UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of May 2024
Commission File Number: 001-39032
PROFOUND MEDICAL CORP.
(Translation of registrant's name into English)
2400 Skymark Avenue, Unit 6, Mississauga, Ontario L4W 5K5
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F [ ] Form 40-F [ X ]
Exhibits 99.2 and 99.3 of this Form 6-K are incorporated by reference into Profound Medical Corp.’s registration statement on Form F-10 (File No. 333-263248).
EXHIBIT INDEX
The following document is attached as an exhibit hereto and is incorporated by reference herein:
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | PROFOUND MEDICAL CORP. |
| | (Registrant) |
| | |
| | |
Date: May 9, 2024 | | /s/ Rashed Dewan |
| | Rashed Dewan |
| | Chief Financial Officer |
| | |
EXHIBIT 99.1
Profound Medical Announces First Quarter 2024 Financial Results and Issues Full-Year 2024 Revenue Guidance
TORONTO, May 09, 2024 (GLOBE NEWSWIRE) -- Profound Medical Corp. (NASDAQ:PROF; TSX:PRN) (“Profound” or the “Company”), a commercial-stage medical device company that develops and markets customizable, incision-free therapies for the ablation of diseased tissue, today reported financial results for the first quarter ended March 31, 2024 and provided full-year 2024 revenue guidance. Unless specified otherwise, all amounts in this press release are expressed in U.S. dollars and are presented in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Business Highlights
- The TULSA-PRO® systems installed base grew from 47 at the end of 2023 to 53 as of the end of Q1-2024; Profound continues to expect that to grow to 75 TULSA-PRO® systems this year.
- Profound continued to see a wide variety of prostate disease patients treated by its TULSA-PRO® customers in the first quarter of 2024:
- Approximately 71% were treated for prostate cancer, 21% were hybrid patients suffering from both prostate cancer and benign prostatic hyperplasia (“BPH”), 6% were salvage, and 2% were men with BPH only;
- For cancer grade, approximately 15% were GG1, 47% were GG2, 27% were GG3, and 13% were GG4 & GG5;
- In terms of ablation, approximately 53% were whole gland; 26% were sub-total but more than half the gland; 10% were hemi-ablations; and 12% were focal therapy; and
- For prostate size, approximately 4% were < 20cc; 29% were 20 – 40cc; 40% were 40-60cc; 23% were 60-100cc; and 4% were over 100cc.
- Profound’s next TULSA AI module, Contouring Assistant, which has been designed to enable the creation of a suggested treatment design based upon the specific prostate anatomy of each patient, is currently under U.S. Food and Drug Administration (FDA) review.
- In or around late-July 2024, the Company anticipates that the U.S. Centers for Medicare & Medicaid Services (CMS) will issue its proposed outpatient prospective payment system (OPPS) reimbursement rule for the three new CPT® Category 1 codes and their descriptors covering the TULSA procedure, with the final rule anticipated in November 2024, which will become effective on January 1, 2025.
- The ongoing Level 1 CAPTAIN trial comparing the TULSA procedure to radical prostatectomy in men with localized prostate cancer remains on track to complete patient enrollment by the end of this year.
- Earlier this week, Profound announced that 25 TULSA-related scientific research presentations have already been delivered at major medical meetings around the world thus far in 2024.
- Today, the Company is providing annual revenue guidance for the first time.
“Concurrent with growing awareness of the TULSA procedure’s potential to become a mainstream treatment modality for prostate disease among urologists via our sales, marketing and clinical education programs, our preparations continue for the permanent CPT® Category 1 codes for TULSA going into effect at the beginning of 2025,” said Arun Menawat, Profound’s CEO and Chairman. “As we continue to advance toward what we anticipate will be a major inflection point for our business, we believe that we now have sufficient visibility into the pace of TULSA adoption ahead of it, both in terms of existing system utilization and installed base growth, to initiate full-year revenue guidance.”
Summary First Quarter 2024 Results
For the quarter ended March 31, 2024, the Company recorded revenue of approximately $1.91 million, with $1.48 million from recurring revenue, which consists of the sale of TULSA-PRO® consumables, lease of medical devices, procedures and services associated with extended warranties, and $428,000 for one-time sale of capital equipment. First quarter 2024 revenue increased approximately 3% from $1.86 million in the same three-month period a year ago.
Total operating expenses, which consist of research and development (“R&D”), general and administrative (“G&A”), and selling and distribution (“S&D”) expenses, were approximately $8.8 million in the first quarter of 2024, an increase of 9% compared with approximately $8.1 million in the first quarter of 2023.
Expenditures for R&D for the three months ended March 31, 2024 were approximately $3.9 million, an increase of 2% compared with approximately $3.8 million in the three months ended March 31, 2023, primarily driven by improved enrollment for the CAPTAIN trial and recruitment efforts, additional travel associated with system installation and clinical trials, and increased software costs associated with thermal boost and artificial intelligence development software. Partially offsetting these amounts was a decrease in rent due to lower MRI time usage and a decrease in share-based compensation due to fewer awards granted to employees.
G&A expenses for the 2024 first quarter increased by 13% to approximately $2.4 million, compared with approximately $2.1 million in the same period in 2023. Salaries and benefits, consulting fees and travel increased due to higher cost of living salary increases, increased legal and accounting fees, and increased travel for investor relations and conferences. Partially offsetting this was a decrease to insurance expense due to lower premium rates and a decrease to general office expenses.
First quarter 2024 S&D expenses increased by 15% to approximately $2.4 million, compared with $2.1 million in the first quarter of 2023. This was driven by increases in salaries and benefits, consulting fees, and marketing and travel expenses due to increased salesforce and commission payments, consultants engaged to assist with Veteran Affairs and military sales markets, release of commercial segments and marketing advertisement campaigns, and increased in-person conferences and customer meetings. These were partially offset by a decrease in share-based compensation due to fewer awards granted to employees.
Net finance income for the three months ended March 31, 2024 was approximately $1.3 million, compared with approximately $145,000 in the three months ended March 31, 2023.
First quarter 2024 net loss was approximately $6.2 million, or $0.26 per common share, compared to approximately $6.7 million, or $0.32 per common share, in the three months ended March 31, 2023.
2024 Financial Outlook
Based on the Company’s current business planning and budgeting activities, it expects total revenue for full-year 2024 to be in the range of $11.0 million to $12.0 million, which represents 53% to 67% growth compared to its prior year revenue.
Liquidity and Outstanding Share Capital
As at March 31, 2024, Profound had cash of approximately $41.2 million.
As at May 9, 2024, Profound had 24,428,899 common shares issued and outstanding.
For complete financial results, please see Profound’s filings at www.sedarplus.ca, www.sec.gov and on the Company’s website at www.profoundmedical.com under “Financial” in the Investors section.
Conference Call Details
Profound Medical is pleased to invite all interested parties to participate in a conference call today at 4:30 pm ET during which time the results will be discussed.
To participate in the conference call by telephone, please pre-register via this link to receive the dial-in number and your unique PIN.
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 (“FDA”).
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 and has FDA approval under a Humanitarian Device Exemption for the treatment of osteoid osteoma. 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, any express or implied statements or guidance regarding current or future financial performance and position, including the Company’s year 2024 financial guidance and related assumptions; the expectations regarding the efficacy of Profound’s technology in the treatment of prostate cancer, BPH, uterine fibroids, palliative pain treatment and osteoid osteoma; and its future revenues/financial results. 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 medical device industry, regulatory approvals, reimbursement, economic factors, the equity markets generally and risks associated with growth and competition, statements and projections regarding financial guidance and goals and the attainment of such goals may differ from actual results based on market factors and Profound’s ability to execute its operational and budget plans; and actual financial results may not be consistent with expectations, including that revenue, operating expenses and cash usage may not be within management's expected ranges. For additional risks, please see the Company’s annual information form for the year ended December 31, 2023 and other disclosure documents available on www.sedarplus.ca and www.sec.gov. 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. 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.
Financial Outlook
This press release contains a financial outlook within the meaning of applicable securities laws. The financial outlook has been prepared by management of the Company to provide an outlook for the Company’s forecasted revenue for the 12 months to be ended December 31, 2024 and may not be appropriate for any other purpose. The financial outlook has been prepared based on a number of assumptions including the assumptions discussed under the heading “Forward-Looking Statements” herein. The actual results of the Company’s operations for any period may vary from the amounts set forth in these projections and such variations may be material. The Company and its management believe that the financial outlook has been prepared on a reasonable basis. However, because this information is highly subjective and subject to numerous risks, including the risks discussed under the heading “Forward-Looking Statements” herein, it should not be relied on as necessarily indicative of future results.
For further information, please contact:
Stephen Kilmer
Investor Relations
skilmer@profoundmedical.com
T: 647.872.4849
Profound Medical Corp.
Interim Condensed Consolidated Balance Sheets
(Unaudited)
| | March 31, 2024 $ | | December 31, 2023 $ | |
| | | |
Assets | | | |
| | | |
Current assets | | | |
Cash | | 41,180 | | 26,213 | |
Trade and other receivables | | 6,510 | | 7,288 | |
Inventory | | 6,976 | | 6,989 | |
Prepaid expenses and deposits | | 875 | | 1,406 | |
Total current assets | | 55,541 | | 41,896 | |
| | | |
Property and equipment | | 866 | | 909 | |
Intangible assets | | 428 | | 490 | |
Right-of-use assets | | 547 | | 616 | |
| | | |
Total assets | | 57,382 | | 43,911 | |
| | | |
Liabilities | | | |
| | | |
Current liabilities | | | |
Accounts payable and accrued liabilities | | 2,875 | | 3,282 | |
Deferred revenue | | 644 | | 721 | |
Long-term debt | | 6,482 | | 2,104 | |
Lease liabilities | | 253 | | 259 | |
Income taxes payable | | 13 | | - | |
Total current liabilities | | 10,267 | | 6,366 | |
| | | |
Deferred tax liability | | 59 | | 59 | |
Long-term debt | | - | | 5,000 | |
Deferred revenue | | 697 | | 728 | |
Lease liabilities | | 501 | | 578 | |
| | | |
Total liabilities | | 11,524 | | 12,731 | |
| | | |
Shareholders’ Equity | | | |
| | | |
Share capital | | 232,763 | | 217,393 | |
Contributed surplus | | 19,985 | | 19,687 | |
Accumulated other comprehensive income | | 17,240 | | 12,031 | |
Deficit | | (224,130 | ) | (217,931 | ) |
| | | |
Total Shareholders’ Equity | | 45,858 | | 31,180 | |
| | | |
Total Liabilities and Shareholders’ Equity | | 57,382 | | 43,911 | |
Profound Medical Corp.
Interim Condensed Consolidated Statements of Loss and Comprehensive Loss
(Unaudited)
| | Three months ended March 31, 2024 $ | | Three months ended March 31, 2023 $ | |
| | | |
Revenue | | | |
Recurring - non-capital | | 1,482 | | 1,467 | |
Capital equipment | | 428 | | 393 | |
| | 1,910 | | 1,860 | |
Cost of sales | | 641 | | 647 | |
Gross profit | | 1,269 | | 1,213 | |
| | | |
Operating expenses | | | |
Research and development | | 3,933 | | 3,840 | |
General and administrative | | 2,387 | | 2,106 | |
Selling and distribution | | 2,431 | | 2,105 | |
Total operating expenses | | 8,751 | | 8,051 | |
| | | |
Operating loss | | 7,482 | | 6,838 | |
| | | |
Net finance expense (income) | | (1,322 | ) | (145 | ) |
| | | |
Loss before income taxes | | 6,160 | | 6,693 | |
| | | |
Income tax expense | | 39 | | 48 | |
| | | |
Net loss attributed to shareholders for the period | | 6,199 | | 6,741 | |
| | | |
Other comprehensive (income) loss | | | |
Item that may be reclassified to loss | | | |
Foreign currency translation adjustment - net of tax | | (5,209 | ) | 47 | |
| | | |
Net loss and comprehensive loss for the period | | 990 | | 6,788 | |
| | | |
Loss per share | | | |
Basic and diluted loss per common share | | 0.26 | | 0.32 | |
Profound Medical Corp.
Interim Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Three months ended March 31, 2024 $ | | Three months ended March 31, 2023 $ | |
| | |
Operating activities | | |
Net loss for the period | (6,199 | ) | (6,741 | ) |
Adjustments to reconcile net loss to net cash flows from operating activities: | | |
Depreciation of property and equipment | 199 | | 179 | |
Amortization of intangible assets | 51 | | 50 | |
Depreciation of right-of-use assets | 55 | | 54 | |
Share-based compensation | 767 | | 941 | |
Interest and accretion expense | 177 | | 192 | |
Deferred revenue | (107 | ) | 212 | |
Change in fair value of derivative financial instrument | - | | (121 | ) |
Net change in amortized cost of trade and other receivables | (69 | ) | (39 | ) |
Changes in non-cash working capital balances | | |
Trade and other receivables | 854 | | (600 | ) |
Prepaid expenses and deposits | 553 | | 364 | |
Inventory | (180 | ) | (330 | ) |
Accounts payable and accrued liabilities | (570 | ) | (21 | ) |
Provisions | - | | 6 | |
Income taxes payable | 13 | | 48 | |
Foreign exchange on cash | (642 | ) | (17 | ) |
Net cash flow used in operating activities | (5,098 | ) | (5,823 | ) |
| | |
Financing activities | | |
Issuance of common shares | 22,938 | | - | |
Transactions costs paid | (1,859 | ) | - | |
Payment of long-term debt | (623 | ) | (206 | ) |
Proceeds from warrants exercised | - | | 2,423 | |
Payment of lease liabilities | (73 | ) | (73 | ) |
Total cash flow from financing activities | 20,383 | | 2,144 | |
| | |
Net change in cash during the period | 15,285 | | (3,679 | ) |
Foreign exchange on cash | (318 | ) | 146 | |
Cash – Beginning of period | 26,213 | | 46,517 | |
Cash – End of period | 41,180 | | 42,984 | |
Exhibit 99.2
![](https://www.sec.gov/Archives/edgar/data/1628808/000117184324002718/logo.jpg)
PROFOUND MEDICAL CORP.
INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
MARCH 31, 2024
PRESENTED IN US DOLLARS (000s)
Profound
Medical Corp.
Interim Condensed Consolidated Balance Sheets
In USD (000s)
(Unaudited)
|
| |
|
March 31, 2024 $ |
| |
|
December 31,
2023 $ |
|
| |
| |
|
Assets | |
| |
|
| |
| |
|
Current assets | |
| |
|
Cash | |
| 41,180 | | |
| 26,213 | |
Trade and other receivables (note 3) | |
| 6,510 | | |
| 7,288 | |
Inventory (note 4) | |
| 6,976 | | |
| 6,989 | |
Prepaid expenses and deposits | |
| 875 | | |
| 1,406 | |
Total current assets | |
| 55,541 | | |
| 41,896 | |
| |
| | | |
| | |
Property and equipment (note 5) | |
| 866 | | |
| 909 | |
Intangible assets (note 6) | |
| 428 | | |
| 490 | |
Right-of-use assets (note 7) | |
| 547 | | |
| 616 | |
| |
| | | |
| | |
Total assets | |
| 57,382 | | |
| 43,911 | |
| |
| | | |
| | |
Liabilities | |
| | | |
| | |
| |
| | | |
| | |
Current liabilities | |
| | | |
| | |
Accounts payable and accrued liabilities | |
| 2,875 | | |
| 3,282 | |
Deferred revenue | |
| 644 | | |
| 721 | |
Long-term debt (note 8) | |
| 6,482 | | |
| 2,104 | |
Lease liabilities (note 9) | |
| 253 | | |
| 259 | |
Income taxes payable | |
| 13 | | |
| - | |
Total current liabilities | |
| 10,267 | | |
| 6,366 | |
| |
| | | |
| | |
Deferred tax liability | |
| 59 | | |
| 59 | |
Long-term debt (note 8) | |
| - | | |
| 5,000 | |
Deferred revenue | |
| 697 | | |
| 728 | |
Lease liabilities (note 9) | |
| 501 | | |
| 578 | |
| |
| | | |
| | |
Total liabilities | |
| 11,524 | | |
| 12,731 | |
| |
| | | |
| | |
Shareholders’ Equity | |
| | | |
| | |
| |
| | | |
| | |
Share capital (note 10) | |
| 232,763 | | |
| 217,393 | |
Contributed surplus | |
| 19,985 | | |
| 19,687 | |
Accumulated other comprehensive income | |
| 17,240 | | |
| 12,031 | |
Deficit | |
| (224,130 | ) | |
| (217,931 | ) |
| |
| | | |
| | |
Total Shareholders’ Equity | |
| 45,858 | | |
| 31,180 | |
| |
| | | |
| | |
Total Liabilities and Shareholders’ Equity | |
| 57,382 | | |
| 43,911 | |
The accompanying notes are an integral part of these interim condensed consolidated financial
statements.
Profound
Medical Corp.
