development expenses, net between 2016 and 2015 was partially
offset by a $1.1 million increase in
salaries and related expenses as a result of the recruitment of
research and development employees during the course of 2015, the
related expenses for whom were fully accounted for in 2016 and a
$229,000 increase in other research
and development expenses relating to the clinical trials.
General and administrative expenses were $3.6 million in the year ended December 31, 2016 compared to $6.6 million in the same period in 2015. This
decrease was primarily due to the absence in 2016 of a $2.0 million share-based compensation expense
recorded in 2015 relating to the one-time grant of options to
certain members of the Company's management and warrants to
Pontifax entities, a $419,000
decrease in salaries and related expenses, primarily due to the
absence in 2016 of a $140,000
one-time severance payment to the Company's former chief executive
officer that was recorded in 2015 and a $109,000 decrease in provision for bonuses to
certain members of the Company's management in 2016, a
$715,000 decrease in professional
services and other general and administrative expenses, primarily
relating to a $248,000 decrease in
recruiting expenses, a $155,000
decrease in legal fees due to our recruitment of an in-house
counsel, as well as reduced rates or services of certain other
professional service providers.
Operating loss was $9.1 million
for the year ended December 31, 2016,
compared to $12.5 million in the same
period in 2015.
Finance income, net was $244,000
in the year ended December 31, 2016,
compared to $173,000 in the same
period in 2015.
Net loss for the year ended December 31,
2016 was $8.8 million,
compared to $12.3 million in the same
period in 2015.
Net cash used in operating activities was $7.9 million in the year ended December 31, 2016, compared to $8.6 million in the same period in 2015.
Net cash provided by financing activities was $5.4 million in the year ended December 31, 2016, as a result of the Company's
registered direct offering and $22
million in the year ended December
31, 2015 as a result of the Company's IPO and concurring
private placement.
A reconciliation of GAAP results to non-GAAP results is provided
below.
The number of outstanding ordinary shares as of December 31, 2016 and March 7, 2017 was 15,205,075 and 15,505,364,
respectively.
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 C-Scan®, the first capsule-based system for
preparation-free, colorectal cancer screening.
Utilizing innovative ultra-low dose X-ray and wireless
communication technologies, the capsule generates information on
the contours of the inside of the colon as it passes
naturally. This information is used to create a 3D map of the
colon, which allows physicians to look for polyps and other
abnormalities. Designed to improve the patient experience and
increase the willingness of individuals to participate in
recommended colorectal cancer screening, C-Scan® removes many
frequently-cited barriers, such as laxative bowel preparation,
invasiveness and sedation. The C-Scan 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 Follow
CHECK-CAP
LTD.
|
CONSOLIDATED
BALANCE SHEETS
|
(U.S. dollars in
thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
|
December
31,
|
|
|
|
2016
|
|
|
2015
|
|
Assets
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
11,639
|
|
|
9,392
|
|
Restricted
cash
|
|
-
|
|
|
46
|
|
Short-term bank
deposit
|
|
-
|
|
|
4,811
|
|
Prepaid expenses and
other current assets
|
|
242
|
|
|
680
|
|
Total current
assets
|
|
11,881
|
|
|
14,929
|
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
|
Property and
equipment, net
|
|
414
|
|
|
369
|
|
Total non-current
assets
|
|
414
|
|
|
369
|
|
|
|
|
|
|
|
|
Total
assets
|
|
12,295
|
|
|
15,298
|
|
|
|
|
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Accounts payable and
accruals
|
|
|
|
|
|
|
Trade
|
|
393
|
|
|
577
|
|
Other
|
|
235
|
|
|
245
|
|
Other current
liabilities
|
|
11
|
|
|
13
|
|
Employees and payroll
accruals
|
|
728
|
|
|
1,238
|
|
Total current
liabilities
|
|
1,367
|
|
|
2,073
|
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
Royalties
provision
|
|
521
|
|
|
577
|
|
Total non-current
liabilities
|
|
521
|
|
|
577
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
|
|
|
|
|
|
Share
capital
|
|
771
|
|
|
599
|
|
Additional paid-in
capital
|
|
52,577
|
|
|
46,164
|
|
Accumulated
deficit
|
|
(42,941)
|
|
|
(34,115)
|
|
Total
shareholders' equity
|
|
10,407
|
|
|
12,648
|
|
|
|
|
|
|
|
|
Total liabilities
and shareholders' equity
|
|
12,295
|
|
|
15,298
|
|
CHECK-CAP
LTD.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(U.S.
