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:    1-877-407-9210 (Canada and the United States)  
    1-201-689-8049 (International)  
       
Replay:    1-919-882-2331  
Replay ID:    34270  

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