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 second quarter ended June 30, 2020, and provided an update on its operations.

Recent Corporate Highlights

  • On April 3, 2020, Profound launched a TULSA procedure website, www.tulsaprocedure.com, as a resource for patients with prostate disease.
  • On July 21, 2020, Profound closed an underwritten offering of common shares (the “July 2020 Offering”), including the full exercise of the over-allotment option, for gross proceeds of approximately US$46 million.

“We are very encouraged by the continuing strong interest shown in TULSA-PRO® by both surgeons and patients across the United States,” said Arun Menawat, Profound’s CEO. “That culminated in us completing the first installation of TULSA-PRO® at a teaching hospital – the world-renowned Mayo Clinic in Jacksonville, FL – in early July. Moving forward, as we continue to execute on our U.S. TULSA-PRO® commercialization strategy, building additional awareness of this technology will be key to our success. To that end, we are looking forward to launching a new patient forum in the Fall, through which patients will be able to share their experiences with the TULSA procedure, as well as rolling out both surgeon-to-surgeon and patient-to-patient education programs.”

Summary Second 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 second quarter ended June 30, 2020, the Company recorded revenue of $1,421,223, with $1,131,801 from the sale of product, $97,868 from pay for procedure and $191,554 from installation and training services. Second quarter 2020 revenue increased approximately 148% from $574,109 in the same three-month period a year ago.

The Company recorded a net loss for the three months ended June 30, 2020 of $7,347,529, or $0.46 per common share, compared to a net loss of $5,844,134, or $0.54 per common share, for the three months ended June 30, 2019. The increase in net loss was primarily attributed to increases in general and administrative (“G&A”) expenses, selling and distribution expenses, and net financing costs by $688,764, $220,619, $1,469,688, respectively. This was offset by a decrease in research and development (“R&D”) expense of $802,488 and an increase in gross profits of $245,788.

Expenditures for R&D for the three months ended June 30, 2020 were $2,383,867, compared to $3,186,355 for the three months ended June 30, 2019. Clinical trial costs, materials, travel, salaries and benefits, and software expenses decreased by $330,260, $517,520, $77,408, $167,227, and $26,646, respectively. These decreases were due to decreased spending on materials and R&D projects due to the impact of COVID-19, as hospitals and testing facilities were not accessible, lower travel due to COVID-19 restrictions, decreased R&D personnel, the Canada Emergency Wage Subsidy (CEWS) and lower software and hardware costs. Offsetting these amounts were increases in consulting fees and share based compensation of $181,807, and $153,453, respectively, due to increased spending for reimbursement, market research and options awarded to employees.

G&A expenses for the three months ended June 30, 2020 increased by $688,764 compared to the three months ended June 30, 2019. Consulting fees, share based compensation, insurance and software expenses increased by $59,737, $242,009, $397,181, and $177,670, respectively, due to increased costs associated with being Nasdaq listed, options awarded to employees, increased insurance costs associated with being Nasdaq listed and increased software costs for cybersecurity. Offsetting these amounts were decreases to salaries and benefits of $97,607 and travel of $59,146 which were due to lower personnel costs, CEWS and COVID-19 travel restrictions. Depreciation expenses decreased by $23,173 due to certain assets being fully depreciated.

Liquidity and Outstanding Share Capital

As at June 30, 2020, the Company had cash of $55,964,086. Subsequent to quarter end, the Company completed the July 2020 Offering, resulting it in having approximate cash of $112 million at July 31, 2020.

As at August 6, 2020, Profound had 19,378,152 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, August 6, 2020, at 4:30 pm ET during which time the results will be discussed.

Live Call:   1-844-407-9500 (Canada and the United States)
    1-862-298-0850 (International)
     
Replay:   1-919-882-2331
Replay ID:   35945

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. No forward-looking statement can be guaranteed. In addition, there is uncertainty about the spread of the COVID-19 virus and the impact it will have on Profound’s operations, the demand for its products, global supply chains and economic activity in general. 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.com T: 647.872.4849

         
Profound Medical Corp.Interim Condensed Consolidated Balance Sheets(Unaudited)
 
    June 30,2020$     December 31,2019$  
         
Assets        
         
Current assets        
Cash   55,964,086     19,222,195  
Trade and other receivables   4,594,426     4,058,136  
Investment tax credits receivable   240,000     240,000  
Inventory   6,781,987     4,764,458  
Prepaid expenses and deposits   583,891     1,335,620  
Total current assets   68,164,390     29,620,409  
         
Property and equipment   663,366     684,718  
Intangible assets   2,551,997     3,128,820  
Right-of-use assets   2,012,198     2,199,381  
Goodwill   3,409,165     3,409,165  
         
