ISFIYA, Israel and BOSTON, Aug. 10, 2017 /PRNewswire/ --
Check-Cap Ltd. (the "Company" or "Check-Cap") (NASDAQ: CHEK;
CHEKW), a clinical-stage medical diagnostics company engaged in the
development of C-Scan®, an ingestible capsule for preparation-free,
colorectal cancer screening, today provided a corporate update and
announced its financial results for the second quarter and six
months ended June 30, 2017.
"During the recent quarter, we continued to advance our ongoing
clinical program and are on track to submit
C-Scan® for CE Marking this summer," said
Bill Densel, CEO of Check-Cap.
"Following the achievement of the initial milestone of our ongoing
collaboration, Check-Cap, along with our collaborator GE
Healthcare, has received approval of a conditional grant to support
a joint development project for C-Scan®
from the Israel-U.S. Binational Industrial Research and Development
Foundation. This project aims to develop a high volume
manufacturing and distribution process of
C-Scan® to the U.S. market."
Recent Highlights:
- Check-Cap and GE Healthcare received approval of a $1 million conditional grant from the Israel-U.S.
Binational Industrial Research and Development Foundation (BIRD).
The grant will support development of a high-volume manufacturing
process for the C-Scan® system's X-ray
source and capsule assembly, and establishing a unique product
distribution process for a pilot clinical trial in the U.S. The
award of the grant is conditioned, among other things, on
submission of an application for CE Marking of the
C-Scan® system.
- On June 2, 2017 the Company
closed a registered direct offering of ordinary shares and a
concurrent private placement with gross proceeds of $2.69 million with a single health-care focused
institutional investor.
Financial Results for the Second Quarter Ended June 30, 2017
Research and development expenses, net were $2.0 million in the three months ended
June 30, 2017, compared to
$1.1 million in the same period in
2016. The increase is primarily attributable to (1)
$561,000 grant received from the
Israel Innovation Authority (the "IIA") which was credited
to research and development expenses, net during the
second quarter of 2016 and (2) $355,000 related primarily to the Company's
clinical trial to support CE Marking for the C-Scan®
system.
General and administrative expenses were $0.8 million in the three months ended
June 30, 2017, compared to
$0.9 million in the same period in
2016. The decrease was primarily due to a $190,000 decrease in share-based compensation,
which was offset primarily by an increase in payroll related
expenses ($103,000).
Operating loss was $2.8 million
for the three months ended June 30,
2017, compared to $2.0 million
in the same period in 2016.
Finance expenses, net were $20,000
in the three months ended June 30,
2017, compared to $15,000 in
the same period in 2016.
Net loss was $2.8 million in the
three months ended June 30, 2017,
compared to $2.0 million in the same
period in 2016.
Non-GAAP net loss was $2.7 million
in the three months ended June 30,
2017, compared to $1.6 million
in the same period in 2016.
Cash, cash equivalents and short-term bank deposit totaled
$9.2 million at June 30, 2017, compared to $9.4 million at March
31, 2017. Check-Cap's cash balance as of June 30, 2017 includes the net proceeds from the
June 2, 2017 registered direct
offering and concurrent private placement.
Financial Results for the Six Months Ended June 30, 2017
Research and development expenses, net were $3.9 million in the six months ended June 30, 2017, compared to $2.9 million in the same period in 2016. The
increase is primarily attributable to (1) $651,000 grant received from the IIA which
was credited to research and development expenses,
net during the six months ended June
30, 2016 and (2) $428,000
related primarily to the Company's clinical trial to support CE
Marking for the C-Scan® system. This increase was
partially offset by a $88,000
decrease in share-based compensation.
General and administrative expenses were $1.7 million in the six months ended June 30, 2017, compared to $2.0 million in the same period in 2016. The
decrease was primarily due to a $360,000 decrease in share-based compensation,
which was offset primarily by an increase in payroll related
expenses ($69,000).
Operating loss was $5.6 million
for the six months ended June 30,
2017, compared to $4.9 million
in the same period in 2016.
Finance income, net was $90,000 in
the six months ended June 30, 2017,
compared to $143,000 in the same
period in 2016.
Net loss was $5.5 million in the
six months ended June 30, 2017,
compared to $4.7 million in the same
period in 2016.
Non-GAAP net loss was $5.1 million
in the six months ended June 30,
2017, compared to $4.0 million
in the same period in 2016.
Net cash used in operating activities was $5.0 million in the six months ended June 30, 2017, compared to $4.8 million in the same period in 2016.
A reconciliation of GAAP results to non-GAAP results is provided
below.
The number of outstanding ordinary shares as of June 30, 2017, was 16,979,845, this number
includes the 1,349,500 ordinary shares that were issued in the
June 2, 2017 registered direct
offering.
