Profound Medical Corp. (NASDAQ:PROF; TSX:PRN) (“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 first quarter ended March 31,
2020, and provided an update on its operations.
Recent Corporate Highlights
- On January 10, 2020, Profound
announced 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 also
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 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 approximately 30 months ahead of schedule, thereby
extinguishing all of its long-term debt.
- On March 4, 2020, Profound
presented at Cowen and Company’s 40th Annual Health Care
Conference.
- On March 18, 2020, Profound
participated in a series of one-on-one virtual meetings with
institutional investors in lieu of the in-person BTIG Annual
Healthcare Conference originally scheduled to take place in
Snowbird, UT.
- On April 3, 2020, Profound launched
a TULSA procedure website, www.tulsaprocedure.com, as a resource
for patients with prostate disease.
“During the first quarter of 2020, we made
important progress on our U.S. TULSA-PRO® commercialization
strategy by executing a multi-site imaging center agreement with
RadNet, as well as supporting TULSA-PRO® installations at Vituro
Health’s center in Sarasota, FL and the Busch Center in Alpharetta,
GA, both of which are now treating patients,” said Arun Menawat,
Profound’s CEO. “Importantly, patients can now find up-to-date
information on where the TULSA Procedure is available, both within
the U.S. and internationally, on our recently launched TULSA
procedure website, which features an enhanced TULSA Center Locator
Page and contact forms to reach out to each center directly. As a
growing resource for prostate patients, the website will provide
regular updates, blog posts and patient testimonials to provide
every visitor with clear and accurate information.”
Summary First Quarter 2020
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 first quarter ended March 31, 2020, the
Company recorded revenue of $1,560,218, with $1,357,539 from the
sale of product, $41,085 from lease of medical device revenue and
$161,594 from installation and training services. First quarter
2020 revenue increased approximately 6% from $1,475,788 in the same
three-month period a year ago.
The Company recorded a net loss for the three
months ended March 31, 2020 of $3,607,693, or $0.25 per common
share, compared to a net loss of $2,962,686 or $0.27 per common
share, for the three months ended March 31, 2019. The increase in
net loss was primarily attributed to an increase in research and
development (“R&D”) expense of $161,471, an increase in general
and administration (“G&A”) expenses of $1,539,114, an increase
in selling and distribution expenses of $1,783,674 and a decrease
in gross profits of $347,822. This was offset by a decrease in net
finance costs of $3,241,009.
Expenditures for R&D for the three months
ended March 31, 2020 were higher by $161,471 compared to the three
months ended March 31, 2019. Materials, consulting fees and share
based compensation increased by $173,407, $89,615, and $120,377,
respectively. These increases were due to increased spending and
testing for R&D projects and additional system applications,
reimbursement of consultants and options awarded to employees.
Offsetting these amounts were reductions in salaries and benefits,
software and other expenses which decreased by $156,735, $38,947
and $30,624, respectively, resulting from decreased R&D
personnel, lower software and hardware costs and an overall
decrease in the general R&D expenditures.
G&A expenses for the three months ended
March 31, 2020 increased by $1,539,114 compared to the three months
ended March 31, 2019. Salaries and benefits, consulting fees, share
based compensation, insurance, software and other expenses
increased by $591,560, $230,059, $213,956, $409,517, $59,964 and
$58,415, respectively, due to salary increases and bonuses awarded
to management, increased costs associated with being Nasdaq listed,
options vesting during the period, increased insurance costs
associated with being Nasdaq listed, increased software costs for
cybersecurity and overall increase in general costs. Depreciation
expenses decreased by $20,781 due to certain assets being fully
depreciated.
Liquidity and Outstanding Share
Capital
As at March 31, 2020, the Company had cash of
$61,900,725.
As at May 7, 2020, Profound had an unlimited
number of authorized common shares with 16,082,577 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, May
7, 2020, at 4:30 pm ET during which time the results will be
discussed.
Live Call: |
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1-877-407-9210 (Canada and the United States) |
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1-201-689-8049
(International) |
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Replay: |
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1-919-882-2331 |
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Replay ID: |
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34270 |
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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 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. 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.