Interim Condensed Consolidated Statements of Loss and Comprehensive
Loss
In USD (000s)
(Unaudited)
|
| |
|
Three months ended March 31, 2024 $ |
| |
|
Three months ended March 31, 2023 $ |
|
| |
| |
|
Revenue (note 12) | |
| |
|
Recurring - non-capital | |
| 1,482 | | |
| 1,467 | |
Capital equipment | |
| 428 | | |
| 393 | |
| |
| 1,910 | | |
| 1,860 | |
Cost of sales (note 13) | |
| 641 | | |
| 647 | |
Gross profit | |
| 1,269 | | |
| 1,213 | |
| |
| | | |
| | |
Operating expenses (note 13) | |
| | | |
| | |
Research and development | |
| 3,933 | | |
| 3,840 | |
General and administrative | |
| 2,387 | | |
| 2,106 | |
Selling and distribution | |
| 2,431 | | |
| 2,105 | |
Total operating expenses | |
| 8,751 | | |
| 8,051 | |
| |
| | | |
| | |
Operating loss | |
| 7,482 | | |
| 6,838 | |
| |
| | | |
| | |
Net finance expense (income) (note 14) | |
| (1,322 | ) | |
| (145 | ) |
| |
| | | |
| | |
Loss before income taxes | |
| 6,160 | | |
| 6,693 | |
| |
| | | |
| | |
Income tax expense | |
| 39 | | |
| 48 | |
| |
| | | |
| | |
Net loss attributed to shareholders for the period | |
| 6,199 | | |
| 6,741 | |
| |
| | | |
| | |
Other comprehensive (income) loss | |
| | | |
| | |
Item that may be reclassified to loss | |
| | | |
| | |
Foreign currency translation adjustment - net of tax | |
| (5,209 | ) | |
| 47 | |
| |
| | | |
| | |
Net loss and comprehensive loss for the period | |
| 990 | | |
| 6,788 | |
| |
| | | |
| | |
Loss per share (note 15) | |
| | | |
| | |
Basic and diluted loss per common share | |
| 0.26 | | |
| 0.32 | |
The accompanying notes are an integral part of these interim condensed consolidated financial
statements.
Profound
Medical Corp.
Interim Condensed Consolidated Statements of Changes in Shareholders’
Equity
In USD (000s)
(Unaudited)
|
| |
|
Number of shares |
| |
|
Share capital $ |
| |
|
Contributed surplus $ |
| |
|
Accumulated other comprehensive income $ |
| |
|
Deficit $ |
| |
|
Total $ |
|
| |
| |
| |
| |
| |
| |
|
Balance – January 1, 2023 | |
| 20,879,497 | | |
| 205,825 | | |
| 18,704 | | |
| 16,837 | | |
| (189,362 | ) | |
| 52,004 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss for the period | |
| - | | |
| - | | |
| - | | |
| - | | |
| (6,741 | ) | |
| (6,741 | ) |
Cumulative translation adjustment – net of tax of $nil | |
| - | | |
| 169 | | |
| (14 | ) | |
| (47 | ) | |
| - | | |
| 108 | |
Exercise of share options | |
| 500 | | |
| 1 | | |
| (1 | ) | |
| - | | |
| - | | |
| - | |
Exercise of Warrants | |
| 234,335 | | |
| 3,409 | | |
| (986 | ) | |
| - | | |
| - | | |
| 2,423 | |
Share-based compensation (note 11) | |
| - | | |
| - | | |
| 941 | | |
| - | | |
| - | | |
| 941 | |
Balance – March 31, 2023 | |
| 21,114,332 | | |
| 209,404 | | |
| 18,644 | | |
| 16,790 | | |
| (196,103 | ) | |
| 48,735 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance – January 1, 2024 | |
| 21,370,565 | | |
| 217,393 | | |
| 19,687 | | |
| 12,031 | | |
| (217,931 | ) | |
| 31,180 | |
Net loss for the period | |
| - | | |
| - | | |
| - | | |
| - | | |
| (6,199 | ) | |
| (6,199 | ) |
Cumulative translation adjustment – net of tax of $nil | |
| - | | |
| (5,709 | ) | |
| (469 | ) | |
| 5,209 | | |
| - | | |
| (969 | ) |
Shares issued in public offering and private placement (note 10) | |
| 3,058,334 | | |
| 21,079 | | |
| - | | |
| - | | |
| - | | |
| 21,079 | |
Share-based compensation (note 11) | |
| - | | |
| - | | |
| 767 | | |
| - | | |
| - | | |
| 767 | |
Balance – March 31, 2024 | |
| 24,428,899 | | |
| 232,763 | | |
| 19,985 | | |
| 17,240 | | |
| (224,130 | ) | |
| 45,858 | |
The accompanying notes are an integral part of these interim condensed consolidated financial
statements.
Profound
Medical Corp.
Interim Condensed Consolidated Statements of Cash Flows
In USD (000s)
(Unaudited)
|
| |
|
Three months ended March 31, 2024 $ |
| |
|
Three months ended March 31, 2023 $ |
|
| |
| |
|
Operating activities | |
| |
|
Net loss for the period | |
| (6,199 | ) | |
| (6,741 | ) |
Adjustments to reconcile net loss to net cash flows from operating activities: | |
| | | |
| | |
Depreciation of property and equipment (note 5) | |
| 199 | | |
| 179 | |
Amortization of intangible assets (note 6) | |
| 51 | | |
| 50 | |
Depreciation of right-of-use assets (note 7) | |
| 55 | | |
| 54 | |
Share-based compensation (note 11) | |
| 767 | | |
| 941 | |
Interest and accretion expense (note 14) | |
| 177 | | |
| 192 | |
Deferred revenue | |
| (107 | ) | |
| 212 | |
Change in fair value of derivative financial instrument (note 14) | |
| - | | |
| (121 | ) |
Net change in amortized cost of trade and other receivables (note 3) | |
| (69 | ) | |
| (39 | ) |
Changes in non-cash working capital balances | |
| | | |
| | |
Trade and other receivables | |
| 854 | | |
| (600 | ) |
Prepaid expenses and deposits | |
| 553 | | |
| 364 | |
Inventory | |
| (180 | ) | |
| (330 | ) |
Accounts payable and accrued liabilities | |
| (570 | ) | |
| (21 | ) |
Provisions | |
| - | | |
| 6 | |
Income taxes payable | |
| 13 | | |
| 48 | |
Foreign exchange on cash | |
| (642 | ) | |
| (17 | ) |
Net cash flow used in operating activities | |
| (5,098 | ) | |
| (5,823 | ) |
| |
| | | |
| | |
Financing activities | |
| | | |
| | |
Issuance of common shares (note 10) | |
| 22,938 | | |
| - | |
Transactions costs paid (note 10) | |
| (1,859 | ) | |
| - | |
Payment of long-term debt (note 8) | |
| (623 | ) | |
| (206 | ) |
Proceeds from warrants exercised | |
| - | | |
| 2,423 | |
Payment of lease liabilities (note 9) | |
| (73 | ) | |
| (73 | ) |
Total cash flow from financing activities | |
| 20,383 | | |
| 2,144 | |
| |
| | | |
| | |
Net change in cash during the period | |
| 15,285 | | |
| (3,679 | ) |
Foreign exchange on cash | |
| (318 | ) | |
| 146 | |
Cash – Beginning of period | |
| 26,213 | | |
| 46,517 | |
Cash – End of period | |
| 41,180 | | |
| 42,984 | |
Supplemental cash flow information:
Interest paid, included in financing activities | |
| 159 | | |
| 157 | |
Income taxes paid, included in operating activities | |
| 14 | | |
| 11 | |
The accompanying notes are an integral part of these interim condensed consolidated financial
statements.
Profound
Medical Corp.
Notes to Interim Condensed Consolidated Financial Statements
March 31, 2024
In USD (000s)
|
Profound Medical Corp. (Profound) and its subsidiaries (together,
the Company) were incorporated under the Ontario Business Corporations Act on July 16, 2014. The Company is a medical technology company
developing treatments to ablate the prostate gland, uterine fibroids, osteoid osteoma and nerves for palliative pain relief for patients
with metastatic bone disease.
The Company’s registered address is 2400 Skymark Avenue,
Unit 6, Mississauga, Ontario, Canada, L4W 5K5.
| 2 | Summary of material accounting policies and basis of preparation |
Basis of preparation
The Company prepares its consolidated financial statements in
accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS Accounting
Standards), applicable to the preparation of interim condensed consolidated financial statements, including International Accounting Standards
(IAS) 34, Interim Financial Reporting. These interim condensed consolidated financial statements are presented in US dollars and should
be read in conjunction with the Company’s annual financial statements for the year ended December 31, 2023, which were prepared
in accordance with IFRS Accounting Standards.
These interim condensed consolidated financial statements are
prepared in accordance with the accounting policies as set out in the Company’s annual consolidated financial statements for the
year ended December 31, 2023. The presentation of these interim condensed consolidated financial statements is consistent with the presentation
of the annual consolidated financial statements. The Board of Directors approved these consolidated financial statements on May 9, 2024.
These consolidated financial statements comply with IFRS Accounting Standards.
The interim condensed consolidated financial statements were
prepared on a going concern basis under the historical cost convention. The fair values of cash, trade and other receivables, accounts
payable and accrued liabilities and lease liabilities approximate their carrying values, due to their relatively short periods to maturity.
The fair value of the long-term debt approximates its carrying amount as it has a floating interest rate.
Accounting standards adopted during the year
Beginning on January 1, 2024, the Company adopted certain IFRS
Accounting Standards and amendments:
| · | Classification of liabilities as current or non-current (Amendments to IAS1) |
| · | Non-current liabilities with covenants (Amendments to IAS1). |
The adoption of these amendments did not have a material impact
on the interim condensed consolidated financial statements.
Profound
Medical Corp.
Notes to Interim Condensed Consolidated Financial Statements
March 31, 2024
In USD (000s)
|
| 3 | Trade and other receivables |
The trade and other receivables balance comprises the following:
| |
|
March 31,
2024 $ |
| |
|
December 31,
2023 $ |
|
| |
| |
|
Trade receivables, gross | |
| 6,557 | | |
| 7,145 | |
Loss allowance | |
| (74 | ) | |
| (76 | ) |
Less amortized cost adjustment | |
| (239 | ) | |
| (315 | ) |
Trade receivables, net | |
| 6,244 | | |
| 6,754 | |
Tax receivables | |
| 66 | | |
| 414 | |
Other receivables | |
| 200 | | |
| 120 | |
Total trade and other receivables | |
| 6,510 | | |
| 7,288 | |
The Company applies the simplified approach to provide for expected
credit losses prescribed by IFRS 9, which permits the use of the lifetime expected loss provision for all trade receivables. Trade receivables
past due represents amounts not collected beyond the customer’s contractual terms. At March 31, 2024 there were $967 of trade receivables
that were past due (December 31, 2023 - $648).
Management continually reviews the future cash flows used in
the calculation of the amortized cost of its trade and other receivables. Due to access to customer locations, certain gross trade receivables
totalling $3,737 are expected to have a longer repayment term due to the payment term being based on installation of the device. The Company
recognized $69 net interest income for the three months ended March 31, 2024 ($39 for the three months ended March 31, 2023).
| |
|
March 31, 2024 $ |
| |
|
December 31,
2023 $ |
|
| |
| |
|
Finished goods | |
| 4,781 | | |
| 4,646 | |
Raw materials | |
| 2,210 | | |
| 2,351 | |
Inventory provision | |
| (15 | ) | |
| (8 | ) |
Total inventory | |
| 6,976 | | |
| 6,989 | |
During the three months ended March 31, 2024, $523 (three months
ended March 31, 2023 - $476) of inventory was recognized in cost of sales. The Company increased its inventory provision by $7 during
the three months ended March 31, 2024 (three months ended March 31, 2023 – $6). There were no other inventory write-downs charged
to cost of sales during the period ended March 31, 2024.
Profound
Medical Corp.
Notes to Interim Condensed Consolidated Financial Statements
March 31, 2024
In USD (000s)
|
| |
|
Leasehold improvements $ |
| |
|
Equipment
under lease $ |
| |
|
Total $ |
|
| |
| |
| |
|
At January 1, 2024 | |
| |
| |
|
Cost | |
| 542 | | |
| 2,583 | | |
| 3,125 | |
Accumulated depreciation | |
| (384 | ) | |
| (1,832 | ) | |
| (2,216 | ) |
Net book value | |
| 158 | | |
| 751 | | |
| 909 | |
| |
| | | |
| | | |
| | |
Three months ended March 31, 2024 | |
| | | |
| | | |
| | |
Opening net book value | |
| 158 | | |
| 751 | | |
| 909 | |
Additions | |
| - | | |
| 159 | | |
| 159 | |
Foreign exchange | |
| (5 | ) | |
| 2 | | |
| (3 | ) |
Depreciation | |
| (14 | ) | |
| (185 | ) | |
| (199 | ) |
Closing net book value | |
| 139 | | |
| 727 | | |
| 866 | |
| |
| | | |
| | | |
| | |
At March 31, 2024 | |
| | | |
| | | |
| | |
Cost | |
| 542 | | |
| 2,742 | | |
| 3,284 | |
Accumulated depreciation | |
| (403 | ) | |
| (2,015 | ) | |
| (2,418 | ) |
Net book value | |
| 139 | | |
| 727 | | |
| 866 | |
| |
|
Exclusive licence agreement $ |
| |
|
Software $ |
| |
|
Proprietary technology $ |
| |
|
Brand $ |
| |
|
Total $ |
|
| |
| |
| |
| |
| |
|
As at January 1, 2024 | |
| |
| |
| |
| |
|
Cost | |
| 231 | | |
| 978 | | |
| 3,456 | | |
| 681 | | |
| 5,346 | |
Accumulated amortization | |
| (114 | ) | |
| (605 | ) | |
| (3,456 | ) | |
| (681 | ) | |
| (4,856 | ) |
Net book value | |
| 117 | | |
| 373 | | |
| - | | |
| - | | |
| 490 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Three months ended March 31, 2024 | |
| | | |
| | | |
| | | |
| | | |
| | |
Opening net book value | |
| 117 | | |
| 373 | | |
| - | | |
| - | | |
| 490 | |
Foreign exchange | |
| (2 | ) | |
| (9 | ) | |
| - | | |
| - | | |
| (11 | ) |
Amortization | |
| (5 | ) | |
| (46 | ) | |
| - | | |
| - | | |
| (51 | ) |
Closing net book value | |
| 110 | | |
| 318 | | |
| - | | |
| - | | |
| 428 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
As at March 31, 2024 | |
| | | |
| | | |
| | | |
| | | |
| | |
Cost | |
| 231 | | |
| 978 | | |
| 3,456 | | |
| 681 | | |
| 5,346 | |
Accumulated amortization | |
| (121 | ) | |
| (660 | ) | |
| (3,456 | ) | |
| (681 | ) | |
| (4,918 | ) |
Net book value | |
| 110 | | |
| 318 | | |
| - | | |
| - | | |
| 428 | |
Profound
Medical Corp.
Notes to Interim Condensed Consolidated Financial Statements
March 31, 2024
In USD (000s)
|
| |
|
Leased premises $ |
|
| |
|
As at January 1, 2024 | |
|
Cost | |
| 1,679 | |
Accumulated depreciation | |
| (1,063 | ) |
Net book value | |
| 616 | |
| |
| | |
Three months ended March 31, 2024 | |
| | |
Opening net book value | |
| 616 | |
Foreign exchange | |
| (14 | ) |
Depreciation | |
| (55 | ) |
Closing net book value | |
| 547 | |
| |
| | |
As at March 31, 2024 | |
| | |
Cost | |
| 1,679 | |
Accumulated depreciation | |
| (1,132 | ) |
Net book value | |
| 547 | |
The Company leases office premises in Mississauga, Canada.
The lease agreement ends on September 30, 2026 with the rights to extend for another 5 years, which is not reasonably certain.
On November 3, 2022, the Company signed a term loan agreement
with CIBC Innovation Banking (CIBC) to provide a secured loan for total gross proceeds of C$10,000 maturing on November 3, 2027 with an
interest rate based on prime plus 2% (CIBC Loan). The Company was required to make interest only payments until October 31, 2023 and monthly
repayments of C$208 plus accrued interest commenced on October 31, 2023. All obligations of the Company under the CIBC Loan are guaranteed
by current and future subsidiaries of the Company and include security of first priority interests in the assets of the Company and its
subsidiaries. Initially, the Company had financial covenants in relation to the CIBC loan where unrestricted cash is at all times greater
than EBITDA for the most recent six-month period, reported on a monthly basis and that revenue for any fiscal quarter must be 15% greater
than revenue for the same fiscal quarter in the prior fiscal year, reported on a quarterly basis.