Use of Non-GAAP Financial Results
In addition to disclosing financial results calculated in
accordance with U.S. GAAP, the Company's financial results
release contains Non-GAAP financial measures of net loss for the
period that exclude the effects of share-based compensation and
changes in royalties provision. The Company's management believes
the Non-GAAP financial information provided in this release is
useful to investors' understanding and assessment of the Company's
on-going operations. Management also uses both GAAP and
Non-GAAP information in evaluating and operating business
internally and as such deemed it important to provide all this
information to investors. The Non-GAAP financial measures disclosed
by the Company should not be considered in isolation or as a
substitute for, or superior to, financial measures calculated in
accordance with GAAP, and the financial results calculated in
accordance with GAAP and reconciliations to those financial
statements should be carefully evaluated. Reconciliations between
GAAP measures and Non-GAAP measures are provided later in this
press release.
About Check-Cap
Check-Cap is a clinical-stage medical diagnostics company
developing C-Scan®, the first capsule-based system for
preparation-free colorectal cancer screening.
Utilizing innovative ultra-low dose X-ray and wireless
communication technologies, the capsule generates information on
the contours of the inside of the colon as it passes
naturally. This information is used to create a 3D map of the
colon, which allows physicians to look for polyps and other
abnormalities. Designed to improve the patient experience and
increase the willingness of individuals to participate in
recommended colorectal cancer screening, C-Scan® removes
many frequently-cited barriers, such as laxative bowel preparation,
invasiveness and sedation. The C-Scan® system is currently not
cleared for marketing in any jurisdiction.
Legal Notice Regarding Forward-Looking Statements
This press release contains "forward-looking statements."
Words such as "may," "should," "could," "would," "predicts,"
"potential," "continue," "expects," "anticipates," "future,"
"intends," "plans," "believes," "estimates," and similar
expressions, as well as statements in future tense, often signify
forward-looking statements. Forward-looking statements should not
be read as a guarantee of future performance or results and may not
be accurate indications of when such performance or results will be
achieved. Forward-looking statements are based on information that
the Company has when those statements are made or management's good
faith belief as of that time with respect to future events, and are
subject to risks and uncertainties that could cause actual
performance or results to differ materially from those expressed in
or suggested by the forward-looking statements. For a discussion of
these and other risks that could cause such differences and that
may affect the realization of forward-looking statements, please
refer to the "Special Note On Forward-looking Statements" and "Risk
Factors" in the Company's Annual Report on Form 20-F and other
filings with the Securities and Exchange Commission (SEC).
Investors and security holders are urged to read these documents
free of charge on the SEC's web site at
http://www.sec.gov. The Company assumes no obligation to
publicly update or revise its forward-looking statements as a
result of new information, future events or
otherwise.
Financial Tables to Follow
CHECK CAP
LTD
|
CONSOLIDATED
UNAUDITED BALANCE SHEETS
|
(U.S. dollars
in thousands, except share and per share data)
|
|
|
|
June
30,
|
|
|
December
31,
|
|
|
|
2017
|
|
|
2016
|
|
Assets
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
9,152
|
|
|
|
11,639
|
|
Prepaid expenses and
other current assets
|
|
|
424
|
|
|
|
242
|
|
Total current
assets
|
|
|
9,576
|
|
|
|
11,881
|
|
|
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
|
|
|
Property and
equipment, net
|
|
|
526
|
|
|
|
414
|
|
Total non-current
assets
|
|
|
526
|
|
|
|
414
|
|
Total
assets
|
|
|
10,102
|
|
|
|
12,295
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Accounts payable and
accruals
|
|
|
|
|
|
|
|
|
Trade
|
|
|
549
|
|
|
|
393
|
|
Other
|
|
|
389
|
|
|
|
235
|
|
Other current
liabilities
|
|
|
11
|
|
|
|
11
|
|
Employees and payroll
accruals
|
|
|
951
|
|
|
|
728
|
|
Total current
liabilities
|
|
|
1,900
|
|
|
|
1,367
|
|
|
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
|
|
Royalties
provision
|
|
|
570
|
|
|
|
521
|
|
Total non-current
liabilities
|
|
|
570
|
|
|
|
521
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
|
|
|
|
|
|
|
|
Share
capital
|
|
|
861
|
|
|
|
771
|
|
Additional paid-in
capital
|
|
|
55,198
|
|
|
|
52,577
|
|
Accumulated
deficit
|
|
|
(48,427)
|
|
|
|
(42,941)
|
|
Total
shareholders' equity
|
|
|
7,632
|
|
|
|
10,407
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
and shareholders' equity
|
|
|
10,102
|
|
|
|
12,295
|
|
CHECK CAP
LTD
|
CONSOLIDATED
UNAUDITED STATEMENTS OF OPERATIONS
|
(U.S. dollars in
thousands, except share and per share data)
|
|
|
|
Six months ended
June 30,
|
|
|
Three months ended
June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development expenses, net
|
|
|
3,874
|
|
|
|
2,883
|
|
|
|
1,997
|
|
|
|
1,081
|
|
General and
administrative expenses
|
|
|
1,696
|
|
|
|
1,992
|
|
|
|
810
|
|
|
|
894
|
|
Operating
loss
|
|
|
5,570
|
|
|
|
4,875
|
|
|
|
2,807
|
|
|
|
1,975
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance income
(expenses), net
|
|
|
90
|
|
|
|
143
|
|
|
|
(20)
|
|
|
|
(15)
|
|
Loss before
tax
|
|
|
5,480
|
|
|
|
4,732
|
|
|
|
2,827
|
|
|
|
1,990
|
|
Taxes on
income
|
|
|
6
|
|
|
|
-
|
|
|
|
3
|
|
|
|
-
|
|
Net loss for the
period
|
|
|
5,486
|
|
|
|
4,732
|
|
|
|
2,830
|
|
|
|
1,990
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per ordinary
share basic and diluted
|
|
|
0.33
|
|
|
|
0.36
|
|
|
|
0.17
|
|
|
|
0.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of ordinary shares outstanding
- basic and diluted (in thousands)
|
|
|
16,635
|
|
|
|
13,277
|
|
|
|
16,840
|
|
|
|
13,274
|
|
CHECK-CAP
LTD.