COVID-19
The COVID-19 outbreak has been declared a
pandemic by the World Health Organization. It is too soon to gauge
the impacts of the current outbreak, given the many unknowns
related to COVID-19 including the duration and severity of the
outbreak. COVID-19 is altering business and consumer activity in
affected areas and beyond. The global response to the COVID-19
outbreak has resulted in, among other things, border closures,
severe travel restrictions, the temporary shut-down of
non-essential services and extreme fluctuations in financial and
commodity markets. Additional measures may be implemented by one or
more governments in jurisdictions where the Company operates. These
measures have caused material disruption to businesses globally,
resulting in an economic slowdown. The extent to which COVID-19 and
any other pandemic or public health crisis impacts the Company’s
business, affairs, operations, financial condition, liquidity,
availability of credit and results of operations will depend on
future developments that are highly uncertain and cannot be
predicted with any meaningful precision, including new information
which may emerge concerning the severity of the COVID-19 virus and
the actions required to contain the COVID-19 virus or remedy its
impact, among others.
The actual and threatened spread of COVID-19
globally could also have a material adverse effect on the regional
economies in which the Company operates, could continue to
negatively impact stock markets, including the trading price of
Profound’s Common Shares, could adversely impact the Company’s
ability to raise capital, and could cause continued interest rate
volatility and movements that could make obtaining financing more
challenging or more expensive.
For further information, please contact:
Stephen KilmerInvestor Relationsskilmer@profoundmedical.com T:
647.872.4849
Profound Medical Corp.Interim Condensed
Consolidated Balance Sheets(Unaudited)
|
|
March
31,2020$ |
|
December 31,2019$ |
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
Cash |
|
61,900,725 |
|
|
19,222,195 |
|
Trade and other receivables |
|
4,471,213 |
|
|
4,058,136 |
|
Investment tax credits receivable |
|
240,000 |
|
|
240,000 |
|
Inventory |
|
5,818,643 |
|
|
4,764,458 |
|
Prepaid expenses and deposits |
|
1,062,788 |
|
|
1,335,620 |
|
Total current assets |
|
73,493,369 |
|
|
29,620,409 |
|
|
|
|
|
|
Property and equipment |
|
803,593 |
|
|
684,718 |
|
Intangible assets |
|
2,840,409 |
|
|
3,128,820 |
|
Right-of-use assets |
|
2,121,039 |
|
|
2,199,381 |
|
Goodwill |
|
3,409,165 |
|
|
3,409,165 |
|
|
|
|
|
|
Total assets |
|
82,667,575 |
|
|
39,042,493 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
Accounts payable and accrued liabilities |
|
2,848,789 |
|
|
3,933,114 |
|
Deferred revenue |
|
739,327 |
|
|
654,763 |
|
Long-term debt |
|
- |
|
|
5,144,461 |
|
Provisions |
|
141,071 |
|
|
134,956 |
|
Other liabilities |
|
213,430 |
|
|
286,858 |
|
Derivative financial instrument |
|
222,122 |
|
|
254,769 |
|
Lease liabilities |
|
307,185 |
|
|
258,685 |
|
Income taxes payable |
|
5,446 |
|
|
15,763 |
|
Total current liabilities |
|
4,477,370 |
|
|
10,683,369 |
|
|
|
|
|
|
Long-term debt |
|
- |
|
|
6,719,924 |
|
Deferred revenue |
|
940,458 |
|
|
829,784 |
|
Provisions |
|
29,029 |
|
|
19,005 |
|
Lease liabilities |
|
2,036,407 |
|
|
2,125,873 |
|
|
|
|
|
|
Total liabilities |
|
7,483,264 |
|
|
20,377,955 |
|
|
|
|
|
|
Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
Share capital |
|
193,917,357 |
|
|
130,266,880 |
|
Contributed surplus |
|
15,872,210 |
|
|
19,580,338 |
|
Accumulated other comprehensive loss |
|
67,929 |
|
|
(117,188 |
) |
Deficit |
|
(134,673,185 |
) |
|
(131,065,492 |