On September 26, 2023 an amendment to the CIBC Loan resulted
in a change to the financial covenants. The amended covenants are that unrestricted cash must at all times be greater of: (i) to the extent
EBITDA is negative for such period, EBITDA for the most recent nine-month period or (ii) $7,500, reported on a monthly basis; and that
recurring revenue for any fiscal quarter must be 15% greater than recurring revenue for the same fiscal quarter in the prior fiscal year,
reported on a quarterly basis. The Company is compliant with the first covenant whereby unrestricted cash is at all times greater than
EBITDA for the most recent nine-month period ended March 31, 2024. However, the Company is in breach with the second covenant whereby
recurring revenue for any fiscal quarter must be 15% greater than recurring revenue for the same fiscal quarter in the prior fiscal year
as at March 31, 2024. The loan is classified as current since CIBC has the right to demand the repayment of the loan. If CIBC demands
repayment of the loan, the Company has sufficient cash to cover the repayment of the loan and would have $34,517 cash remaining.
Profound
Medical Corp.
Notes to Interim Condensed Consolidated Financial Statements
March 31, 2024
In USD (000s)
|
On May 3, 2024, the Company received a waiver from CIBC and an
amendment to the CIBC Loan which resulted in an amendment to the financial covenants. The amended covenants are that the recurring revenue
covenant shall not be tested for any fiscal quarter in the 2024 fiscal year so long as unrestricted cash is no less than 2.5 multiplied
by the principal amount of outstanding CIBC Loan at all times.
| |
|
March 31, 2024 $ |
| |
|
December 31,
2023 $ |
|
| |
| |
|
Balance - Beginning of period | |
| 7,104 | | |
| 7,174 | |
Interest and accretion expense | |
| 169 | | |
| 727 | |
Foreign exchange | |
| (168 | ) | |
| 115 | |
Repayment | |
| (623 | ) | |
| (912 | ) |
Balance - End of period | |
| 6,482 | | |
| 7,104 | |
Less: Current portion | |
| 6,482 | | |
| 2,104 | |
Long-term portion | |
| - | | |
| 5,000 | |
| |
|
March 31, 2024 $ |
| |
|
December 31,
2023 $ |
|
| |
| |
|
Balance – Beginning of Period | |
| 837 | | |
| 1,056 | |
Repayments | |
| (73 | ) | |
| (292 | ) |
Foreign exchange | |
| (18 | ) | |
| 30 | |
Interest and accretion expense | |
| 8 | | |
| 43 | |
Balance – End of Period | |
| 754 | | |
| 837 | |
Less: Current portion | |
| 253 | | |
| 259 | |
Long-term portion | |
| 501 | | |
| 578 | |
Common shares
The Company is authorized to issue an unlimited number of common shares.
Issued and outstanding (with no par value)
| |
|
March 31, 2024 $ |
| |
|
December 31,
2023 $ |
|
| |
| |
|
24,428,899 (December 31, 2023 – 21,370,565) common shares | |
| 232,763 | | |
| 217,393 | |
Profound
Medical Corp.
Notes to Interim Condensed Consolidated Financial Statements
March 31, 2024
In USD (000s)
|
On January 2, 2024, the Company closed a public offering, resulting
in the issuance of 2,666,667 common shares at a price of $7.50, for gross proceeds of $20,000 ($18,238, net of transaction costs).
On January 16, 2024, the Company closed a non-brokered private
placement, resulting in the issuance of 391,667 common shares at a price of $7.50, for gross proceeds of $2,938 ($2,841, net of transaction
costs).
On September 6, 2023, the Company entered into an at-the-market
equity program (ATM Program), under which the Company may from time to time in its sole discretion, issue and sell through its securities
dealers acting as agents up to $30,000 of common shares. Through March 31, 2024, the Company has not issued any common shares of the Company
under the ATM Program and is no longer in effect due to the expiry of the Company’s shelf prospectus.
Share options
Compensation expense related to share options for the three months
ended March 31, 2024 was $169 (three months ended March 31, 2023 – $415). A summary of the share option changes during the period
presented and the total number of share options outstanding as at those dates are set forth below:
| |
|
Number of
options |
| |
|
Weighted
average exercise
price C$ |
|
| |
| |
|
Balance - January 1, 2024 | |
| 1,474,809 | | |
| 16.19 | |
Granted | |
| 28,700 | | |
| 11.24 | |
Forfeited/expired | |
| (12,650 | ) | |
| 17.40 | |
Balance - March 31, 2024 | |
| 1,490,859 | | |
| 16.08 | |
The Company estimated the fair value of the share options granted
during the period using the Black-Scholes option pricing model with the weighted average assumptions below.
| |
|
March 18, 2024 |
|
| |
|
Exercise price | |
|
C$11.24 |
|
Expected volatility | |
| 70 | % |
Expected life of options | |
| 6 years | |
Risk-free interest rate | |
| 3.54 | % |
Dividend yield | |
| - | |
Number of share options issued | |
| 28,700 | |
Profound
Medical Corp.
Notes to Interim Condensed Consolidated Financial Statements
March 31, 2024
In USD (000s)
|
The following table summarizes information about the share options
outstanding as at March 31, 2024:
Exercise price
C$ |
|
Number of
options
outstanding |
|
Weighted
average
remaining
contractual
life (years) |
|
Number of
options
exercisable |
|
|
|
|
|
|
|
|
|
8.01 – 10.00 |
|
317,109 |
|
5.05 |
|
314,319 |
|
10.01 – 12.00 |
|
138,234 |
|
5.22 |
|
109,534 |
|
12.01 – 14.00 |
|
34,650 |
|
7.61 |
|
11,834 |
|
14.01 – 16.00 |
|
142,456 |
|
3.18 |
|
135,585 |
|
16.01 – 18.00 |
|
420,189 |
|
6.15 |
|
400,997 |
|
18.01 – 20.00 |
|
15,450 |
|
9.21 |
|
- |
|
20.01 – 22.00 |
|
300 |
|
6.38 |
|
267 |
|
22.01 – 24.00 |
|
410,671 |
|
7.13 |
|
291,823 |
|
24.01 – 26.00 |
|
1,800 |
|
6.65 |
|
1,484 |
|
28.01 – 30.00 |
|
10,000 |
|
6.95 |
|
7,504 |
|
|
|
1,490,859 |
|
5.89 |
|
1,273,347 |
|
Long-term incentive plan
Share-based compensation expense related to long-term incentive
plan (LTIP) for the three months ended March 31, 2024 was $598 (three months ended March 31, 2023 – $526).
A summary of the RSU changes during the year are set forth
below:
| |
|
Number of
RSUs |
| |
|
Weighted average remaining contractual life (years) |
|
| |
| |
|
Balance - January 1, 2024 | |
| 493,396 | | |
| 1.99 | |
Granted | |
| 30,000 | | |
| 2.92 | |
Forfeited | |
| (11,666 | ) | |
| - | |
Balance - March 31, 2024 | |
| 511,730 | | |
| 1.82 | |
A summary of the DSU changes during the period are set forth
below:
| |
|
Number of
DSUs |
|
| |
|
Balance - January 1, 2024 & March 31, 2024 | |
| 75,000 | |
Profound
Medical Corp.
Notes to Interim Condensed Consolidated Financial Statements
March 31, 2024
In USD (000s)
|
| |
Three Months ended March 31, |
| |
2024 $ | |
2023
$ |
| |
|
Contracts with customers |
| |
|
Leasing |
| |
|
Total |
| |
|
Contracts with customers |
| |
|
Leasing |
| |
|
Total |
|
| |
| |
| |
| |
| |
| |
|
Recurring - non-capital | |
| 1,262 | | |
| 220 | | |
| 1,482 | | |
| 1,257 | | |
| 210 | | |
| 1,467 | |
Capital equipment | |
| - | | |
| 428 | | |
| 428 | | |
| 393 | | |
| - | | |
| 393 | |
| |
| 1,262 | | |
| 648 | | |
| 1,910 | | |
| 1,650 | | |
| 210 | | |
| 1,860 | |
| |
|
Three months ended March 31, 2024 $ |
| |
|
Three months ended March 31, 2023 $ |
|
| |
| |
|
Production and manufacturing costs | |
| 109 | | |
| 216 | |
Salaries and benefits | |
| 3,992 | | |
| 3,757 | |
Consulting fees | |
| 1,605 | | |
| 1,018 | |
Research and development expenses | |
| 756 | | |
| 816 | |
Sales and marketing expenses | |
| 709 | | |
| 483 | |
Amortization and depreciation | |
| 305 | | |
| 283 | |
Share-based compensation | |
| 767 | | |
| 941 | |
Rent | |
| 94 | | |
| 281 | |
Software/hardware | |
| 212 | | |
| 160 | |
Insurance | |
| 331 | | |
| 360 | |
Office and shop supplies | |
| 35 | | |
| 133 | |
Other expenses | |
| 479 | | |
| 250 | |
Expected credit loss (note 3) | |
| (2 | ) | |
| - | |
| |
| 9,392 | | |
| 8,698 | |
| 14 | Net finance expense (income) |
| |
|
Three months ended March 31, 2024 $ |
| |
|
Three months ended March 31, 2023 $ |
|
| |
| |
|
Change in fair value of derivative financial instrument | |
| - | | |
| (121 | ) |
Lease liability interest expense (note 9) | |
| 8 | | |
| 12 | |
Interest income | |
| (562 | ) | |
| (297 | ) |
Net change for amortized cost of trade and other receivables (note 3) | |
| (69 | ) | |
| (39 | ) |
CIBC loan interest expense (note 8) | |
| 169 | | |
| 180 | |
Net foreign exchange loss (gain) | |
| (868 | ) | |
| 120 | |
| |
| (1,322 | ) | |
| (145 | ) |
Profound
Medical Corp.
Notes to Interim Condensed Consolidated Financial Statements
March 31, 2024
In USD (000s)
|
Credit risk
Credit risk is the risk of a financial loss to the Company if
a counterparty to a financial instrument fails to meet its contractual obligation. The Company is exposed to credit risk on its cash and
trade and other receivable balances. The Company’s cash management policies include ensuring cash is deposited in Canadian chartered
banks.
The Company applies the IFRS 9 simplified approach to measuring
expected credit losses, which uses a lifetime expected loss allowance for all trade receivables. To measure the expected credit losses,
trade receivables are grouped based on shared credit risk characteristics and the days past due.
At March 31, 2024, the expected loss rates are based on comparable
company payment profiles of sales over a period of 36 months before March 31, 2024 and the corresponding historical credit losses experienced
within this period. The historical loss rates are adjusted to reflect current information on macroeconomic factors affecting the ability
of the customers to settle the receivables.
The loss allowance as at March 31, 2024 for trade receivables
is as follows:
| |
| |
| |
| |
| |
| |
|
2024 |
|
| |
|
Current |
| |
|
0–30 days |
| |
|
31-60 days |
| |
|
61-90 days |
| |
|
90+ days |
| |
|
Total |
|
| |
| |
| |
| |
| |
| |
|
Expected loss rate | |
| 0.84 | % | |
| 1.42 | % | |
| 1.35 | % | |
| 2.46 | % | |
| 3.62 | % | |
| | |
Gross carrying amount | |
| 5,590 | | |
| 265 | | |
| 89 | | |
| - | | |
| 613 | | |
| 6,557 | |
Loss allowance | |
| 47 | | |
| 4 | | |
| 1 | | |
| - | | |
| 22 | | |
| 74 | |
Foreign currency risk
Foreign currency risk occurs as a result of foreign exchange
rate fluctuations between the time a transaction is recorded and the time it is settled.
The Company purchases goods and services denominated in foreign
currencies and, accordingly, is subject to foreign currency risk. The Company’s financial instruments denominated in foreign currencies
are shown below in US dollars.
| |
| |
| |
| |
|
|
|
March 31, 2024 |
|
| |
|
US dollars $ |
| |
|
Euro $ |
| |
|
Canadian dollars $ |
| |
|
Chinese
renminbi $ |
| |
|
Total $ |
|
| |
| |
| |
| |
| |
|
Cash | |
| 38,002 | | |
| 606 | | |
| 2,391 | | |
| 181 | | |
| 41,180 | |
Trade and other receivables | |
| 4,364 | | |
| 1,880 | | |
| 266 | | |
| - | | |
| 6,510 | |
Accounts payable and accrued liabilities | |
| (622 | ) | |
| (400 | ) | |
| (1,836 | ) | |
| (17 | ) | |
| (2,875 | ) |
Lease liabilities | |
| - | | |
| - | | |
| (754 | ) | |
| - | | |
| (754 | ) |
Long-term debt | |
| - | | |
| - | | |
| (6,482 | ) | |
| - | | |
| (6,482 | ) |
Profound
Medical Corp.
Notes to Interim Condensed Consolidated Financial Statements
March 31, 2024
In USD (000s)
|
As at March 31, 2024, if foreign exchange rates had been 5% higher,
with all other variables held constant, loss and comprehensive loss would have been $208 higher, mainly as a result of the translation
of foreign currency denominated cash, trade and other receivables, accounts payable and accrued liabilities, lease liabilities and long-term
debt. The Company does not use derivatives to reduce exposure to foreign currency risk.
Liquidity risk
Liquidity risk is the risk the Company may encounter difficulties
in meeting its financial liability obligations as they come due. The Company has a planning and budgeting process in place to help determine
the funds required to support the Company’s normal operating requirements on an ongoing basis.
The Company controls liquidity risk through management of working
capital, cash flows and the availability and sourcing of financing. The Company’s ability to accomplish all of its future strategic
plans is dependent on obtaining additional financing or executing other strategic options; however, there is no assurance the Company
will achieve these objectives.
The following table summarizes the Company’s significant
contractual, undiscounted cash flows related to its financial liabilities following the receipt of a waiver in relation to the covenant
breach on the CIBC loan.
| |
| |
| |
| |
|
2024 |
|
| |
|
Carrying amount $ |
| |
|
Future cash flows $ |
| |
|
Less than 1 year $ |
| |
|
Between 1 year and 5 years $ |
|
| |
| |
| |
| |
|
Accounts payable and accrued liabilities | |
| 2,875 | | |
| 2,875 | | |
| 2,875 | | |
| - | |
Lease liabilities | |
| 754 | | |
| 810 | | |
| 291 | | |
| 519 | |
Long-term debt | |
| 6,482 | | |
| 7,874 | | |
| 2,565 | | |
| 5,309 | |
| |
| 10,111 | | |
| 11,559 | | |
| 5,731 | | |
| 5,828 | |
The following table shows the calculation of basic and diluted loss per share:
| |
|
Three months ended March 31, 2024 |
| |
|
Three months ended March 31, 2023 |
|
| |
| |
|
Net loss for the period | |
$ | 6,199 | | |
$ | 6,741 | |
Weighted average number of common shares | |
| 24,295,749 | | |
| 20,922,209 | |
Basic and diluted loss per share | |
$ | 0.26 | | |
$ | 0.32 | |
Profound
Medical Corp.
Notes to Interim Condensed Consolidated Financial Statements
March 31, 2024
In USD (000s)
|
The computation of diluted loss per share is equal to the basic
loss per share due to the anti-dilutive effect of the share options, RSUs and DSUs. Of the 1,490,859 share options (March 31, 2023 –
1,521,025), 511,730 RSUs (March 31, 2023 – 444,861), and 75,000 DSUs (March 31, 2023 – 60,000) not included in the calculation
of diluted loss per share for the period ended March 31, 2024, 1,273,347 (March 31, 2023 – 1,162,041) were exercisable.
| 16 | Related party transactions |
Key management includes the Company’s directors and senior
management team. The remuneration of directors and the senior management team was as follows:
| |
|
Three months ended March 31, 2024 $ |
| |
|
Three months ended March 31, 2023 $ |
|
| |
| |
|
Salaries and employee benefits | |
| 350 | | |
| 478 | |
Directors’ fees | |
| 69 | | |
| 81 | |
Share-based compensation | |
| 542 | | |
| 777 | |
| |
| 961 | | |
| 1,336 | |
Executive employment agreements allow for additional payments
in the event of a liquidity event, or if the executive is terminated without cause.
The Company’s operations are categorized into one industry
segment, which is medical technology focused on magnetic resonance guided ablation procedures for the treatments to ablate the prostate
gland, uterine fibroids, osteoid osteoma and nerves for palliative pain relief for patients with metastatic bone disease. The Company
is managed geographically in Canada, Germany, USA, China and Finland.
For the three months ended March 31, 2024:
| |
|
Canada $ |
| |
|
USA $ |
| |
|
Germany $ |
| |
|
Total $ |
|
| |
| |
| |
| |
|
Revenue | |
| |
| |
| |
|
Recurring - non-capital | |
| 104 | | |
| 1,158 | | |
| 220 | | |
| 1,482 | |
Capital equipment | |
| - | | |
| - | | |
| 428 | | |
| 428 | |
| |
| 104 | | |
| 1,158 | | |
| 648 | | |
| 1,910 | |
For the three months ended March 31, 2023:
| |
|
Canada $ |
| |
|
USA $ |
| |
|
Germany $ |
| |
|
Total $ |
|
| |
| |
| |
| |
|
Revenue | |
| |
| |
| |
|
Recurring - non-capital | |
| 41 | | |
| 1,060 | | |
| 366 | | |
| 1,467 | |
Capital equipment | |
| - | | |
| - | | |
| 393 | | |
| 393 | |
| |
| 41 | | |
| 1,060 | | |
| 759 | | |
| 1,860 | |
Profound
Medical Corp.