|
CONSOLIDATED
UNAUDITED STATEMENTS OF CASH FLOWS
|
(U.S.
dollars in thousands, except per share data)
|
|
|
|
Six months
ended
June
30,
|
|
|
|
2017
|
|
|
2016
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
Net loss for the
period
|
|
|
(5,486)
|
|
|
|
(4,732)
|
|
Depreciation and
amortization
|
|
|
73
|
|
|
|
63
|
|
Share-based
compensation
|
|
|
347
|
|
|
|
794
|
|
Financial income,
net
|
|
|
(158)
|
|
|
|
(64)
|
|
Changes in assets
and liabilities items:
|
|
|
|
|
|
|
|
|
Decrease in prepaid
and other current assets and non-current
assets
|
|
|
(182)
|
|
|
|
(219)
|
|
Increase (decrease)
in trade accounts payable, accruals and other current
liabilities
|
|
|
107
|
|
|
|
(93)
|
|
Increase (decrease)
in employees and payroll accruals
|
|
|
223
|
|
|
|
(535)
|
|
Increase (decrease)
in royalties provision
|
|
|
49
|
|
|
|
(13)
|
|
Net cash used in
operating activities
|
|
|
(5,027)
|
|
|
|
(4,799)
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Purchase of property
and equipment
|
|
|
(81)
|
|
|
|
(79)
|
|
Decrease in
restricted deposit
|
|
|
-
|
|
|
|
46
|
|
Proceeds from
short-term investments
|
|
|
-
|
|
|
|
3,811
|
|
Net cash provided
by (used in) investing activities
|
|
|
(81)
|
|
|
|
3,778
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Exercise of warrants
into ordinary shares
|
|
|
82
|
|
|
|
5
|
|
Issuance of ordinary
shares in RD 2017, net of issuance
expenses in an amount of $349
|
|
|
2,380
|
|
|
|
-
|
|
Net cash provided
by financing activities
|
|
|
2,462
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
|
159
|
|
|
|
61
|
|
Net decrease in
cash and cash equivalents
|
|
|
(2,487)
|
|
|
|
(955)
|
|
Cash and cash
equivalents at the beginning of the period
|
|
|
11,639
|
|
|
|
9,392
|
|
Cash and cash
equivalents at the end of the period
|
|
|
9,152
|
|
|
|
8,437
|
|
CHECK-CAP
LTD.
|
SUPPLEMENTAL
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
|
(U.S. dollars in
thousands)
|
|
|
|
Six months ended
June 30,
|
|
Three months ended
June 30,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss for the
period
|
|
|
(5,486)
|
|
|
(4,732)
|
|
|
(2,830)
|
|
|
(1,990)
|
|
Share-based
compensation (1)
|
|
|
347
|
|
|
794
|
|
|
133
|
|
|
358
|
|
Changes in
royalties
|
|
|
49
|
|
|
(13)
|
|
|
25
|
|
|
11
|
|
Non-GAAP net loss
for the period
|
|
|
(5,090)
|
|
|
(3,951)
|
|
|
(2,672)
|
|
|
(1,621)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Share-based
compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development expenses, net
|
|
|
75
|
|
|
162
|
|
|
31
|
|
|
66
|
|
General and
administrative expenses
|
|
|
272
|
|
|
632
|
|
|
102
|
|
|
292
|
|
|
|
|
347
|
|
|
794
|
|
|
133
|
|
|
358
|
|
CONTACT:
Investors
David Carey
Lazar Partners Ltd.
212-867-1768
dcarey@lazarpartners.com
Vivian Cervantes
PCG Advisory
212-554-5482
vivian@pcgadvisory.com
Media
Erich Sandoval or Rob Sawyer
Lazar Partners Ltd.
213-908-6226 or 212-843-0209
esandoval@lazarpartners.com
rsawyer@lazarpartners.com
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SOURCE Check-Cap Ltd.