dollars in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
Year
ended
December
31,
|
|
|
Three months
ended
December
31,
|
|
|
|
2016
|
|
2015
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
Research and
development expenses, net
|
|
5,491
|
|
5,837
|
|
|
1,621
|
|
1,583
|
|
General and
administrative expenses
|
|
3,571
|
|
6,626
|
|
|
813
|
|
1,470
|
|
Operating
loss
|
|
9,062
|
|
12,463
|
|
|
2,434
|
|
3,053
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance income,
net
|
|
244
|
|
173
|
|
|
40
|
|
82
|
|
Loss before income
tax
|
|
8,818
|
|
12,290
|
|
|
2,394
|
|
2,971
|
|
Taxes on
income
|
|
8
|
|
-
|
|
|
8
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the
period
|
|
8,826
|
|
12,290
|
|
|
2,402
|
|
2,971
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per ordinary
share basic and diluted
|
|
0.61
|
|
1.06
|
|
|
0.15
|
|
0.22
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of ordinary shares outstanding - basic and diluted (in thousands)
|
|
14,499
|
|
11,918
|
|
|
16,428
|
|
13,265
|
|
CHECK-CAP
LTD.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(U.S. dollars in
thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
Year
ended
December
31,
|
|
|
Three months
ended
December
31,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Net loss for the
period
|
|
|
(8,826)
|
|
|
|
(12,290)
|
|
|
|
(2,402)
|
|
|
|
(2,971)
|
|
|
Adjustments required
to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revaluation of fair
value of warrants to purchase preferred shares
|
|
|
-
|
|
|
|
(174)
|
|
|
|
-
|
|
|
|
-
|
|
|
Depreciation and
amortization
|
|
|
130
|
|
|
|
92
|
|
|
|
34
|
|
|
|
30
|
|
|
Share-based
compensation
|
|
|
1,209
|
|
|
|
3,724
|
|
|
|
156
|
|
|
|
555
|
|
|
Financial expenses
(income), net
|
|
|
(56)
|
|
|
|
(11)
|
|
|
|
68
|
|
|
|
(3)
|
|
|
Changes in assets
and liabilities items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease (increase)
in prepaid and other current assets and non-current
assets
|
|
|
438
|
|
|
|
(563)
|
|
|
|
273
|
|
|
|
(346)
|
|
|
Increase (decrease)
in trade accounts payable, accruals and other current
liabilities
|
|
|
(252)
|
|
|
|
334
|
|
|
|
72
|
|
|
|
209
|
|
|
Increase (decrease)
in employees and payroll accruals
|
|
|
(510)
|
|
|
|
227
|
|
|
|
109
|
|
|
|
257
|
|
|
Increase (decrease)
in royalties provision
|
|
|
(56)
|
|
|
|
33
|
|
|
|
(68)
|
|
|
|
(10)
|
|
|
Net cash used in
operating activities
|
|
|
(7,923)
|
|
|
|
(8,628)
|
|
|
|
(1,758)
|
|
|
|
(2,279)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property
and equipment
|
|
|
(166)
|
|
|
|
(270)
|
|
|
|
-
|
|
|
|
(63)
|
|
|
Restricted
cash
|
|
|
46
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Investment in
(proceeds from) short-term bank deposit
|
|
|
4,811
|
|
|
|
(4,800)
|
|
|
|
2,000
|
|
|
|
1,989
|
|
|
Net cash provided
by (used in) investing activities
|
|
|
4,691
|
|
|
|
(5,070)
|
|
|
|
2,000
|
|
|
|
1,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
117
|
|
|
|
29
|
|
|
|