Notes to Interim Condensed Consolidated Financial Statements
March 31, 2024
In USD (000s)
|
Other financial information by segment as at March 31, 2024:
| |
|
Canada $ |
| |
|
USA $ |
| |
|
Germany $ |
| |
|
China $ |
| |
|
Finland $ |
| |
|
Total $ |
|
| |
| |
| |
| |
| |
| |
|
Total assets | |
| 47,576 | | |
| 3,811 | | |
| 2,297 | | |
| 195 | | |
| 3,503 | | |
| 57,382 | |
Intangible assets | |
| 428 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 428 | |
Property and equipment | |
| 139 | | |
| 727 | | |
| - | | |
| - | | |
| - | | |
| 866 | |
Right-of-use assets | |
| 547 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 547 | |
Amortization of intangible assets | |
| 51 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 51 | |
Depreciation of property and equipment | |
| 14 | | |
| 185 | | |
| - | | |
| - | | |
| - | | |
| 199 | |
Depreciation of right-of-use assets | |
| 55 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 55 | |
Other financial information by segment as at December 31, 2023:
| |
|
Canada $ |
| |
|
USA $ |
| |
|
Germany $ |
| |
|
China $ |
| |
|
Finland $ |
| |
|
Total $ |
|
| |
| |
| |
| |
| |
| |
|
Total assets | |
| 34,257 | | |
| 4,067 | | |
| 1,952 | | |
| 82 | | |
| 3,553 | | |
| 43,911 | |
Intangible assets | |
| 490 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 490 | |
Property and equipment | |
| 158 | | |
| 751 | | |
| - | | |
| - | | |
| - | | |
| 909 | |
Right-of-use assets | |
| 616 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 616 | |
Amortization of intangible assets | |
| 202 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 202 | |
Depreciation of property and equipment | |
| 57 | | |
| 670 | | |
| - | | |
| - | | |
| - | | |
| 727 | |
Depreciation of right-of-use assets | |
| 217 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 217 | |
(12)
Exhibit 99.3
![](https://www.sec.gov/Archives/edgar/data/1628808/000117184324002718/logo.jpg)
PROFOUND MEDICAL CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
MARCH 31, 2024
PRESENTED IN US DOLLARS (000s)
Profound Medical Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
In USD$ (000s)
The following Management’s Discussion and Analysis (“MD&A”)
prepared as of May 9, 2024 should be read in conjunction with the March 31, 2024 unaudited interim condensed consolidated financial statements
and related notes of Profound Medical Corp. (“Profound” or the “Company”). The unaudited interim
condensed consolidated financial statements of Profound and related notes were prepared in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”) applicable to the preparation
of interim financial statements, including International Accounting Standard 34, Interim Financial Reporting. Unless stated otherwise,
all references to “$” are to United States dollars and all references to “C$” are to Canadian dollars. In this
MD&A, unless the context requires otherwise, references to “Profound”, “the Company”, “we”, “us”
or “our” are references to Profound Medical Corp. and its subsidiaries.
FORWARD-LOOKING STATEMENTS
This MD&A contains “forward-looking statements” within
the meaning of Section 27A of the US Securities Act and Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange
Act”) pursuant to the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of
1995, and “forward-looking information” within the meaning of applicable Canadian securities laws, which include all statements
other than statements of historical fact contained in this MD&A, such as statements that relate to the Company’s current expectations
and views of future events. Often, but not always, forward-looking statements can be identified by the use of words such as “may”,
“will”, “expect”, “anticipate”, “predict”, “aim”, “estimate”,
“intend”, “plan”, “seek”, “believe”, “potential”, “continue”,
“is/are likely to”, “is/are projected to” or the negative of these terms, or other similar expressions intended
to identify forward-looking statements. These forward-looking statements include, among other things, statements relating to:
| · | our expectations regarding the commercialization and adoption of our approved products (particularly the
TULSA-PRO® system following US Food and Drug Administration (“FDA”) clearance) and our ability to generate
revenues and achieve profitability; |
| · | our expectations regarding the safety, efficacy and advantages of our products over our competitors and
alternative treatment options; |
| · | our expectations regarding our products fulfilling unmet clinical needs and achieving market acceptance
among patients, physicians and clinicians; |
| · | our expectations regarding reimbursement for our approved products from third-party payors; |
| · | our expectations regarding an out-of-pocket market for the Company’s products; |
| · | our expectations regarding our relationships with Koninklijke Philips N.V. (“Philips”),
Siemens Healthcare GmBH (“Siemens”) and GE Healthcare (“GE”), and our ability to achieve compatibility
of our systems with magnetic resonance imaging (“MRI”) scanners produced by other manufacturers; |
| · | our ability to attract, develop and maintain relationships with other suppliers, manufacturers, distributors
and strategic partners; |
| · | our expectations regarding our pipeline of product development, including expanding the clinical application
of our products to cover additional indications; |
| · | our expectations regarding current and future clinical trials, including the timing, enrollment and results
thereof; |
| · | our expectations regarding changes to existing regulatory frameworks; |
| · | our expectations regarding obtaining regulatory approvals; |
| · | our expectations regarding maintenance of the current regulatory approvals we have received, including
our compliance with the conditions under such approvals, and the receipt of additional regulatory approvals for our products and future
product candidates; |
| · | our mission and future growth plans; |
| · | our ability to attract and retain personnel; |
| · | our expectations regarding our competitive position for each of our products in the jurisdictions where
they are approved; |
| · | our ability to manage our working capital and our ongoing ability to satisfy our cash requirements and
any future commitments, financial obligations, covenants and contingencies; |
| · | our ability to raise debt and equity capital to fund future product development, pursue regulatory approvals
and commercialize our approved products; and |
| · | anticipated trends and challenges in our business and the markets in which we operate. |
Forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or achievements of Profound to be materially different from any future
results, performance or achievements expressed or implied by the forward-looking statements, including those factors discussed in the
section entitled “Risk Factors” in the Company’s Annual Information Form prepared as of March 7, 2024 for the year ended
December 31, 2023 (the “AIF”), available on SEDAR+ at www.sedarplus.ca and filed as an exhibit to the Company’s
annual report on Form 40-F, filed on March 7, 2024 (the “40-F”), available on EDGAR at www.sec.gov, such as:
| · | risks related to our limited operating history and history of net losses; |
| · | risks related to our liquidity and financing needs; |
| · | risks related to our ability to commercialize our approved products, including realizing the anticipated
benefits of our co-development agreement with GE (the “GE Agreement”), expanding our sales and marketing capabilities,
increasing our manufacturing and distribution capacity, increasing reimbursement coverage for our approved products and achieving and
maintaining market acceptance for our products; |
Profound Medical Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
In USD$ (000s)
| · | risks related to the regulation of our products, including in connection with obtaining regulatory approvals
as well as post-marketing regulation; |
| · | risks related to our successful completion of clinical trials with respect to our products and future
product candidates; |
| · | risks related to managing growth, including in respect of obtaining additional funding and establishing
and maintaining collaborative partnerships, to achieve our goals; |
| · | risks related to competition that may impact market acceptance of our products and limit our growth; |
| · | risks relating to fluctuating input prices and currency exchange rates; |
| · | risks related to the reimbursement models in relevant jurisdictions that may not be advantageous; |
| · | risks related to reliance on third parties, including our collaborative partners, manufacturers, distributors
and suppliers, and increasing the compatibility of our systems with MRI scanners; |
| · | risks related to intellectual property, including license rights that are key to our business; |
| · | risks related to product liability; and |
| · | risks related to the loss of key personnel. |
Forward-looking statements contained herein are made as of the date of
this MD&A and Profound disclaims any obligation to update any forward-looking statements, whether as a result of new information,
future events or results or otherwise, unless required by applicable laws. There can be no assurance that forward-looking statements will
prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward-looking statements due to the inherent uncertainty in them. Readers are cautioned that
while Profound believes it has accurately summarized all clinical studies cited in this MD&A, readers should review the full publications
of the studies prior to making an investment decision in the Company.
BUSINESS OVERVIEW
Profound (NASDAQ: PROF; TSX: PRN) is a commercial-stage medical device
company focused on the development and marketing of customizable, incision-free therapeutic systems for the image guided ablation of diseased
tissue utilizing its platform technologies and leveraging the healthcare system’s existing imaging infrastructure. Profound’s
lead product (the “TULSA-PRO® system”) combines real-time MRI, robotically driven transurethral
sweeping-action thermal ultrasound with closed-loop temperature feedback control for the ablation of prostate tissue. The product is comprised
of one-time-use devices and durable equipment that are used in conjunction with a customer’s existing MRI scanner.
In August 2019, the TULSA-PRO® system received FDA clearance
as a Class II device in the United States of America (“United States” or “US”) for thermal ablation
of prescribed prostate tissue, using transurethral ultrasound ablation (“TULSA®”) based on the Company
sponsored (“TACT”) whole gland ablation pivotal clinical study. It is also CE marked in the European Union (“EU”)
for ablation of targeted prostate tissue (benign or malignant). The TULSA-PRO® system was approved by Health Canada in
November 2019.
Profound believes that, based on the Company’s TACT clinical data
and additional studies conducted in the EU, physicians may elect to use TULSA-PRO® to ablate benign or malignant prostate
tissue in patients with a variety of prostate diseases. Prostate diseases include prostate cancer and benign prostatic hyperplasia (“BPH”).
Prostate cancer is one of the most common types of cancer affecting men. The annual incidence of newly diagnosed cases in 2023 is estimated
to reach 288,300 in the United States according to the American Cancer Society and in 2020 there were approximately 475,000 newly diagnosed
cases of prostate cancer in Europe, according to the International Agency for Research on Cancer. The American Cancer Society further
estimates that there are approximately 5.8 million men living with prostate cancer in these two geographic regions. Although ten-year
survival outcomes for prostate cancer remain favorable, it is still one of most common causes of cancer deaths among men. BPH is a histologic
diagnosis that refers to the proliferation of smooth muscle and epithelial cells within the prostatic transition zone. According to the
American Urological Association, BPH is nearly ubiquitous in the aging male population with worldwide autopsy proven histological prevalence
increases starting at ages 40 to 45 years, reaching 60% at age 60 and 80% at age 80.
Profound initiated the commercial launch of its lead product, the TULSA-PRO®
system in the United States in Q4 2019, treating the first patient in a non-trial setting in January 2020. On June 2, 2023, Profound Medical
announced new CPT Category 1 Codes from the American Medical Association (“AMA”) for TULSA to treat prostate diseases,
which will be effective January 1, 2025. In addition, Profound continues to support additional clinical trials in the United States and
abroad to further increase the body of clinical evidence that may be needed particularly for reimbursement and coverage of its technologies
by private and government healthcare providers. The Company continues to expand the compatibility of its TULSA-PRO® system
with additional MRI brands to broaden its ability to utilize the global MRI installed base and seek regulatory approvals of its products
in additional international jurisdictions.
Profound Medical Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
In USD$ (000s)
Profound’s second product, the Sonalleve® system,
is CE marked in the EU for the treatment of uterine fibroids and adenomyotic tissue, palliative pain relief associated with bone metastases,
treatment of osteoid osteoma, and management of benign desmoid tumors and has also been approved by the regulatory bodies in China and
South Korea for non-invasive treatment of uterine fibroids. In late 2020, Sonalleve® received Humanitarian Device Exemption
(“HDE”) approval from the FDA for the treatment of Osteoid Osteoma in the United States. The Sonalleve®
system is only compatible with certain Philips MRIs.
Profound deploys a recurring revenue business model in the United States
to market TULSA-PRO®, charging a one-time payment that includes a supply of its one-time-use devices, use of the system,
as well as the Company’s customer and technological support (“Genius”) services that support each TULSA center.
The Sonalleve® product is marketed primarily outside North America in European and Asian countries, deploying a capital
sales model. Outside of North America, Profound generates most of its revenues from its system sales in Europe and Asia, where the Company
deploys a more traditional hybrid business model, charging for the system separately as a capital sale and an additional per patient charge
for the one-time-use devices and associated Genius services.
Profound’s Technology
TULSA-PRO® and Sonalleve® share the common
technological concept of using MRI to enable visualization by the surgeon of desired tissue in real time. Both products also use thermal
ultrasound technology to gently heat and ablate tissue using the real-time thermometry capability of the MRI.
TULSA-PRO® delivers its ultrasound energy through a transurethral
catheter, a one-time-use device that is placed in the patient’s prostate through a natural orifice. Focused ultrasound energy is
then delivered by the catheter in the shape of a blade. Externally the catheter is connected to a software controlled robotic manipulator
that rotates up to 360-degree in a sweeping action to impart thermal energy and thus ablation of tissue. The real time temperature measurement
of the prostate is coupled with closed loop process control that measures the appropriate amount of ultrasound energy to gently heat the
physician-prescribed region of prostate tissue to the target temperature to achieve cell kill without boiling or charring the tissue.
As a measure to keep the urethra within the prostate viable, the temperature of the transurethral catheter is maintained at an appropriate
level by circulating water inside the catheter. Similarly, a water-cooled specially designed catheter is placed in the patient’s
rectum during the ablation process to keep it protected from thermal damage during the procedure. The TULSA-PRO in conjunction with its
Thermal Boost module, enables surgeons to temporarily increase the ablation target temperature in prostate regions where advanced stage
cancer might reside, further increasing their confidence that aggressive cancer cells have been ablated. Profound believes that TULSA-PRO®’s
controlled and relatively gentle heating process may result in lower post procedural pain and complications, reduced potential of life
affecting side effects, and in significantly desirable shrinkage of the prostate via resorption of the dead tissue over time, which may
provide a longer-term durable benefit.
Sonalleve® delivers its ultrasound energy via a disc located
outside the patient. Its ultrasound energy is focused to create small cylindrical hot spots a certain distance into the patient. Overlapping
cylinders create ablation of the physician-prescribed desired tissue. Similar to TULSA-PRO, Sonalleve® also provides for
controlled temperature increases to achieve cell kill.
The physician is in charge of using the Profound devices and decides which
tissue needs to be ablated to impart therapeutic effect. Profound believes that in the hands of trained physicians, its systems have the
ability to provide customizable, incision-free ablative therapies with the precision of real-time MRI visualization and thermometry, focused
ultrasound and closed-loop temperature feedback control. Profound believes that its technology offers clinicians and appropriate patients
a better alternative to traditional surgical or radiation therapies, with respect to clinical outcomes, side effects and recovery time.
TULSA-PRO®
The TULSA-PRO® system is designed to provide precise,
flexible and durable ablation of a surgeon defined region of the prostate while actively protecting the urethra and rectum to help preserve
the patient’s natural functional abilities. To date, over 3,000 global TULSA-PRO® procedures have been performed
by more than 100 physicians at over 30 commercial and 20 clinical research sites.
Clinical Studies
In March 2014, Profound completed enrollment and treatment of 30 patients
in the Phase I TULSA multi-jurisdictional safety and precision study. Based on the Phase I clinical trial results, in April 2016, Profound
received a CE Certificate of Conformity for the TULSA-PRO® system from its notified body in the EU, and in the fourth quarter
of 2016, Profound initiated a pilot commercial launch of TULSA-PRO® in key European markets where the CE mark is accepted.
Profound received FDA clearance for the TULSA-PRO® system
in August 2019 for transurethral ultrasound ablation of prostate tissue, based on the Company’s TACT Pivotal Clinical Trial. The
TACT Pivotal Clinical Trial is a prospective, open-label, single-arm pivotal clinical study, of 115 treatment-naïve localized prostate
cancer patients across 13 research sites in the United States, Canada and Europe, which enrolled patients between August 2016 and February
2018.
Profound Medical Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
In USD$ (000s)
Localized Prostate Cancer, Ablation Safety and Efficacy: TACT Pivotal
Study
The TACT Pivotal Clinical Trial demonstrates that MRI-guided TULSA is a
minimally invasive procedure for effective prostate cancer ablation with a favorable side effect profile, minimal impact on quality of
life and low rates of residual disease1. In the large, multi-center prospective study in men with predominately intermediate-risk
prostate cancer, whole gland ablation sparing the urethra and apical sphincter with the TULSA-PRO® met its primary regulatory
endpoint of prostate-specific antigen (“PSA”) reduction in 96% of men to a median nadir of 0.34 ng/ml and 0.5 ng/ml
at 12 months. Median decrease in perfused prostate volume as assessed by a central radiologist using 12-month MRI was 91%, from a median
37 cc to 2.8 cc. At 12 months, extensive biopsy sampling of the markedly reduced prostate volume demonstrated a benefit for nearly 80%
of men. There was no evidence of cancer in 65% of men and 14% had low-volume clinically-insignificant disease. The authors, however, noted
that thermally-fixed non-viable cells can retain their apparently-malignant tissue morphology, confounding Gleason grading and potentially
introducing false positives2. By two and five years, 7% and 21%, respectively, of men sought additional treatment for their
prostate cancer (prostatectomy, radiation). The study patient population, with two-thirds of those with Gleason Grade Group (GGG) ≥
2 having either bilateral disease or at least five positive cores, allowed for evaluation of oncologically relevant secondary outcomes
including PSA stability, post-treatment biopsy, and salvage treatment. Notwithstanding the limitations of comparisons between ablative
and extirpative therapies, the 21% 5-year rate of salvage treatment and 20% rate of residual clinically significant prostate cancer in
intermediate-risk patients are in line with accepted rates of early failure or additional intervention after standard treatments and goals
for retreatment after ablative therapies. By five years, the median PSA nadir further reduced to 0.26 ng/ml. PSA reduction was durable
over the extended follow-up period, from 0.53 ng/ml at one year to 0.63 ng/ml at five years.
