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 |
|
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