Profound Medical Corp. (NASDAQ:PROF; TSX:PRN) (“Profound” or the
“Company”), a commercial-stage medical device company focused on
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 fourth quarter and full year ended December 31, 2019. 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.
Full Year 2019 and 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”) 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 8, 2019, Profound 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 had
gained first-hand experience with the technology as investigators
for the TACT trial and from commercial users in Europe. In
addition, leading global researchers and clinicians presented on
both current and potential future applications for
Sonalleve®.
- On April 16, 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 July 9, 2019, Profound announced that it had sold its first
TULSA-PRO® system in Japan to Hokuyu Hospital in Sapporo, via
Japan's Pharmaceutical and Medical Device Act’s expanded access
program.
- On August 16, 2019, Profound announced that it received 510(k)
clearance from the FDA to market TULSA-PRO® for ablation of
prostate tissue.
- On September 20, 2019, Profound announced the closing of a
marketed offering of units, including the full exercise of the
over-allotment option, for total gross proceeds of
$11,500,001.
- On October 16, 2019, Profound effected a 10:1 share
consolidation in anticipation of its listing on the NASDAQ Stock
Market LLC (“NASDAQ”). Profound's common shares commenced trading
on NASDAQ under the symbol "PROF" on October 29, 2019.
- On November 25, 2019, Profound
announced that Health Canada approved the TULSA-PRO® system for the
ablation of low-to-intermediate risk organ-confined prostate
cancer.
- On January 10, 2020, Profound
signed its first-ever U.S. multi-site imaging center agreement for
TULSA-PRO® with RadNet, Inc. (NASDAQ:RDNT), a national leader in
providing high-quality, cost-effective, fixed-site outpatient
diagnostic imaging services through a network of 340 owned and/or
operated outpatient imaging centers.
- On January 10, 2020, Profound announced that it had submitted
its application for a Healthcare Common Procedure Coding System
C-Code from the Centers for Medicare & Medicaid Services for
the TULSA-PRO® procedure.
- On January 27, 2020, the Company closed an underwritten
offering (the “2020 Offering”) of common shares, including the full
exercise of the over-allotment option, for gross proceeds of
US$39,522,625.
- On February 4, 2020, Profound announced that it had retired its
$12.5 million in principal amount loan with Canadian Imperial Bank
of Commerce (the “CIBC Loan”) approximately 30 months ahead of
schedule, thereby extinguishing all of its long-term debt.
“From
the positive TACT clinical trial results, to receipt of both FDA
and Health Canada approval for TULSA-PRO®, 2019 was a momentous
year for Profound,” said Arun Menawat, Profound’s CEO. “We are
pleased that the increasing interest in TULSA-PRO® in international
markets, combined with our ongoing roll-out of Sonalleve® in China,
has resulted in a more than four-fold sequential increase in fourth
quarter 2019 revenue. Looking ahead, our focus will be on
continuing to execute the commercial launch of TULSA-PRO® in the
U.S. by building on the momentum of our recent multi-site imaging
center agreement with RadNet. We also intend to conduct additional
trials that will enable TULSA-PRO® to qualify for a specific CPT
code as part of our overall reimbursement strategy, with patient
recruitment expected to begin in the first half of this year.”
Summary Fourth Quarter 2019
Results
For the quarter ended December 31, 2019, the
Company recorded revenue of $2,795,450, with $2,553,228 from the
sale of products and $242,222 from installation, training and
support of the multi-use system components. This was slightly
higher than the Company’s preliminary unaudited revenue estimate
announced on January 10, 2020 and represented revenue growth of 64%
year-over-year and 310% sequentially over the previous quarter.
The Company recorded a net loss for the three
months ended December 31, 2019 of $5,151,526, or $0.43 per common
share, compared to a net loss of $4,858,209 or $0.45 per common
share, for the three months ended December 31, 2018. The decrease
in net loss was primarily attributed to an increase in R&D
expense of $354,150, an increase in G&A expenses of $1,172,687
and an increase in selling and distribution expenses of $154,589.
This was offset by a decrease in net finance costs of $273,786 an
increase in gross profits of $1,077,613.