TULSA was associated with a high degree of safety and maintenance of quality-of-life,
durable to five years, comparing favorably to radical prostatectomy and other whole-gland ablation techniques. At 12 months, 96% of men
returned to baseline urinary continence, and 75% of potent men maintained or returned to erections sufficient for penetration, with these
rates remaining stable or further improving to five years. A total of 12 grade 3 adverse events occurred in 8% of men, including genitourinary
infection (4%), urethral stricture (2%), urinary retention (1.7%), urethral calculus and pain (1%), and urinoma (1%), all resolved by
12 months. There were no grade 4 events, rectal injuries, severe incontinence requiring surgical intervention, or severe erectile dysfunction
unresponsive to medication.
Localized Prostate Cancer, Durability of Outcomes: Phase I Safety and
Precision Study
The Phase I Clinical Trial demonstrates that MRI-guided TULSA is safe and
precise for ablation in patients with localized prostate cancer, providing spatial ablation precision of ± 1.3 mm with a well-tolerated
side-effect profile and minor or no impact on urinary, erectile and bowel function at 12 months3. There were no grade 4 or
higher adverse events, one transient attributable grade 3 event (epididymitis), and notably no injury to rectal or periprostatic structures.
Functional outcomes, International Prostate Symptom Score (“IPSS”) and IIEF-15, both showed a favorable anticipated
trend of initial deterioration with subsequent gradual improvement toward baseline levels. Consistent with the conservative whole-gland
treatment plan which included a 3 mm circumferential margin expected to spare 10% viable prostate at the gland periphery, intra-operative
MRI thermometry measured 90% thermal ablation of the prostate gland, median PSA decreased 90% from 5.8 ng/ml to nadir of 0.6 ng/ml, and
median prostate volume reduced by 88% on 1-year MRI. Prostate biopsy at one year identified decreased cancer burden with 61% reduction
in cancer length; however, attributable to the circumferential safety margin, clinically significant cancer in 9 of 29 men (31%), and
any cancer in 16 of 29 (55%).
Follow-up data to three and five years demonstrate durability of the outcomes,
with continued treatment safety and stable quality of life, as well as predictable PSA and biopsy oncological outcomes based on treatment-day
imaging and early PSA follow-up, without precluding any potential salvage therapy options4. Repeat prostate biopsy at three
years demonstrated durable histological outcomes, with only one subject upgrading to GGG 1 from negative at 12 months, and one subject
upgrading to GGG 2 from GGG 1 at 12 months. Between one and five years, there were no new serious adverse events. By five years, 16 men
completed protocol follow-up, three withdrew with PSA <0.4 ng/ml, 10 had salvage therapy without complications (six prostatectomy,
three radiation and one laser ablation), and one died of an unrelated cause. Of 16 men with complete follow-up data, five-year median
PSA remained at 0.55 ng/ml. Median IPSS of 6 at baseline returned to 5 by three months, and 6.5 at five years. At baseline, 9 of 16 had
erections sufficient for penetration, 11 of 16 at one year, and 7 of 16 at five years. All 16 subjects had leak-free, pad-free continence
at one and five years. Predictors of salvage therapy included lower ablation coverage and higher PSA nadir. At five years after TULSA,
cancer specific survival is 100%, and overall survival 97%.
1 Klotz et al, “MRI-guided transurethral ultrasound ablation of prostate
cancer,” The Journal of Urology, 2020
2 Anttinen et al, “Histopathological evaluation of prostate specimens after
thermal ablation may be confounded by the presence of thermally-fixed cells,” International Journal of Hyperthermia, 2019
3 Chin et al, “Magnetic Resonance Imaging-Guided Transurethral Ultrasound
Ablation of Prostate Tissue in Patients with Localized Prostate Cancer: A Prospective Phase 1 Clinical Trial,” European Urology,
2016; Bonekamp et al, “Twelve-month prostate volume reduction after MRI-guided transurethral ultrasound ablation of the prostate,”
European Radiology, 2018
4 Nair et al, “MRI-Guided Transurethral Ultrasound Ablation in Patients with
Localized Prostate Cancer: Three Year Outcomes of a Prospective Phase I Study”, BJU International, 2020; Nair et al, “PD17-03
Five-Year Outcomes from a Prospective Phase I Study of MRI-Guided Transurethral Ultrasound Ablation in Men with Localized Prostate Cancer”,
AUA 2020 Virtual Experience, Abstract in The Journal of Urology, 2020; Hatiboglu et al, “Durability of functional outcomes after
MRI-guided transurethral ultrasound ablation of the prostate,” JU Open Plus, 2023.
Profound Medical Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
In USD$ (000s)
Benign Prostatic Hyperplasia (BPH), Relief of Lower Urinary Tract Symptoms
(LUTS): Phase I Studies
Promising safety and feasibility of the TULSA-PRO® to relieve
Lower Urinary Tract Symptoms (“LUTS”) associated with BPH has been demonstrated in two clinical studies showing improvements
in IPSS comparable to modern minimally invasive surgical therapies5. A retrospective analysis of a sub-group of nine men
from the Phase I localized prostate cancer study who also had LUTS (baseline IPSS ≥ 12) demonstrated significant IPSS improvement of
58% from 16.1 to 6.3 at 12 months (p=0.003), with at least a moderate (≥ 6 points) symptom reduction in eight of nine patients. IPSS
Quality of Life (“QoL”) improved in eight of nine patients. Erectile function (IIEF-EF) remained stable from 14.6 at
baseline to 15.7 at 12 months. The proportion of patients with erections sufficient for penetration was unchanged. Full urinary continence
(pad-free, leak-free) was achieved at 12 months in all patients. In five men who suffered from more severe symptoms (baseline IPSS ≥
12 and Qmax < 15 ml/s), peak urine flow rate (“Qmax”) increased from 11.6 ml/s to 22.5 ml/s at 12 months. All adverse
events were mild to moderate with no serious events reported.
A prospective Phase I/II study of TULSA-PRO® for BPH has
been conducted with early outcomes published in 20226. All measures of urinary function and quality of life improved during
the initial twelve-month follow up among the first ten patients treated, while no adverse effects were seen on sexual and bowel functions:
average IPSS decreased from 17.5 to 4.0, IPSS QoL decreased from 4.0 to 0.5, and Qmax increased from 12.4 ml/s to 21.8 ml/s, among several
other improved urinary measures. A single serious adverse event had occurred, abscess of the epididymis requiring drainage at two weeks
post therapy. Enrollment of this study has been increased to 30 patients.
Radio-recurrent localized prostate cancer, Salvage TULSA (sTULSA): Phase
I Study
Salvage ablation of radio-recurrent localized prostate cancer has been
evaluated in a prospective Phase I/II study of TULSA-PRO® with early outcomes published in 20207. The report
includes the first eleven patients from a 40-patient study, who were successfully treated, and discharged on the first postoperative day,
with median catheterization time of seven days. Median PSA decreased from 7.6 ng/ml at baseline to a nadir of 0.2 ng/ml and was 0.23 ng/ml
at 12 months. At 12 months, 10/11 patients were free of any PCa in the targeted ablation zone, confirmed with biopsy and imaging (MRI
and PSMA-PET), and had low and stable PSA. Four patients had prolonged catheterization and subsequent urinary tract infection, and one
of these patients had upper urinary tract dilation treated with double-J-stents.
Palliation of symptomatic locally advanced prostate cancer, Palliative
TULSA (pTULSA): Phase I Study
Patients with symptomatic locally advanced prostate cancer can suffer from
severe urinary retention due to bladder outlet obstruction, intractable hematuria and frequent hospitalization. While these complications
are commonly treated by palliative transurethral resection of the prostate (“TURP”), the improvement is often insufficient
and may exclude patients who cannot discontinue anticoagulants. The safety and feasibility of MRI-guided TULSA was evaluated as an alternative
palliative treatment option for men suffering from symptomatic locally advanced prostate cancer8. Ten patients with locally
advanced prostate cancer were enrolled, half with clinical stage T4 disease and half with clinical T3. Prior to TULSA, all patients had
continuous indwelling catheterization due to urinary retention, and 90% had history of recurrent and/or ongoing gross hematuria. Three
patients had palliative TURP performed six months prior to receiving palliative TULSA, all of which were unsuccessful. One week after
palliative TULSA, 50% of men were catheter-free. At last follow-up, 100% of men were free of gross hematuria, and 80% had an improvement
in catheterization, with 70% completely catheter-free. Notably, the average hospitalization time from local complications reduced from
7.3 to 1.4 days in the six-month period before and after palliative TULSA. All adverse events were related to urinary tract infections,
with two patients requiring intravenous administration of antibiotics and three patients resolved with oral antibiotics alone. No other
treatment related adverse events were recorded, with no rectal injury or fistula. Further, there was no need for blood transfusions and
there was no perioperative mortality.
5 Elterman et al, “Relief of Lower Urinary Tract Symptoms
after MRI-Guided Transurethral Ultrasound Ablation (TULSA) for localized prostate cancer: Subgroup Analyses in Patients with concurrent
cancer and Benign Prostatic Hyperplasia,” Journal of Endourology, 2020; Anttinen et al, “Transurethral ultrasound therapy
for benign prostatic obstruction in humans,” EAU 2020 Conference Presentation
6 Viitala et al, “Magnetic resonance imaging-guided transurethral ultrasound
ablation for benign prostatic hyperplasia: 12-month clinical outcomes of a phase I study,” BJU Int, 2022.
7 Anttinen et al, “Salvage Magnetic Resonance Imaging–guided Transurethral
Ultrasound Ablation for Localized Radiorecurrent Prostate Cancer: 12-Month Functional and Oncological Results,” European Urology
Open Science, 2020.
8 Anttinen et al, “Palliative MRI-guided transurethral ultrasound ablation
for symptomatic locally advanced prostate cancer,” Scandinavian Journal of Urology, 2020
Profound Medical Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
In USD$ (000s)
CAPTAIN Trial
CAPTAIN (A Comparison of TULSA Procedure vs. Radical Prostatectomy in Participants
with Localized Prostate Cancer) is a prospective, multi-centre randomized controlled trial of 201 patients aimed at comparing the safety
and efficacy of the TULSA procedure (performed with the TULSA-PRO® system) with radical prostatectomy (“RP”)
in men with organ-confined, intermediate-risk, Gleason Score 7 (Grade Group 2 and 3) prostate cancer. In the CAPTAIN trial, 134 patients
will be randomized to receive one or two TULSA procedures and 67 patients will be randomized to receive RP. The trial takes place primarily
in the United States, with an additional two sites in Canada and one in Europe. Of those, sixteen sites have been activated to date and
are currently recruiting patients.
RP is currently the gold-standard surgical treatment for intermediate-risk
prostate cancer. RP effectively controls disease but carries risk of significant side effects such as long-term erectile dysfunction and
urinary incontinence. The TULSA procedure combines transurethral, robotically-driven therapeutic ultrasound with real-time visualization
of temperature and automated control of heating from magnetic resonance thermometry. The high spatial, thermal, and anatomic resolution
of the target volume enables precise ablation of prostate tissue while sparing functionally important structures, potentially reducing
the risk of side effects relative to RP.
The goal of the CAPTAIN trial is to demonstrate that the efficacy of the
TULSA procedure is not inferior to RP, while demonstrating superior quality of life outcomes in patients receiving the TULSA procedure
as compared to those patients receiving RP. The primary safety endpoint is the proportion of patients who preserve both erectile potency
and urinary continence at one year after treatment. The primary efficacy endpoint is the proportion of patients who are free from any
additional treatment for prostate cancer by three years after treatment. Secondary endpoints include comparison of rates of complications,
cost effectiveness, and timing of the return to baseline activity. Long-term follow-up will be gathered for up to 10 years after treatment.
Sonalleve®
Profound’s Sonalleve® system combines real-time MRI
and thermometry with focused ultrasound delivered from the outside of the patient to enable customized incision-free ablation of diseased
tissue. Profound acquired the Sonalleve® technology from Philips in 2017.
The Sonalleve® system is CE marked in the EU for the treatment
of uterine fibroids, adenomyotic tissue, palliative pain treatment of bone metastases, osteoid osteoma and management of benign tumors.
The uterine fibroids application is also available for sale in Canada. In 2018, the Sonalleve® system was also approved
in China by the National Medical Products Administration for the non-invasive treatment of uterine fibroids and by the Ministry of Food
and Drug Safety in South Korea. Philips Oy registered Sonalleve® in several Middle East, North African, and South Asian
countries. In 2020, Sonalleve® also received HDE from the US FDA for treatment of Osteoid Osteoma.
Sonalleve® Clinical Applications
Uterine Fibroids and Adenomyosis
Uterine fibroids are the most common non-cancerous tumors in women of childbearing
age. Both surgical and medical treatments are available, and the choice depends on number, size, and location of uterine fibroids, patient’s
age and preferences, and pregnancy expectations. To date, symptomatic uterine fibroids have been mostly treated with radical surgery (hysterectomy)
in women who have completed childbearing, or conservative surgery (myomectomy and endometrial ablation) in women who wish to preserve
fertility. Today, the radiologist also has interventional options available. Minimally or non-invasive interventional radiology procedures
include uterine artery embolization.
There is currently no ideal treatment for adenomyosis, and new options
are needed. Drawing on experience of treatment of uterine fibroids, MR-High Intensity Focused Ultrasound (“MR-HIFU”)
has been explored as a potential new conservative treatment and MR-HIFU is an early-stage, non-invasive, therapeutic technology with the
potential to improve the QoL and decrease the cost of care for patients with adenomyosis.
To achieve its current regulatory clearances, the Sonalleve®
MR-HIFU System has undergone several studies and clinical trials for uterine applications at Sunnybrook Health Sciences Center (Toronto,
Ontario), University Medical Center Utrecht (Utrecht, the Netherlands), National Institutes of Health (Bethesda, MD, USA), St. Luke’s
Episcopal Hospital (Houston, TX, USA), University Hospital St. André (Bordeaux, France), Samsung Medical Center (Seoul, Korea),
Peking University First Hospital Beijing (Beijing, China), First Affiliated Hospital of Medical College of Xi’an Jiaotong University
(Xi’an, China), and Turku University Hospital (Turku, Finland), amongst others.
In addition, a comprehensive literature review provides supportive evidence
showcasing the beneficial action of MR-HIFU in uterine fibroid and adenomyosis therapy. These studies include the Verpalen et al. 2020,
Nguyen 2020, Yeo et al. 2017, Kim et al. 2017, and Hocquelet et al. 2017 that utilized the Sonalleve® MR-HIFU System. Specifically,
the studies show impressive performance in terms of ablation efficiency, therapeutic efficacy, symptom reduction, and/or QoL improvement.
There were no treatment-related serious adverse events in any of these studies, although Browne et al. 2020 describes a procedure-related
major complication in the form of deep vein thrombosis that was noted in one patient (0.8%) and subsequently and successfully treated
with anticoagulation therapy. Minor adverse events, when present, typically include 1st and 2nd degree skin burns, local swelling, cramps,
leg pain, abdominal pain, buttock pain, and back pain, which are all known and anticipated adverse events of MR-HIFU therapy.
Profound Medical Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
In USD$ (000s)
Palliative Bone Pain Treatment
Pain caused by bone metastases is common in the event of malignancy and
is inevitably associated with serious complications that may deteriorate the QoL of patients and become life threatening.
For patients with bone metastases, clinical evaluation reports were completed
in October 2020, showing significant decrease in pain score and/or dosage of medication and increase in QoL are to be expected with MR-HIFU
bone therapy. The randomized controlled Phase III study by Hurwitz et al. represents some of the most important clinical data that has
been reported. In 112 subjects receiving MR-HIFU compared against 35 subjects receiving sham treatment, significant pain reduction at
three months (decrease in worst NRS pain ≥ 2 without increase in pain medication) was 64.3% vs. 20.0% (p<0.001), with mean Numeric
Pain Scale (“NRS”) reduction of 3.6 ± 3.1 vs. 0.7 ± 2.4 from an initial median NRS score of 7.0 in both
groups. Improvement in average Brief Pain Inventory-Quality of Life at three months was 2.4 points superior in the MR-HIFU group (p<0.001),
representing a clinically important reduction in impairment caused by bone metastasis pain.
The clinical data above shows that patients with bone metastases can expect
a statistically significant decrease in pain scores and/or in medication dosage and increase in quality of life with MR-HIFU bone metastasis
therapy.