83
|
|
|
|
-
|
|
|
Issuance of ordinary
shares in the RD offering, net of
issuance expenses
|
|
|
5,307
|
|
|
|
-
|
|
|
|
(87)
|
|
|
|
-
|
|
|
Issuance of ordinary
shares in the private placement, net of
issuance expenses
|
|
|
-
|
|
|
|
11,021
|
|
|
|
-
|
|
|
|
-
|
|
|
Issuance of ordinary
shares in IPO, net of issuance expenses
|
|
|
-
|
|
|
|
10,947
|
|
|
|
-
|
|
|
|
-
|
|
|
Net cash provided
by financing activities
|
|
|
5,424
|
|
|
|
22,013
|
|
|
|
(4)
|
|
|
|
-
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
|
55
|
|
|
|
2
|
|
|
|
(55)
|
|
|
|
2
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
|
2,247
|
|
|
|
8,317
|
|
|
|
183
|
|
|
|
(351)
|
|
|
Cash and cash
equivalents at the beginning of the period
|
|
|
9,392
|
|
|
|
1,075
|
|
|
|
11,456
|
|
|
|
9,743
|
|
|
Cash and cash
equivalents at the end of the period
|
|
|
11,639
|
|
|
|
9,392
|
|
|
|
11,639
|
|
|
|
9,392
|
|
|
Supplemental
disclosure of non-cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification of
liability warrants to equity warrants
|
|
|
-
|
|
|
|
233
|
|
|
|
-
|
|
|
|
-
|
|
|
Cashless exercise of
warrants to purchase ordinary shares into ordinary
shares
|
|
|
23
|
|
|
|
45
|
|
|
|
-
|
|
|
|
-
|
|
|
Conversion of
preferred shares into ordinary shares
|
|
|
-
|
|
|
|
226
|
|
|
|
-
|
|
|
|
-
|
|
|
Purchase of property
and equipment
|
|
|
8
|
|
|
|
-
|
|
|
|
8
|
|
|
|
-
|
|
|
Issuance expenses in
the registered direct offering
|
|
|
47
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Supplemental
disclosure of cash flow information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for income
taxes
|
|
|
8
|
|
|
|
-
|
|
|
|
8
|
|
|
|
-
|
|
|
Cash paid for
interest
|
|
|
-
|
|
|
|
11
|
|
|
|
-
|
|
|
|
-
|
|
|
CHECK-CAP
LTD.
|
SUPPLEMENTAL
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
|
(U.S. dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
Year
ended
December
31,
|
|
|
Three months
ended
December
31,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
GAAP net loss for the
period
|
|
|
(8,826)
|
|
|
|
(12,290)
|
|
|
|
(2,402)
|
|
|
|
(2,971)
|
|
Share-based
compensation (1)
|
|
|
1,209
|
|
|
|
3,724
|
|
|
|
156
|
|
|
|
555
|
|
Changes in
royalties
|
|
|
(56)
|
|
|
|
33
|
|
|
|
(68)
|
|
|
|
(10)
|
|
Financial income
related to revaluation of fair value of preferred shares
warrants
|
|
|
-
|
|
|
|
(174)
|
|
|
|
-
|
|
|
|
-
|
|
Non-GAAP net loss
for the period
|
|
|
(7,673)
|
|
|
|
(8,707)
|
|
|
|
(2,314)
|
|
|
|
(2,426)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Share-based
compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development expenses, net
|
|
|
234
|
|
|
|
790
|
|
|
|
27
|
|
|
|
111
|
|
General and
administrative expenses
|
|
|
975
|
|
|
|
2,934
|
|
|
|
129
|
|
|
|
444
|
|
|
|
|
1,209
|
|
|
|
3,724
|
|
|
|
156
|
|
|
|
555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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-fourth-quarter-and-fiscal-year-2016-financial-results-300421081.html
SOURCE Check-Cap Ltd.