Expenditures for R&D for the three months
ended December 31, 2019 were higher by $354,150 compared to the
three months ended December 31, 2018. Materials, consulting fees
and share based compensation increased by $436,440, $48,896 and
$115,376, respectively. The increases were due to increased
spending and testing for R&D projects and options awarded to
employees. Offsetting these amounts were decreases in clinical
trial costs, rent and salaries and benefits by $151,618, $85,853
and $59,957, respectively, resulting from the completion of the
TACT Pivotal Clinical Trial enrollment initiatives, the adoption of
IFRS 16 resulting in the recognition of lower rental costs and
decreased R&D personnel. Depreciation expenses increased by
$26,328 due to the adoption of IFRS 16 with the depreciation of the
right-of-use assets.
G&A expenses for the fourth quarter of 2019
increased by $1,172,687 compared to the three months ended December
31, 2018. Share based compensation, consulting fees, bad debt and
other expenses increased by $228,715, $230,058, $324,700 and
$405,682, respectively, due to options awarded to employees and
directors, increased costs associated with the NASDAQ listing, bad
debt expenses associated with one customer and increased insurance
costs associated with the NASDAQ listing. Offsetting these amounts
was a decrease in salaries and benefits by $63,047, and rent by
$21,579 due to the adoption of IFRS 16 resulting in the recognition
of lower rental costs. Depreciation expenses increased by $53,047
due to the adoption of IFRS 16 with the depreciation of the
right-of-use assets.
Summary Full Year 2019
Results
For the year ended December 31, 2019, the
Company recorded revenue of $5,527,571, with $4,895,427 from the
sale of products and $632,144 from installation, training and
support of the multi-use system components. This compares to
$2,602,278 in the twelve months ended December 31, 2018.
The Company recorded a net loss for the year
ended December 31, 2019 of $20,192,250 or $1.82 per common share,
compared to a net loss of $20,762,989 or $2.07 per common share for
the year ended December 31, 2018. The decrease in net loss was
primarily attributed to a decrease in selling and distribution
expenses of $1,302,305, a decrease in net finance cost of $112,245
and an increase in gross profits of $2,341,989. This was offset by
an increase in R&D expenses of $2,200,761 and an increase in
G&A expenses of $1,021,949.
Expenditures for R&D for the year ended
December 31, 2019 were higher by $2,200,761 compared to the year
ended December 31, 2018. Materials, consulting fees, travel, share
based compensation, salaries and benefits and other expenses
increased by $1,611,748, $140,213, $49,613, $288,037, $256,917 and
$46,164, respectively. These costs were higher compared to the year
ended December 31, 2018 due to increased spending and testing on
R&D and FDA regulatory projects, options awarded and vested for
employees, increased R&D personnel and investment tax credits
decreasing by $192,228 because of lower eligibility for refundable
tax credits. Offsetting these amounts was a decrease in clinical
trial costs and rent by $199,356 and $289,055, respectively,
resulting from the completion of the TACT Pivotal Clinical Trial
enrollment initiatives and the adoption of IFRS 16 resulting in the
recognition of lower rental costs. Depreciation expenses increased
by $106,988 due to the adoption of IFRS 16 with the depreciation of
the right-of-use assets.
G&A expenses for the year ended December 31,
2019 were higher by $1,021,949 compared to the year ended December
31, 2018. Share based compensation, bad debt and other
expenses increased by $561,944, $324,700 and $378,981,
respectively, due to the issuance of options to employees and
directors, bad debt expense associated with one customer and higher
insurance costs associated with the NASDAQ listing. Offsetting
these amounts was a decrease to salaries and benefits, consulting
fees, rent, and travel by $254,829, $142,011, $48,808, and $32,714,
respectively, due to no bonuses awarded to management, lower
G&A project costs, adoption of IFRS 16 resulting in the
recognition of lower rental costs and decreased travel to customer
sites. Depreciation expenses increased by $228,383 due to the
adoption of IFRS 16 with the depreciation of the right-of-use
assets.
Liquidity and Outstanding Share
Capital
As at December 31, 2019, Profound had cash of
$19,222,195. Subsequent to year end, the Company completed the 2020
Offering for net proceeds of US$36,656,041 and repaid the total
amount of the CIBC Loan, plus interest, for a total payment of
$12,041,032.
As at March 3, 2020, Profound had 15,689,577
common shares issued and outstanding.
For complete financial results, please see
Profound’s filings at www.sedar.com and the Company’s website at
www.profoundmedical.com.
Conference Call Details
Profound Medical is pleased to invite all
interested parties to participate in a conference call today, March
3, 2020, 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: |
33148 |
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 is a commercial-stage medical device
company that develops and markets customizable, incision-free
therapies for the ablation of diseased tissue.