Osteoid Osteoma Treatment
Osteoid osteoma is a relatively rare, painful bone tumor that typically
occurs in the cortex of long bones, especially in children and adolescents, and accounts for approximately 10% of all benign bone tumors.
Current osteoid osteoma treatment options include surgery and radiofrequency
ablation (“RFA”), which is a less invasive option than surgical resection. Although RFA can have a high success rate,
the treatment is invasive and can potentially cause minor and major complications. It also exposes patients and operators to ionizing
radiation associated with the CT imaging guidance.
Sonalleve® MR-HIFU provides an optimal therapy choice for
osteoid osteoma which is a precise, completely non-invasive, and free from ionizing radiation treatment. The recent studies have assessed
the use of Sonalleve® MR-HIFU in treatment of osteoid osteoma, showing a high clinical success rate and complete symptom
resolution without any serious adverse effects and only few minor adverse effects that promptly resolve. The Sonalleve®
MR-HIFU device offers a novel, minimally invasive, MRI-guided method to treat osteoid osteoma safely and effectively. A desmoid tumor,
also called desmoid fibromatosis or aggressive fibromatosis, is a non-metastasizing but locally aggressive proliferation of myofibroblasts
that affects children and adults, with a peak incidence in early adulthood. Traditional management of desmoid tumors includes observation,
surgical resection, radiation, and/or chemotherapy. Observation allows assessment of the rate of tumor growth and may be acceptable in
small, slow-growing, or asymptomatic lesions. Surgical resection is often a highly morbid procedure and has a high rate of recurrence
even with negative margins. Radiotherapy provides somewhat improved local control rates but the morbidity from radiation, including burns,
fibrosis, chronic edema, and pathologic fractures, is problematic. In addition, the small but finite risk of a radiation-induced malignancy
is particularly troublesome in this young patient population, considering the tumor being treated is benign.
Recently, MR-HIFU has been assessed as a non-invasive therapy of desmoid
tumors, showing good clinical success and even complete tumor eradication in some cases with low number and relative mild adverse events,
which typically promptly resolve. The Sonalleve® MR-HIFU device offers a novel, non-invasive, MRI-guided method to treat
desmoid tumors.
This technology is ideally suited for the treatment of desmoid tumors in
a patient population that is generally young, otherwise healthy, and would like to avoid the morbidity of traditional surgical, radiation,
and medical therapies for a benign disease. Magnetic resonance imaging provides visualization of critical neurovascular structures and
allows sparing of these structures during therapy. While complete ablation of a desmoid tumor may not be possible in all cases because
of involvement of these structures, significant reduction in tumor volume is often obtained with a corresponding improvement in pain and
functional impairment. As the natural history of the disease often involves recurrence, the ability to re-treat with MR-HIFU without an
upper dose limit is also an advantage. The clinical evidence to date demonstrates that MR-HIFU provides a safe and effective treatment
of desmoid tumors.
Profound Medical Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
In USD$ (000s)
Business Update and Sales Strategy
Profound initiated its launch of the TULSA-PRO® system in
the United States in Q4 2019 and the first patient was treated in the United States in a non-clinical trial setting in January 2020. Since
then, Profound’s business model has evolved to a recurring revenue model that includes durable hardware usage, one-time-use devices
and Profound’s Genius services, which includes necessary support for a productive start-up of the practice.
Profound has generated revenues from capital sales, one-time-use devices
and related services, in the EU (principally in Germany) and Asia. For the period ended March 31, 2024, approximately 61%, 34% and 5%
of revenues were generated in the United States, EU and Asia, respectively, compared to approximately 57%, 41% and 2% of revenues which
were generated in the United States, EU and Asia, respectively for the period ended March 31, 2023. Revenue on a quarter over quarter
basis is expected to fluctuate given the Company is maintaining a limited European commercial effort and remains primarily focused on
the US market.
Profound’s TULSA-PRO® system is primarily marketed
to early adopter physicians who specialize in treatment of prostate disease including urologists and radiologists at opinion leading hospitals.
TULSA-PRO® services are available at either independent imaging centers or at hospital-based imaging centers.
Historically, treatment of conditions such as localized prostate disease
and uterine fibroids have included surgical intervention. Over time, surgery has evolved from an ‘open’ technique, to laparoscopic,
to robotic surgery. The motivation of surgeons behind this evolution has been to perform procedures that reduce invasiveness, improve
clinical outcomes and reduce recovery times. Profound is seeking to take this concept to the next level by enabling customizable, incision-free
therapies for the MRI-guided ablation of diseased tissue with the TULSA-PRO® and Sonalleve® systems. These
incision-free and radiation-free procedures offer surgeons the option of providing predictable and customizable procedures that eliminate
invasiveness, offer the potential to improve clinical outcomes and further reduce hospital stays and patient recovery times.
Profound is establishing its own direct sales and marketing teams for sales
of TULSA-PRO® systems and the one-time-use devices related thereto, as well as for Sonalleve® systems in
the jurisdictions where it is approved. The primary focus of Profound’s direct sales team is to cultivate adoption of the TULSA-PRO®
technology, support clinical customers with the TULSA-PRO® procedures and increase the utilization of the systems and one-time-use
devices. Profound expects to generate recurring revenues from the use of the system, one-time-use devices, clinical support and service
maintenance.
On January 21, 2019, the Company entered into an agreement with Siemens
(the “Siemens Agreement”). Under the Siemens Agreement, there is a one-time fixed license fee and per annum payments
calculated based on annual volume of Profound’s systems that are interfaced to a Siemens MRI scanner. The initial term of the Siemens
Agreement is five years and will be automatically extended for successive one-year terms thereafter unless terminated earlier. The Company
also obtained a non-exclusive license to Siemens Access I interface software and reasonable support for the term of the Siemens Agreement.
On December 21, 2020, Profound signed the GE Agreement to expand provider
access to TULSA-PRO®. Pursuant to the terms of the GE Agreement, Profound has been supplied with additional information
to utilize the ExSI interface, which has allowed Profound to interface with GE MRI scanners and GE is helping support the development
efforts of Profound to achieve compatibility with its GE MRI scanners which was achieved on March 1, 2022 when the Company signed the
first site agreement for a Tulsa-PRO® system interfaced with a GE scanner.
On February 8, 2024, Profound entered into a non-exclusive collaboration
with Siemens Healthineers, aimed at laying the groundwork for Profound to begin marketing a complete therapeutics solution, combining
its TULSA-PRO® system with the MAGNETOM Free.Max magnetic resonance scanner from Siemens Healthineers, via Profound’s
own sales force. Profound will continue to market TULSA-PRO® as a stand-alone offering, providing its customers with
the flexibility to use the technology with the MR hardware of their choice.
Competition
TULSA-PRO®
The TULSA-PRO® system is intended to ablate benign and malignant
prostate tissue, however there are other treatment options for prostate disease. There are currently no marketed devices indicated for
the treatment of prostate diseases or prostate cancer and Profound’s FDA indication and CE mark in the EU also do not include treatment
of any particular disease or condition. However, there are a number of devices indicated for the destruction or removal of prostate tissue
and devices indicated for use in performing surgical procedures that physicians and surgeons currently utilize when treating patients
with prostate disease, including prostate cancer. Approaches that physicians and surgeons currently use to address prostate disease include:
(1) watchful waiting/active surveillance; (2) simple prostatectomy; (3) radical prostatectomy (includes open, laparoscopic and robotic
procedures); (4) radiation therapies including, external beam radiation therapy, brachytherapy and high dose radiation; (5) cryoablation;
and (6) trans-rectal high intensity focused ultrasound (“HIFU”). In addition, certain adjunct or less common procedures
are used or are under development to address prostate disease, such as androgen deprivation therapy and proton beam therapy.
Profound Medical Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
In USD$ (000s)
Each of the foregoing competing options have their own limitations and
benefits and may only be appropriate for limited patient populations. For example, active surveillance is generally recommended for patients
who have been diagnosed with earlier stage, lower risk, disease where the possibility of side effects from intervention may outweigh the
expected benefit of the chosen procedure. For clinicians and patients, the gap between active surveillance and the most commonly utilized
options of radical prostatectomy or radiation therapy, imposes the possibility of substantial side effects, creating a need for a less
invasive methodology to remove diseased prostate tissue that is both radiation and incision-free, provides a more favorable side-effect
profile, and allows for safe and effective salvage treatment options if required in the future.
Profound believes that the flexibility of the TULSA-PRO® system may
allow the Company to demonstrate its use as a tool for ablating benign and malignant diseased prostate tissue with greater speed and precision
than current options while minimizing potential side effects. Profound believes that the TULSA-PRO® system may overcome certain limitations
of other devices and methodologies for removing or addressing diseased prostate tissue including HIFU, such as complications associated
with trans-rectal delivery and limitations relating to prostate size and total ablation volume. Profound believes that a transurethral
(inside out) ablation approach with millimeter accuracy has advantages over HIFU in ablating the whole gland safely, as well as ablating
larger prescribed treatment plans for patients with multi-focal disease, BPH, and those who have prostate cancer concurrent with BPH.
Sonalleve®
The treatment choices for uterine fibroids usually depend
on the symptoms of the patient, size of the fibroid, desire for future pregnancy and preference of the treating gynecologist. The
most common treatment options for uterine fibroids include: (1) hormonal medications including gonadotrophin releasing hormone agonists;
(2) progesterone releasing intra-uterine devices; (3) surgical procedures such as hysterectomy and myomectomy; and (4) uterine artery
embolization. Profound believes that the Sonalleve® system may provide a treatment option that is more convenient and comfortable
with fewer side effects than hormonal medications or surgical procedures, such as hysterectomy or myomectomy.
Reimbursement
Profound’s ability to successfully commercialize
the Company’s products depends in large part on the extent to which coverage and adequate reimbursement for such products and related
treatments or procedures will be available from government health administration authorities, government and private health insurers,
and other organizations or third-party payors. Pricing and reimbursement procedures and decisions vary from country to country. Many government
health authorities and private payors condition payment on the cost-effectiveness of the product. Even if a device is FDA cleared or CE
marked or has received other regulatory clearance or approval, there is no guarantee that third-party payors will reimburse providers
or patients for the cost of the device and related procedures or that the amount of such reimbursement will be adequate to cover the cost
of the device. The availability of coverage and adequate reimbursement to hospitals and clinicians using Profound’s products therefore
is important to its ability to generate revenue and Profound plans to pursue coverage and reimbursement for the Company’s products
in the key markets where the Company has regulatory approvals. Successful commercialization of the Company’s approved products will
also depend on the cost of the system and the availability of coverage and adequate reimbursement from third-party payors.
Although Profound expects there to be an out-of-pocket
market for the Company’s approved products, an out-of-pocket market alone is unlikely to be sufficient to support successful commercialization
of the Company’s products. With sponsorship and support from multiple physician specialty societies, the AMA has established three
new Current Procedural Terminology (“CPT’) Category 1 codes for MRI-Monitored Transurethral Ultrasound Ablation (“TULSA”)
of prostate tissue, performed using Profound’s TULSA-PRO system. The first CPT Code describes the complete TULSA procedure when
furnished by a single physician, such as a urologist. The other two CPT codes each describe a part of the TULSA procedure when TULSA is
furnished by two physicians, such as a urologist in collaboration with a radiologist. The three new CPT Category 1 codes and their descriptors
covering the TULSA procedure will be included in a future edition of the CPT Codebook and will be effective on January 1, 2025. In the
meantime, U.S. hospitals and Ambulatory Surgical Centers performing the TULSA procedure on Medicare patients may utilize HCPCS C code,
C9734, established by the U.S. Centers for Medicare and Medicaid Services for the Hospital Outpatient Prospective Payment System. Effective
January 1, 2024, national average reimbursement to a hospital billing under C9734 is set to $12.5.
Profound Medical Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
In USD$ (000s)
HIGHLIGHTS
| § | On January 2, 2024, Profound completed an underwritten public offering for aggregate gross proceeds of
$20,000 ($18,238, net of transaction costs) with the issuance of 2,666,667 Common Shares at a price of $7.50 per share (the “Public
Offering”). |
| § | On January 16, 2024, Profound completed a non-brokered private placement for aggregate gross proceeds
of $2,938 ($2,841, net of transaction costs) with the issuance of 391,667 Common Shares at a price of $7.50 per share (the “Private
Placement”). |
| § | On February 27, 2024, Profound entered into a collaboration with Siemens Healthineers to further expand
physician and patient access to the TULSA procedure. |
| § | On March 7, 2024, Profound announced the promotion of Mathieu Burtnyk, PhD, from SVP Product Leader to
Chief Operating Officer. |
SELECTED FINANCIAL INFORMATION
The following selected financial information as at and for the three months
ended March 31, 2024, 2023 and 2022, have been derived from the unaudited interim condensed consolidated financial statements and should
be read in conjunction with those unaudited interim condensed consolidated financial statements and related notes.
| |
|
For three months ended March 31, |
|
| |
| 2024 | | |
| 2023 | | |
| 2022 | |
| |
| $ | | |
| $ | | |
| $ | |
Revenue | |
| 1,910 | | |
| 1,860 | | |
| 1,364 | |
Operating expenses | |
| 8,751 | | |
| 8,051 | | |
| 7,728 | |
Net finance expense (income) | |
| (1,322 | ) | |
| (145 | ) | |
| 892 | |
Net loss for the period | |
| 6,160 | | |
| 6,693 | | |
| 8,184 | |
Basic and diluted loss per share | |
| 0.26 | | |
| 0.32 | | |
| 0.40 | |
| |
|
March 31, 2024 $ |
| |
|
December 31,
2023 $ |
|
| |
| |
|
Total assets | |
| 57,382 | | |
| 43,911 | |
Total non-current financial liabilities | |
| 501 | | |
| 5,578 | |
Revenue has increased for the three months ended March 31, 2024 due to
higher US sales from recurring revenue and capital sales compared to the three months ended March 31, 2023.
Operating expenses increased for the three months ended March 31, 2024
compared to the three months ended March 31, 2023 and 2022 due to the continued focus of commercialization of the TULSA-PRO®
within the US market based on increased selling and distribution expenses.
The increase in net finance income for the three months ended March 31,
2024 compared to the three months ended March 31, 2023 and 2022 was primarily the impact of the change in the foreign exchange rates for
Profound’s foreign currency denominated cash and interest income from cash held in the bank.
The Company reported total assets of $57,382 as at March 31, 2024 compared
to $43,911 as at December 31, 2023. The increase in 2024 was a result of the Public Offering and Private Placement for net proceeds of
$21,079.
Profound Medical Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
In USD$ (000s)
RESULTS OF OPERATIONS
| |
Three
months ended March 31 |
| |
| |
| |
Change |
| |
|
2024
$ |
| |
|
2023
$ |
| |
|
$ |
|
|
|
% |
|
| |
| |
| |
|
Revenue | |
| 1,910 | | |
| 1,860 | | |
| (50 | ) | |
| 3 | % |
Cost of sales | |
| 641 | | |
| 647 | | |
| (6 | ) | |
| -1 | % |
Gross profit | |
| 1,269 | | |
| 1,213 | | |
| 56 | | |
| 5 | % |
| |
| | | |
| | | |
| | | |
| | |
Expenses | |
| | | |
| | | |
| | | |
| | |
Research and development | |
| 3,933 | | |
| 3,840 | | |
| 93 | | |
| 2 | % |
General and administrative | |
| 2,387 | | |
| 2,106 | | |
| 281 | | |
| 13 | % |
Selling and distribution | |
| 2,431 | | |
| 2,105 | | |
| 326 | | |
| 15 | % |
Total operating expenses | |
| 8,751 | | |
| 8,051 | | |
| 700 | | |
| 9 | % |
| |
| | | |
| | | |
| | | |
| | |
Net finance expense (income) | |
| (1,322 | ) | |
| (145 | ) | |
| (1,177 | ) | |
| 812 | % |
| |
| | | |
| | | |
| | | |
| | |
Loss before income taxes | |
| 6,160 | | |
| 6,693 | | |
| (533 | ) | |
| -8 | % |
| |
| | | |
| | | |
| | | |
| | |
Income taxes | |
| 39 | | |
| 48 | | |
| (9 | ) | |
| -19 | % |
| |
| | | |
| | | |
| | | |
| | |
Net loss attributed to shareholders for the period | |
| 6,199 | | |
| 6,741 | | |
| (542 | ) | |
| -8 | % |
| |
| | | |
| | | |
| | | |
| | |
Other comprehensive loss (income) | |
| | | |
| | | |
| | | |
| | |
Item that may be reclassified to profit or loss | |
| | | |
| | | |
| | | |
| | |
Foreign currency translation adjustment - net of tax | |
| (5,209 | ) | |
| 47 | | |
| (5,256 | ) | |
| -11183 | % |
Net loss and comprehensive loss for the period | |
| 990 | | |
| 6,788 | | |
| (5,798 | ) | |
| -85 | % |
| |
| | | |
| | | |
| | | |
| | |
Loss per share | |
| | | |
| | | |
| | | |
| | |
Basic and diluted net loss per common share | |
| 0.26 | | |
| 0.32 | | |
| (0.06 | ) | |
| -19 | % |
Profound Medical Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
In USD$ (000s)
Revenue
Profound deploys a recurring revenue business model in the US to market
TULSA-PRO®, charging a one-time payment that includes a supply of its one-time-use device, use of the system as well as
Company’s Genius services that support each TULSA center with clinical and patient recruitment. The Sonalleve® product
is marketed primarily outside North America in European and Asian countries deploying one-time capital sales model with limited recurring
service revenue. Outside of North America, Profound generates most of its revenues from its system sales (both TULSA-PRO®
and Sonalleve®) in Europe and Asia where the Company deploys a more traditional hybrid business model, charging for the
system separately as capital and an additional per patient charge for the one-time-use devices and associated Genius services. Revenue
is comprised of recurring – non-capital revenue, which consists of the sale of one-time-use devices, lease of medical devices, procedures
and services associated with extended warranties and one-time sale of capital equipment.