) |
|
|
|
|
|
Total Shareholders’ Equity |
|
75,184,311 |
|
|
18,664,538 |
|
|
|
|
|
|
Total Liabilities and Shareholders’ Equity |
|
82,667,575 |
|
|
39,042,493 |
|
Profound Medical Corp.Interim Condensed
Consolidated Statements of Cash Flows(Unaudited)
|
|
Three months ended March 31,
2020$ |
Three months ended March 31,
2019$ |
|
|
|
|
Revenue |
|
|
|
Products |
|
1,357,539 |
|
1,347,781 |
|
Services |
|
161,594 |
|
128,007 |
|
Lease of medical devices |
|
41,085 |
|
- |
|
|
|
1,560,218 |
|
1,475,788 |
|
Cost of sales |
|
965,608 |
|
533,356 |
|
Gross profit |
|
594,610 |
|
942,432 |
|
|
|
|
|
Operating expenses (recovery) |
|
|
|
Research and development |
|
2,839,217 |
|
2,677,746 |
|
General and administrative |
|
3,053,227 |
|
1,514,113 |
|
Selling and distribution |
|
1,254,329 |
|
(529,345 |
) |
Total operating expenses |
|
7,146,773 |
|
3,662,514 |
|
|
|
|
|
Operating Loss |
|
6,552,163 |
|
2,720,082 |
|
|
|
|
|
Net finance (income)/costs |
|
(3,068,205 |
) |
172,804 |
|
|
|
|
|
Loss before taxes |
|
3,483,958 |
|
2,892,886 |
|
|
|
|
|
Income taxes |
|
123,735 |
|
33,800 |
|
|
|
|
|
Net loss attributed to shareholders for the
period |
|
3,607,693 |
|
2,926,686 |
|
|
|
|
|
Other comprehensive loss (income) |
|
|
|
Item that may be reclassified to profit or loss |
|
|
|
Foreign currency translation adjustment - net of tax of $nil (2019
- $nil) |
|
185,117 |
|
(46,389 |
) |
|
|
|
|
Net loss and comprehensive loss for the
period |
|
3,792,810 |
|
2,880,297 |
|
|
|
|
|
Loss per share |
|
|
|
Basic and diluted loss per common share |
|
0.25 |
|
0.27 |
|
Profound Medical Corp.Interim Condensed
Consolidated Statements of Cash Flows(Unaudited)
|
Three months ended March
31,2020$ |
Three months ended March
31,2019$ |
|
|
|
Operating activities |
|
|
Net loss for the period |
(3,607,693 |
) |
(2,926,686 |
) |
Adjustments to reconcile net loss to net cash flows from operating
activities: |
|
|
Depreciation of property and equipment |
118,582 |
|
129,325 |
|
Amortization of intangible assets |
288,411 |
|
282,110 |
|
Depreciation of right-of-use assets |
101,173 |
|
102,224 |
|
Share-based compensation |
611,124 |
|
72,638 |
|
Interest and accretion expense |
665,315 |
|
342,012 |
|
Deferred revenue |
195,238 |
|
438,306 |
|
Change in fair value of derivative financial instrument |
(32,647 |
) |
57,471 |
|
Change in fair value of contingent consideration |
14,624 |
|
(72,876 |
) |
Foreign exchange on cash |
(3,290,028 |
) |
- |
|
Changes in non-cash working capital balances |
|
|
Trade and other receivables |
(413,077 |
) |
(360,565 |
) |
Prepaid expenses and deposits |
272,832 |
|
41,650 |
|
Inventory |
(1,242,998 |
) |
217,613 |
|
Accounts payable and accrued liabilities |
(961,929 |
) |
(347,454 |
) |
Provisions |
16,139 |
|
(1,206,383 |
) |
Income taxes payable |
(10,317 |
) |
12,573 |
|
Net cash flow used in operating activities |
(7,275,251 |
) |
(3,218,042 |
) |
|
|
|
Financing activities |
|
|
Issuance of common shares |
52,098,723 |
|
- |
|
Transaction costs paid |
(4,152,072 |
) |
- |
|
Payment of other liabilities |
(88,052 |
) |
- |
|
Payment of long-term debt and interest |
(12,497,993 |
) |
(8,545 |
) |
Proceeds from share options exercised |
1,480,555 |
|
(331,490 |
) |
Proceeds from warrants exercised |
9,904,019 |
|
- |
|
Payment of lease liabilities |
(81,427 |
) |
(80,269 |
) |
Total cash from financing activities |
46,663,753 |
|
(420,304 |
) |
|
|
|
Net change in cash during the period |
39,388,502 |
|
(3,638,346 |
) |
Foreign exchange on cash |
3,290,028 |
|
- |
|
Cash – Beginning of period |
19,222,195 |
|
30,687,183 |
|
Cash – End of
period |
61,900,725 |
|
27,048,837 |
|
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