Profound is commercializing TULSA-PRO®, a
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® has the potential 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). TULSA-PRO®
is CE marked, Health Canada approved, and 510(k) cleared by the
U.S. Food and Drug Administration.
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
National Medical Products 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 its U.S. multi-center
commercial agreement with RadNet; the efficacy of Profound’s
technology in the treatment of prostate cancer, uterine fibroids
and palliative pain treatment; the potential obtainment of a C-Code
from CMS for TULSA-PRO®; and the success of Profound’s U.S.
commercialization strategy and activities for TULSA-PRO®. 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. Please see the Company’s annual
information form for a detailed discussion of the risk factors.
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 KilmerInvestor Relationsskilmer@profoundmedical.comT:
647.872.4849
Profound Medical
Corp.Consolidated Balance
SheetsAs at December 31, 2019 and
2018
|
|
2019$ |
|
|
2018$ |
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
Current
assets |
|
|
|
|
Cash |
|
19,222,195 |
|
|
30,687,183 |
|
Trade and other receivables |
|
4,058,136 |
|
|
2,686,112 |
|
Investment tax credits receivable |
|
240,000 |
|
|
480,000 |
|
Inventory |
|
4,764,458 |
|
|
3,631,623 |
|
Prepaid expenses and deposits |
|
1,335,620 |
|
|
434,871 |
|
Total current
assets |
|
29,620,409 |
|
|
37,919,789 |
|
|
|
|
|
|
Property and equipment |
|
684,718 |
|
|
1,207,357 |
|
Intangible assets |
|
3,128,820 |
|
|
4,013,561 |
|
Right-of-use assets |
|
2,199,381 |
|
|
- |
|
Goodwill |
|
3,409,165 |
|
|
3,409,165 |
|
|
|
|
|
|
Total assets |
|
39,042,493 |
|
|
46,549,872 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
Accounts payable and accrued liabilities |
|
3,933,114 |
|
|
3,912,350 |
|
Deferred revenue |
|
654,763 |
|
|
312,558 |
|
Long-term debt |
|
5,144,461 |
|
|
1,339,583 |
|
Provisions |
|
134,956 |
|
|
1,352,017 |
|
Other liabilities |
|
286,858 |
|
|
567,296 |
|
Derivative financial instrument |
|
254,769 |
|
|
98,203 |
|
Lease liabilities |
|
258,685 |
|
|
- |
|
Income taxes payable |
|
15,763 |
|
|
297,353 |
|
Total current
liabilities |
|
10,683,369 |
|
|
7,879,360 |
|
|
|
|
|
|
Long-term debt |
|
6,719,924 |
|
|
10,615,662 |
|
Deferred revenue |
|
829,784 |
|
|
379,044 |
|
Provisions |
|
19,005 |
|
|
49,319 |
|
Other liabilities |
|
- |
|
|
1,000,153 |
|
Lease liabilities |
|
2,125,873 |
|
|
- |
|
|
|
|
|
|
Total liabilities |
|
20,377,955 |
|
|
19,923,538 |
|
|
|
|
|
|
Shareholders’
Equity |
|
|
|
|
|
|
|
|
|
Share capital |
|
130,266,880 |
|
|
120,932,404 |
|
Contributed surplus |
|
19,580,338 |
|
|
16,756,294 |
|
Accumulated other comprehensive
loss |
|
(117,188 |
) |
|
(28,703 |
) |
Deficit |
|
(131,065,492 |
) |
|
(111,033,661 |
) |
|
|
|
|
|
Total Shareholders’ Equity |
|
18,664,538 |
|
|
26,626,334 |
|
|
|
|
|
|
Total Liabilities and Shareholders’ Equity |
|
39,042,493 |
|
|
46,549,872 |
|
Profound Medical
Corp.Consolidated Statements of Loss and
Comprehensive LossFor the years ended December 31,
2019 and 2018
|
|
2019$ |
|
2018$ |
|
|
|
|
|
Revenue |
|
|
|
Products |
|
4,895,427 |
|
2,421,331 |
|
Services |
|
632,144 |
|
180,947 |
|
|
|
5,527,571 |
|
2,602,278 |
|
Cost of sales |
|
2,361,805 |
|
1,778,501 |
|
Gross profit |
|
3,165,766 |
|
823,777 |