For the three months ended March 31, 2024, the Company recorded revenue
totaling $1,910 with $428 from the one-time sale of capital equipment and $1,482 coming from recurring – non-capital revenue. For
the three months ended March 31, 2023, the Company recorded revenue totaling $1,860 with $393 from the one-time sale of capital equipment
and $1,467 from recurring – non-capital revenue. The increase in revenue for the three months ended March 31, 2024, was a result
of higher US sales from recurring revenue and capital sales. Revenue on a quarter over quarter basis is expected to fluctuate in the near
term given the Company is maintaining a limited European commercial effort and remains focused primarily on the US market which continues
to see growth quarter over quarter.
Cost of sales
Cost of sales includes cost of finished goods, inventory provisions, warranty,
freight and manufacturing overhead expenses.
For the three months ended March 31, 2024, the Company recorded cost of
sales of $641, related to the sale of medical devices, capital and non-capital, which reflects a 66% gross profit. For the three months
ended March 31, 2023, the Company recorded cost of sales of $647, related to the sale of medical devices, capital and non-capital, which
reflects a 65% gross profit. The gross profit was slightly higher in 2024 due to manufacturing operating at a higher efficiency rates
based on process improvements.
Operating Expenses
Operating expenses consist of three components: research and development
(“R&D”), general and administrative (“G&A”) and selling and distribution expenses. Historically,
R&D expenses have exceeded selling and distribution expenses; however, in the future Profound expects selling and distribution expenses
to increase as the Company further commercializes the TULSA-PRO® system in the US.
R&D Expenses
R&D expenses are comprised of costs incurred in performing R&D
activities, including new product development, continuous product improvement, investment in clinical trials and related clinical manufacturing
costs, materials and supplies, salaries and benefits, consulting fees, patent procurement costs, and occupancy costs related to R&D
activity.
For the three months ended March 31, 2024, R&D expenses were higher
by $93 compared to the three months ended March 31, 2023. Clinical trial costs, travel and software costs increased by $227, $27 and $30,
respectively. The increases were due to improved enrolment for the CAPTAIN trial and recruitment efforts, additional travel associated
with system installation and clinical trials and increased software costs associated with thermal boost and artificial intelligence development
software. Offsetting these amounts was a decrease in rent of $125 due to lower MRI time usage and a decrease of $68 to share based compensation
due to few awards granted to employees.
G&A expenses
G&A expenses are comprised of management costs, including salaries
and benefits, various management and administrative support functions, insurance and other operating and occupancy costs.
G&A expenses for the three months ended March 31, 2024 increased by
$281 compared to the three months ended March 31, 2023. Salaries and benefits, consulting fees and travel increased by $78, $246 and $18,
respectively, due to higher cost of living salary increases, increased legal and accounting fees associated with annual audit and upcoming
disclosure changes and increased travel for investor relations and conferences. Offsetting this amount was a decrease to insurance expense
of $30 due to lower premium rates and decrease to the general office expenses of $30.
Selling and distribution expenses
Selling and distribution expenses are comprised of business development
costs related to the market development activities and commercialization of the Company’s systems, including salaries and benefits,
marketing support functions, occupancy costs related to marketing activity and other miscellaneous marketing costs.
Profound Medical Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
In USD$ (000s)
Selling and distribution expenses for the three months ended March 31,
2024 were higher by $326 compared to the three months ended March 31, 2023. Salaries and benefits, consulting fees, marketing and travel
increased by $176, $67, $67 and $89, respectively, due to increased salesforce and commission payments, consultants engaged to assist
with Veteran Affairs and military sales markets, release of commercial segments and marketing advertisement campaigns, and increased in-person
conferences and customer meetings. Offsetting these amounts was a decrease of $89 to share based compensation due to few awards granted
to employees.
Net finance expense (income)
Net finance expense (income) is primarily comprised of the following: (i)
the CIBC Loan Agreement (as defined herein) accreting to the principal amount repayable and its related interest expense; (ii) the change
in the fair value of the derivative liability warrants; (iii) the lease liability interest expense; (iv) foreign exchange gain or losses;
(v) interest income; and (vi) the change in amortized cost of trade and other receivables.
Net finance income for the three months ended March 31, 2024, was higher
by $1,177 compared to the three months ended March 31, 2023. During the three months ended March 31, 2024, the Company recognized $868
of foreign exchange gain and a $69 change in amortized cost of trade and other receivables. The Company also recognized interest income
of $562, interest expense from the CIBC Loan Agreement of $169 and lease liability interest expense of $8. The largest fluctuation from
the three months ended March 31, 2024 versus the three months ended March 31, 2023 was the $121 increase in fair value of the derivative
liability warrants, $988 increase in foreign exchange and $265 increase in interest income.
Net loss
Net loss for the three months ended March 31, 2024, was $6,199 or $0.26
per Common Share, compared to a net loss of $6,741 or $0.32 per Common Share for the three months ended March 31, 2023. The increase in
net loss was primarily attributed to an increase in R&D expense of $93, an increase in G&A expenses of $281 and an increase in
selling and distribution expenses of $326. This was offset by an increase in net finance income of $1,177 and an increase in gross profits
of $56.
SUMMARY OF QUARTERLY FINANCIAL RESULTS
The summary financial information provided below is derived from the Company’s interim
financial statements for each of the last eight quarters that are prepared under IFRS Accounting Standards in US dollars.
| |
2024 | |
2023 | |
2022 |
| |
| Q1 | | |
| Q4 | | |
| Q3 | | |
| Q2 | | |
| Q1 | | |
| Q4 | | |
| Q3 | | |
| Q2 | |
| |
| $ | | |
| $ | | |
| $ | | |
| $ | | |
| $ | | |
| $ | | |
| $ | | |
| $ | |
Revenue | |
| 1,910 | | |
| 2,009 | | |
| 1,728 | | |
| 1,602 | | |
| 1,860 | | |
| 1,257 | | |
| 2,035 | | |
| 2,025 | |
Cost of sales | |
| 641 | | |
| 950 | | |
| 668 | | |
| 552 | | |
| 647 | | |
| 698 | | |
| 945 | | |
| 1,089 | |
Gross profit | |
| 1,269 | | |
| 1,059 | | |
| 1,060 | | |
| 1,050 | | |
| 1,213 | | |
| 559 | | |
| 1,090 | | |
| 936 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Operating expenses | |
| 8,751 | | |
| 9,841 | | |
| 7,620 | | |
| 7,486 | | |
| 8,051 | | |
| 9,381 | | |
| 9,324 | | |
| 8,714 | |
Net finance expense (income) | |
| (1,322 | ) | |
| 356 | | |
| (1,014 | ) | |
| 884 | | |
| (145 | ) | |
| 499 | | |
| (3,271 | ) | |
| (1,864 | ) |
Loss before income taxes | |
| 6,160 | | |
| 9,138 | | |
| 5,546 | | |
| 7,320 | | |
| 6,693 | | |
| 9,321 | | |
| 4,963 | | |
| 5,914 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Income taxes | |
| 39 | | |
| (229 | ) | |
| 18 | | |
| 35 | | |
| 48 | | |
| 206 | | |
| 34 | | |
| 16 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss for the period | |
| 6,199 | | |
| 8,909 | | |
| 5,564 | | |
| 7,355 | | |
| 6,741 | | |
| 9,527 | | |
| 4,997 | | |
| 5,930 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Loss per Common Share | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic and diluted | |
| 0.26 | | |
| 0.42 | | |
| 0.26 | | |
| 0.35 | | |
| 0.32 | | |
| 0.46 | | |
| 0.24 | | |
| 0.28 | |
The first quarter of 2024 revenue increased compared to the majority of
prior quarters as a result of higher US sales from recurring revenue. Operating expenses increased against the majority of prior quarters
due to additional headcount within sales and distribution and expenses associated with the continued TULSA-PRO® commercialization
with the US market.
Profound Medical Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
In USD$ (000s)
In the fourth quarter of 2023 revenue continued to increase compared to
prior quarters as new sites became operational and increased patient procedures. Operating expenses were higher than prior quarters due
to ATM offering fees as well as overall increase to the salesforce.
In the third quarter of 2023 operating expenses were higher compared to
the prior quarter due to increased consulting costs associated with regulatory and foreign consultants for additional approval in other
countries. In addition, there was also an increase in finance income due to the US dollar and Euro foreign currency rate, triggering a
foreign exchange gain.
The second quarter of 2023 revenue was lower compared to the prior quarter
due to decreased one-time capital sales. Operating expenses were lower compared to the prior quarters due to decreased share based compensation
expenses and lower amortization expenses as a result of intangible assets being fully amortized.
The first quarter of 2023 cost of sales decreased from the quarterly periods
in 2022 as a result of manufacturing operating at a higher efficiency rate based on improvements to quality and training that were implemented
in the manufacturing process.
The fourth quarter of 2022 revenue was lower compared to prior quarters
due to decreased one-time capital sales, primarily resulting from lower capital sales than previous quarters. Operating expenses were
higher due to goodwill impairment.
The third quarter of 2022 cost of sales decreased as a result of better
yields and product quality. In addition, there was also an increase in finance income due to the US dollar and Euro foreign currency rates,
triggering a foreign exchange gain.
The second quarter of 2022 revenue increased compared to the prior quarter
as a result of the rise of recurring revenue from US procedures. Operating expenses were higher due to the increase in headcount and software
fees. In addition, there was also an increase in finance income due to the US dollar and Euro foreign currency rate, triggering a foreign
exchange gain.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2024, the Company had cash of $41,180 compared to $26,213
at December 31, 2023. Historically, the Company’s primary source of cash has been financing activities, e.g., equity offerings as
well as the CIBC Loan (as defined below).
Use of Proceeds
2024 Offering and non-brokered private placement
The Company received net proceeds of $21,079 from the Public Offering and
Private Placement. The Company intends to use net proceeds from the Public Offering and Private Placement to fund the continued commercialization
of the TULSA-PRO® system in the United States, the continued development and commercialization of the TULSA-PRO®
system and the SONALLEVE® system globally and for working capital and general corporate purposes. The Company confirms
that there have been no material variances in the estimated use of proceeds from the net proceeds of the Public Offering since the date
of the Company’s prospectus supplement dated December 27, 2023. In addition, there have been no material adjustments to the cost
or timing of the business objective previously disclosed in such prospectus supplement.
| |
|
Total spending as at March 31, 2024 |
|
| |
|
$ |
|
TULSA-PRO® commercialization | |
| 3,767 | |
Sonalleve® development and commercialization | |
| 631 | |
Working capital and general corporate purposes | |
| 3,620 | |
Total | |
| 8,018 | |
CIBC Loan
Profound Medical Inc. (“PMI”) entered into a loan agreement
with Canadian Imperial Bank of Commerce (“CIBC”) on November 3, 2022 (the “CIBC Loan Agreement”),
for gross proceeds of C$10,000, maturing on November 3, 2027, with an interest rate based on CIBC prime plus 2% (the “CIBC Loan”).
The Company was required to make interest-only payments until October 31, 2023, and monthly repayments on the principal of C$208 plus
accrued interest commenced on October 31, 2023. All obligations of the Company under the CIBC Loan Agreement are guaranteed by current
and future subsidiaries of the Company and included security of first priority interests in the assets of the Company and its subsidiaries.
Initially, the Company had financial covenants in relation to the CIBC loan where unrestricted cash is at all times greater than EBITDA
for the most recent six-month period, reported on a monthly basis and that revenue for any fiscal quarter must be 15% greater than revenue
for the same fiscal quarter in the prior fiscal year, reported on a quarterly basis.
Profound Medical Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
In USD$ (000s)
On September 26, 2023 an amendment to the CIBC Loan resulted in an amendment
to the financial covenants. The amended covenants are that unrestricted cash must at all times be greater of: (i) to the extent EBITDA
is negative for such period, EBITDA for the most recent nine-month period or (ii) $7,500, reported on a monthly basis; and that recurring
revenue for any fiscal quarter must be 15% greater than recurring revenue for the same fiscal quarter in the prior fiscal year, reported
on a quarterly basis. The Company is compliant with the first covenant whereby unrestricted cash is at all times greater than EBITDA for
the most recent nine-month period ended March 31, 2024. However, as at March 31, 2024, the Company is in breach with the second covenant
whereby recurring revenue for any fiscal quarter must be 15% greater than recurring revenue for the same fiscal quarter in the prior fiscal
year. The loan is classified as current since CIBC has the right to demand the repayment of the loan. If CIBC demands repayment of the
loan, the Company has sufficient cash to cover the repayment of the loan and would have $34,517 cash remaining.
On May 3, 2024, the Company received a waiver from CIBC and an amendment
to the CIBC Loan which resulted in an amendment to the financial covenants. The amended covenants are that the recurring revenue covenant
shall not be tested for any fiscal quarter in the 2024 fiscal year so long as unrestricted cash is no less than 2.5 multiplied by the
principal amount of outstanding CIBC Loan at all times.
Cash Flow
The Company manages liquidity risk by monitoring actual and projected cash
flows. A cash flow forecast is performed regularly to ensure that the Company has sufficient cash to meet operational needs while maintaining
sufficient liquidity. The Company’s cash requirements depend on numerous factors, including market acceptance of the Company’s
products, the resources devoted to developing and supporting the products and other factors. Profound expects to continue to devote substantial
resources to expand procedure adoption and acceptance of the Company’s products.
The Company may require additional capital to fund R&D activities and
any significant expansion of operations. Potential sources of capital could include equity and/or debt financings, development agreements
or marketing agreements, the collection of revenue resulting from future commercialization activities and/or new strategic partnership
agreements to fund some or all costs of development. There can be no assurance that the Company will be able to obtain the capital sufficient
to meet any or all of the Company’s needs. The availability of equity or debt financing will be affected by, among other things,
the results of R&D, the Company’s ability to obtain regulatory approvals, the market acceptance of the Company’s products,
the state of the capital markets generally, strategic alliance agreements and other relevant commercial considerations. In addition, if
the Company raises additional funds by issuing equity securities, existing security holders will likely experience dilution, and any incurring
of indebtedness would result in increased debt service obligations and could require the Company to agree to operating and financial covenants
that would restrict operations. Any failure on the Company’s part to raise additional funds on terms favourable to the Company or
at all may require the Company to significantly change or curtail current or planned operations in order to conserve cash until such time,
if ever, that sufficient proceeds from operations are generated, and could result in the Company not being in a position to take advantage
of business opportunities, in the termination or delay of clinical trials for its products, in curtailment of product development programs
designed to identify new products, in the sale or assignment of rights to technologies, product and/or an inability to file market approval
applications at all or in time to competitively market products.
| |
|
Three months ended |
|
| |
|
March 31, 2024 $ |
| |
|
March 31, 2023 $ |
|
| |
| |
|
Cash provided by (used in) operating activities | |
| (5,098 | ) | |
| (5,823 | ) |
Cash provided by (used in) financing activities | |
| 20,383 | | |
| 2,144 | |
Foreign exchange on cash | |
| (318 | ) | |
| 146 | |
Net increase (decrease) in cash | |
| 14,967 | | |
| (3,533 | ) |
Profound Medical Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
In USD$ (000s)
Operating Activities
Net cash provided by (used in) operating activities for the three months
ended March 31, 2024 was $(5,098) versus $(5,823) for the three months ended March 31, 2023. The principal use of the operating cash flows
during this period related to improved trade and other receivable collection, foreign exchange and offsetting these were increased sales
and marketing efforts in the US which decreased cash.
Financing Activities
Net cash provided by (used in) financing activities for the three months
ended March 31, 2024 was $20,383 versus $2,144 for the three months ended March 31, 2023. These cash flows relate primarily to the 2024
Offering and non-brokered private placement pursuant to which the Company received net proceeds of $21,079.
Foreign Exchange on Cash
Cash was impacted by the change in the foreign exchange rates for the Company’s
foreign currency denominated cash (non-USD). The value of the Company’s currencies decreased, resulting in a decrease in the Company’s
cash holdings.