Total assets   76,801,116     39,042,493  
         
Liabilities        
         
Current liabilities        
Accounts payable and accrued liabilities   2,742,942     3,933,114  
Deferred revenue   1,028,766     654,763  
Long-term debt   -     5,144,461  
Warranty provision   129,871     134,956  
Other liabilities   106,513     286,858  
Derivative financial instrument   487,235     254,769  
Lease liabilities   346,587     258,685  
Income taxes payable   5,856     15,763  
Total current liabilities   4,847,770     10,683,369  
         
Long-term debt   -     6,719,924  
Deferred revenue   490,835     829,784  
Warranty provision   28,509     19,005  
Lease liabilities   1,937,279     2,125,873  
         
Total liabilities   7,304,393     20,377,955  
         
Shareholders’ Equity        
         
Share capital   194,991,770     130,266,880  
Contributed surplus   16,483,466     19,580,338  
Accumulated other comprehensive gain/(loss)   42,201     (117,188 )
Deficit   (142,020,714 )   (131,065,492 )
         
Total Shareholders’ Equity   69,496,723     18,664,538  
         
Total Liabilities and Shareholders’ Equity   76,801,116     39,042,493  
 
Profound Medical Corp.Interim Condensed Consolidated Statements of Loss and Comprehensive Loss (Unaudited)
 
    ThreemonthsendedJune 30,2020$     ThreemonthsendedJune 30,2019$     SixmonthsendedJune 30,2020$     SixmonthsendedJune 30,2019$  
                 
Revenue                
Products   1,131,801     465,840     2,489,340     1,813,621  
Services   191,554     108,269     353,148     236,276  
Pay per procedure   97,868     -     138,953     -  
    1,421,223     574,109     2,981,441     2,049,897  
Cost of sales   845,392     244,066     1,811,000     777,422  
Gross profit   575,831     330,043     1,170,441     1,272,475  
                 
Operating Expenses                
Research and development   2,383,867     3,186,355     5,223,084     5,864,101  
General and administrative   2,275,087     1,586,323     5,328,314     3,100,436  
Selling and distribution   1,375,488     1,154,869     2,629,817     625,524  
Total operating expenses   6,034,442     5,927,547     13,181,215     9,590,061  
                 
Operating Loss   5,458,611     5,597,504     12,010,774     8,317,586  
                 
Net finance (income)/costs   1,696,118     226,430     (1,372,087 )   399,234  
                 
Loss before income taxes   7,154,729     5,823,934     10,638,687     8,716,820  
                 
Income taxes   192,800     20,200     316,535     54,000  
                 
Net loss for the period   7,347,529     5,844,134     10,955,222     8,770,820  
                 
Other comprehensive loss (income)                
Item that may be reclassified to profit or loss                
Foreign currency translation adjustment - net of tax of $nil (2019 - $nil)   (25,728 )   (11,843 )   159,389     (58,232 )
Net loss and comprehensive loss for the period   7,321,801     5,832,291     11,114,611     8,712,588  
                 
Loss per share                
Basic and diluted net loss per share   0.46     0.54     0.71     0.81  
 
Profound Medical Corp.Interim Condensed Consolidated Statements of Cash Flows(Unaudited)
 
  Sixmonthsended June 30,2020$   Sixmonthsended June 30, 2019$  
     
Operating activities    
Net loss for the period (10,955,222 ) (8,770,820 )
Adjustments to reconcile net loss to net cash flows from operating activities:    
Depreciation of property and equipment 245,277   257,299  
Amortization of intangible assets 203,663   564,219  
Depreciation of right-of-use assets 576,823   204,126  
Share-based compensation 1,490,806   456,427  
Interest and accretion expense 696,866   681,258  
Deferred revenue 35,054   387,165  
Change in fair value of derivative financial instrument 232,466   54,220  
Change in fair value of contingent consideration 11,580   (208,911 )
Foreign exchange on cash (1,701,391 ) -  
Changes in non-cash working capital balances    
Trade and other receivables (536,290 ) (248,171 )
Prepaid expenses and deposits 751,729   63,186  
Inventory (2,206,342 ) 20,277  
Accounts payable and accrued liabilities (1,071,273 ) (1,612,144 )
Provisions 4,419   (1,219,114 )
Income taxes payable (9,907 ) (133,274 )
Net cash flow used in operating activities (12,231,742 ) (9,504,257 )
     
Financing activities    
Issuance of common shares 52,098,723   -  
Transaction costs paid (4,152,072 ) -  
Payment of other liabilities (191,925 ) (16,203 )
Payment of long-term debt and interest (12,497,993 ) (534,709 )
Proceeds from share options exercised 1,540,180   5,399  
Proceeds from warrants exercised 10,650,381   -  
Payment of lease liabilities (175,052 ) (143,943 )
Total cash from financing activities 47,272,242   (689,456 )
     
Net change in cash during the period 35,040,500   (10,193,713 )
Foreign exchange on cash 1,701,391   -  
Cash – Beginning of period 19,222,195   30,687,183  
Cash End of period 55,964,086   20,493,470