|
|
|
|
|
Operating
expenses |
|
|
|
Research and development - net of investment tax credits of $nil
(2018 – $240,000) |
|
12,466,149 |
|
10,265,388 |
|
General and administrative |
|
7,678,672 |
|
6,656,723 |
|
Selling and distribution |
|
2,789,042 |
|
4,091,347 |
|
Total operating expenses |
|
22,933,863 |
|
21,013,458 |
|
|
|
|
|
Operating Loss |
|
19,768,097 |
|
20,189,681 |
|
|
|
|
|
Other income and
expense |
|
|
|
Finance costs |
|
711,588 |
|
826,312 |
|
Finance income |
|
(481,309 |
) |
(483,788 |
) |
|
|
230,279 |
|
342,524 |
|
Loss before taxes |
|
19,998,376 |
|
20,532,205 |
|
|
|
|
|
Income
taxes |
|
193,874 |
|
230,784 |
|
|
|
|
|
Net loss attributed to shareholders for the
year |
|
20,192,250 |
|
20,762,989 |
|
|
|
|
|
Other comprehensive
loss (income) |
|
|
|
Item that may be reclassified
to profit or loss |
|
|
|
Foreign currency translation adjustment - net of tax |
|
(88,485 |
) |
29,226 |
|
|
|
|
|
Net loss and comprehensive loss for the year |
|
20,103,765 |
|
20,792,215 |
|
|
|
|
|
Loss per share |
|
|
|
Basic and diluted loss per
common share |
|
1.82 |
|
2.07 |
|
Profound Medical Corp.Consolidated Statements
of Cash FlowsFor the years ended December 31, 2019 and
2018
|
2019$ |
|
2018$ |
|
|
|
|
Operating
activities |
|
|
Net loss for the year |
(20,192,250 |
) |
(20,762,989 |
) |
Adjustments to reconcile net loss
to net cash flows from operating activities: |
|
|
Depreciation of property and equipment |
472,685 |
|
546,001 |
|
Amortization of intangible assets |
1,134,741 |
|
1,128,437 |
|
Depreciation of right-of-use assets |
406,397 |
|
- |
|
Share-based compensation |
1,676,844 |
|
1,086,199 |
|
Interest and accretion expense |
1,369,928 |
|
1,028,843 |
|
Change in deferred rent |
- |
|
7,108 |
|
Deferred revenue |
792,945 |
|
450,286 |
|
Change in fair value of derivative financial instrument |
156,566 |
|
(96,619 |
) |
Change in fair value of contingent consideration |
(968,883 |
) |
(325,253 |
) |
Changes in non-cash working
capital balances |
|
|
Investment tax credits receivable |
240,000 |
|
(240,000 |
) |
Trade and other receivables |
(1,372,024 |
) |
1,565,546 |
|
Prepaid expenses and deposits |
(1,110,749 |
) |
141,157 |
|
Inventory |
(1,132,835 |
) |
(2,200,466 |
) |
Accounts payable and accrued liabilities |
(24,162 |
) |
(1,167,336 |
) |
Provisions |
(1,198,056 |
) |
319,875 |
|
Income taxes payable |
(281,590 |
) |
224,574 |
|
Net cash flow used in operating activities |
(20,030,444 |
) |
(18,294,637 |
) |
|
|
|
Investing
activities |
|
|
Purchase of intangible assets |
(250,000 |
) |
- |
|
Total cash used in investing activities |
(250,000 |
) |
- |
|
|
|
|
Financing
activities |
|
|
Issuance of common shares |
11,500,001 |
|
34,500,000 |
|
Transaction costs paid |
(1,023,724 |
) |
(2,472,498 |
) |
Proceeds from bank loan |
- |
|
12,500,000 |
|
Bank loan costs paid |
- |
|
(735,698 |
) |
Payment of other liabilities |
(16,203 |
) |
(5,851,489 |
) |
Payment of long-term debt and
interest |
(1,331,771 |
) |
(166,975 |
) |
Proceeds from share options
exercised |
5,399 |
|
105,257 |
|
Payment of lease liabilities |
(318,245 |
) |
- |
|
Total cash from financing activities |
8,815,455 |
|
37,878,597 |
|
|
|
|
Net change in cash during the
year |
(11,464,988 |
) |
19,583,960 |
|
Cash – Beginning of year |
30,687,183 |
|
11,103,223 |
|
Cash – End of
year |
19,222,195 |
|
30,687,183 |
|
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