Contractual obligations
The following table summarizes the Company’s significant contractual obligations:
| |
| |
|
March 31, 2024 |
|
| |
| Carrying
amount $ | | |
| Future cash
flows $ | | |
| Less than 1
Year $ | | |
| Between 1 year and 5 years $ | |
| |
| | | |
| | | |
| | | |
| | |
Accounts payables and accrued liabilities | |
| 2,875 | | |
| 2,875 | | |
| 2,875 | | |
| - | |
Lease liabilities | |
| 7541 | | |
| 810 | | |
| 291 | | |
| 519 | |
Long-term debt | |
| 6,482 | | |
| 7,8742 | | |
| 2,565 | | |
| 5,309 | |
Total | |
| 10,111 | | |
| 11,559 | | |
| 5,731 | | |
| 5,828 | |
1 Present value of the lease payments that are not paid, discounted using the interest
rate implicit in the lease.
2 Subsequent to period end, a waiver was obtained which revert the payment terms
back in alignment with the CIBC agreement.
Non-GAAP Financial Measures
Non-GAAP measures are not recognized measures under IFRS Accounting Standards
and do not have a standardized meaning prescribed by IFRS Accounting Standards. These measures are defined with reference to the nearest
comparable IFRS Accounting Standards measure such that a reconciliation to the nearest comparable IFRS Accounting Standards measure can
be completed. Accordingly, these measures may not be comparable to similar measures presented by other companies. Profound uses non-GAAP
measures in order to provide additional financial information to complement the closest IFRS Accounting Standards measures in order to
provide investors with a further understanding of the Company’s operations from management’s perspective. Investors should
not consider that these non-GAAP measures are a substitute for analyses of the financial information that Profound reports under IFRS
Accounting Standards. Profound uses these non-GAAP measures in order to provide investors with a supplemental measure of its operating
performance and thus highlight trends in the Company’s business that may not otherwise be apparent when relying solely on IFRS Accounting
Standards measures.
The Company’s working capital (defined as current assets less current
liabilities) is a non-GAAP financial measure. Working capital is used to fund operations and meet short-term obligations. If the
Company has enough working capital, it can continue to pay its employees and suppliers and meet other obligations, such as interest payments
and taxes, even if it runs into cash flow challenges. The working capital as at March 31, 2024 and December 31, 2023 is set forth in the
table below.
Profound Medical Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
In USD$ (000s)
| |
|
March 31, 2023 $ |
| |
|
December 31,
2022 $ |
|
| |
| |
|
Current assets | |
| 55,541 | | |
| 41,896 | |
Less: Current liabilities | |
| 10,267 | | |
| 6,366 | |
Working capital | |
| 45,274 | | |
| 35,530 | |
Working capital increased by $9,744 with a surplus of $45,274 at March
31, 2024 compared to the surplus of $35,530 at December 31, 2023. The change in working capital is due to an increase in current assets
of $13,645, which was primarily the result of the increase in the cash balance of $14,967 which was offset by decreased in trade and other
receivables of $778. Current liabilities increased by $3,901 due to an increase in the current portion of the long-term debt caused by
it being reclassified to a current liability due to the breach of a debt covenant which was offset by a decrease in accounts payable and
accrued liabilities.
COMMITMENTS & CONTINGENCIES
All directors and officers of the Company are indemnified by the Company
for various items including, but not limited to, all costs to settle lawsuits or actions due to their association with the Company, subject
to certain restrictions. The Company has purchased directors’ and officers’ liability insurance to mitigate the cost of any
potential future lawsuits or actions. The term of the indemnification is not explicitly defined but is limited to events for the period
during which the indemnified party served as a director or officer of the Company. The maximum amount of any potential future payment
cannot be reasonably estimated but could have a material adverse effect on the Company.
The Company has also indemnified certain lenders and underwriters in relation
to certain debt and equity offerings and their respective affiliates and directors, officers, employees, shareholders, partners, advisers
and agents and each other person, if any, controlling any of the underwriters or lenders or their affiliates against certain liabilities.
FINANCIAL INSTRUMENTS
The Company’s financial instruments consist of cash, trade and other
receivables, accounts payable and accrued liabilities, derivative financial instruments, lease liabilities and long-term debt. The fair
values of these financial instruments, approximate carrying value as a result of their short-term nature. Financial assets measured at
amortized cost include cash and trade and other receivables. The fair value of the long-term debt approximates its carrying amount as
it has a floating interest rate.
Financial liabilities measured at amortized cost include accounts payable
and accrued liabilities, long-term debt and lease liabilities.
The Company’s financial instruments are exposed to certain financial
risks including credit risk, liquidity risk, currency risk and interest rate risk. There have been no significant changes to those risks
impacting the Company since December 31, 2023, nor has there been a significant change in the composition of its financial instruments
since December 31, 2023.
RELATED PARTY TRANSACTIONS
Key management includes the Company’s directors and senior management
team. Additional information on the senior management team can be found in the Company’s AIF. The remuneration of directors and
the senior management team were as follows:
| |
Three months ended March 31, |
| |
|
2024 $ |
| |
|
2023
$ |
|
| |
| |
|
Salaries and employee benefits | |
| 350 | | |
| 478 | |
Directors’ fees | |
| 69 | | |
| 81 | |
Share-based compensation | |
| 542 | | |
| 777 | |
Total | |
| 961 | | |
| 1,336 | |
Profound Medical Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
In USD$ (000s)
Executive employment agreements allow for additional payments in the event
of a liquidity event, or if the executive is terminated without cause.
OUTSTANDING SHARES
As at May 9, 2024, the date of this MD&A, the Company had the following
securities outstanding:
| |
|
Number |
|
Common Shares | |
| 24,428,899 | |
Share purchase options | |
| 1,485,509 | |
Deferred Share Units | |
| 75,000 | |
Restricted Share Units | |
| 511,730 | |
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of consolidated financial statements in conformity with
IFRS Accounting Standards requires management to make estimates and judgements that affect the reported amounts of assets and liabilities
at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the year. Actual results
could differ from these estimates. As additional information becomes available or actual amounts are determinable, the recorded estimates
are revised and reflected in operating results in the year in which they are determined.
Critical accounting policies
Revenue
To determine revenue recognition for arrangements the Company performs
the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii)
determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize
revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it
is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the
customer.
The Company derives its revenues primarily from the lease and sale of medical
devices and the sale of certain one-time-use devices. Capital equipment consists of one-time revenue for the sale of capital equipment
including installation fees. Recurring – non-capital revenue consists of the sale of one-time-use devices, lease of medical devices,
procedures and services associated with extended warranties. Revenue is recognized when a contractual promise to a customer (performance
obligation) has been fulfilled by transferring control over the promised goods or services, generally at the point in time of shipment
to or receipt of the products by the customer or when the services are performed. When contracts contain customer acceptance provisions,
revenue is recognized on the satisfaction of the specific acceptance criteria.
The amount of revenue to be recognized is based on the consideration the
Company expects to receive in exchange for its goods and services. For contracts that contain multiple performance obligations, the Company
allocates the consideration to which it expects to be entitled to each performance obligation based on relative standalone selling prices
and recognizes the related revenue when or as control of each individual performance obligation is transferred to customers.
Service revenue related to installation and training is recognized over
the period in which the services are performed. Service revenue related to extended warranty service is deferred and recognized on a straight-line
basis over the extended warranty period covered by the respective customer contract.
Profound Medical Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
In USD$ (000s)
Critical accounting estimates
Trade and other receivables
The key judgements and estimates used in determining the amortized cost
for trade and other receivables are the estimated collection period and the discount rate applied to the cash flow projections.
DISCLOSURE CONTROLS AND PROCEDURES AND
INTERNAL CONTROLS OVER FINANCIAL REPORTING
Disclosure controls and procedures have been designed to ensure that information
required to be disclosed by the Company is accumulated and communicated to the Company’s management as appropriate to allow timely
decisions regarding required disclosure.
The Chief Executive Officer and the Chief Financial Officer of the Company
(collectively the “Certifying Officers”) are responsible for establishing and maintaining disclosure controls and procedures
(“DC&P”) and internal control over financial reporting (“ICFR”), as those terms are defined
in National Instrument 52-109 Certification of Disclosure in Issuer’s Annual and Interim Filings.
The Certifying Officers have concluded that as at March 31, 2024, the Company's
DC&P has been designed effectively to provide reasonable assurance that (a) material information relating to the Company is made known
to them by others, particularly during the period in which the annual filings are being prepared; and (b) information required to be disclosed
by the Company in its annual filings, interim filings or other reports are filed or submitted, recorded, processed, summarized and reported
within the time periods specified in the securities legislation.
There have been no significant changes to the Company's ICFR for the period
ended March 31, 2024, which have materially affected, or are reasonably likely to materially affect the Company's ICFR. Based on their
evaluation of these controls for the period ended March 31, 2024, the Certifying Officers have also concluded that the Company's ICFR
have been designed effectively to provide reasonable assurance regarding the reliability of the preparation and presentation of the financial
statements for external purposes and that ICFR were effective as at March 31, 2024. The Company used the Committee of Sponsoring Organizations
of the Treadway Commission control framework to evaluate DC&P and ICFR.
It should be noted that while the Company's Certifying Officers believe
that the Company's DC&P provides a reasonable level of assurance that they are effective, they do not expect that the disclosure controls
will prevent all errors and fraud. A control system, no matter how well conceived or operated, can only provide reasonable, not absolute,
assurance that the objectives of the control system are met.
ICFR is designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of the annual financial statements for external reporting purposes in line with IFRS Accounting
Standards. Management is responsible for establishing and maintaining adequate internal controls over financial reporting appropriate
to the nature and size of the Company. However, any system of internal control over financial reporting has inherent limitations and can
only provide reasonable assurance with respect to annual financial statement preparation and presentation.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
Environmental, social and governance (“ESG”) issues
are an integral part of human life. They’ve also become a more conscious and explicit part of business life, especially for public
entities like Profound. The Company believes ESG sensitivities are an integral part of growing a successful, sustainable business. The
importance Profound places on ESG principles stems from its foundation as a company, whose mission is focused on providing customizable
incision-free therapies that are flexible to treat different types of patients and can treat each patient differently. ESG is embedded
in the Company’s corporate strategy, which seeks to maximize long-term value by taking a disciplined and sustainable approach to
changing the paradigm of prostate cancer treatment.
Through Profound’s ESG plan, the Company
intends to create enduring value for shareholders by:
| · | attracting, retaining and empowering a diverse, engaged workforce to bring unique perspectives and experiences
to strategic decisions; |
| · | ensuring safe and secure workplaces for its employees and contributing to their welfare; |
| · | caring for the environment in which the Company operates; |
| · | strengthening relationships with shareholders by working collaboratively to achieve positive social, economic
and environmental outcomes; and |
| · | operating transparently. |
Profound Medical Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
In USD$ (000s)
Environmental
Profound believes in the 3Rs: reduce, reuse, recycle. Profound strives
to control the waste and, in its facilities, electronic equipment, paper, glass, plastic and metal items, as well as hazardous waste,
are recovered and recycled. Given the finite resources in the world, Profound believes moving towards a circular economy in which Profound
reduces waste production is critical for both business and society. Recognizing the opportunity for the medical technology industry to
support the transition towards lower waste and circular business models, including by minimizing Profound’s waste footprint and
exploring opportunities to reduce the volume of materials used. At Profound, focusing efforts on waste minimization through a repair first
strategy, and by using materials that can be recycled to increase the supply of material for future reuse. The equipment that Profound
provides to customers is collected, tested, repaired, or refurbished then redeployed thus contributing to a circular economy. Equipment
which can no longer be redeployed is brought to organizations or third party vendors that partner with Profound to resell and recycle
obsolete equipment.
Profound is focused on waste reduction, waste avoidance, and waste management
strategies for all materials, including plastic, metal, water and cardboard. To manage the Company’s waste it segregates, recycles,
and properly disposes of hazardous and non-hazardous materials and where possible, reuses materials such as alcohol and water through
its recycling plan. Profound will continue managing its waste and material use through clear and consistent communication of best practices
throughout the Company. Profound is committed to environmental sustainability and prioritizes efforts to prevent pollution and to conserve,
recover, and recycle materials wherever possible. The Company attempts to distribute documents electronically to minimize paper consumption,
waste and limit the use of single-use plastics. Since 2021, Profound has invested in upgrading its lighting in its manufacturing facilities
by retrofitting its lighting to high-efficiency LED to reduce energy consumption and enhance the manufacturing facilities work environment
for its employees. The Company plans to continue to invest in lighting where it can have a positive environmental impact and improve working
conditions.
The repair first approach promotes reuse of existing materials and reduction
of new materials (including packaging associated with replacing parts), therefore avoiding waste to landfill. To further support these
key areas, the Company is exploring opportunities to recycle glass, water and metals. In Profound’s facilities, multiple waterless
urinals have been installed which save over 100,000 litres of water per urinal each year.
Social
As the demand for talent increases, the need for innovative attraction
and retention strategies also increases. The Company recognizes that in a rapidly changing environment, its employees are central to its
business performance. Profound’s workforce is a key driver of its success, which is why providing a superior employee experience
is one of its top priorities. This includes Profound’s commitment to providing a safe and healthy workplace for all employees, consultants,
and business partners. Profound does not simply consider this to be its duty of care but an important business practice as it lowers costs,
reduces absenteeism and turnover, increases productivity and quality and raises employee morale.
In addition to competitive salaries, Profound offers other benefits to
its employees. These benefits include a range of incentives, flexible and home-based work options and other health-related benefits. The
human resources department is responsible for promoting a wide range of opportunities for innovation at work – which is a significant
aspect of Profound’s corporate strategy – and for helping employees to nurture their personal strengths while developing as
individuals. In order to be best prepared for challenges, Profound emphasizes the acquisition of technical expertise as part of the qualification
system.
Diversity and inclusion are long-standing core values that Profound embraces
by fostering a respectful workplace where integrity, trust and inclusion are the norm. Profound believes that an inclusive workplace is
one where everyone feels a sense of belonging, has a safe environment in which to work and develop, and shares equal opportunities for
career advancement regardless of gender, skin colour, ethnicity, religion, age, disability or sexual orientation. Profound values diversity
and inclusion as together they enable a highly collaborative and engaging work environment and drive innovation and the development of
new ideas, which in turn directly correlates with improved Company performance.
Profound wants every employee to feel healthy, safe and productive at work.
Cultivating a safe workplace helps advance the Company’s purpose of enabling everyone to live healthier, fuller lives. Given the
increased incidence of mental illness in the workplace, Profound’s healthcare coverage offers access to quality counseling services.
Artificial intelligence is getting increasingly sophisticated at doing
what humans do, but more efficiently, more quickly and at a lower cost. The potential for both AI and robotics in healthcare is vast.
Just like in our every-day lives, AI and robotics are increasingly a part of our healthcare eco-system and a major factor for the Company. By
analyzing large amounts of data in real time, AI can help improve clinical and nonclinical decision making, ablation planning, treatment
time reduction and workflow ease of use optimization. Advances in technology are driving constant changes in the delivery of healthcare.
Care providers must seek new training and education opportunities to adjust to this quickly evolving landscape. Artificial intelligence
supports these efforts by revolutionizing the capture, storage, and analysis of training video.
Profound Medical Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
In USD$ (000s)
Artificial intelligence has the potential to help solve some of the biggest
challenges facing healthcare today, such as managing costs, physician burnout, and health equity. Our AI solutions are designed to give
healthcare professionals the time and tools they need to deliver better care to more people around the world. The thermal boost technology
enables predictable, customized ablation at the prostate capsule to ensure a reliable heating of the planned ablation volume. It demonstrates
successful application for boosting the MRI-visible lesions to ensure reliable heating to the capsule, boosting in regions with larger
prostate radii and boosting if the lethal heat did not initially reach the target boundary.
Governance
Profound’s Board of Directors are responsible
for the stewardship of the Company and for overseeing the conduct of business and the activities of management. The Human Resource and
Corporate Governance Committee of the board of directors of Profound is responsible for providing leadership in shaping the Company’s
governance policies and practices. The Audit Committee is responsible for overseeing financial reporting and related internal controls,
risk, independent and internal auditors, and ethics and compliance. The committees of the board of directors of Profound consist of many
affluent senior leadership members within the industry that provide meaningful insight and guidance. Strong and effective governance practices
are part of Profound’s organizational culture. This encompasses sound and effective internal processes and procedures, minimizing
risks, continuous enhancement of human resource policies and practices, a cyber security strategy and promoting efficiency.
The Company holds itself to a high standard of
governance and it is continually taking steps to strengthen its performance and accountability in critical areas. Profound’s Code
of Business Conduct and Ethics and Whistleblower policies provide the standards for ethical behavior throughout Profound’s business
activities and reflect its commitment to conducting a culture of honesty, integrity, and accountability.
As Profound continues to work towards its mission, the Company is committed
to conducting its business in a responsible and sustainable manner by aspiring to develop healthy, resilient communities through its dedication
to social, economic and environmental sustainability. By unlocking value through its core activities, Profound remains focused on execution
on all fronts including in fulfilling its commitment to ESG best practices in the years to come.
RISK FACTORS
For a detailed description of risk factors associated with the Company,
refer to the “Risk Factors” section of the AIF, which is available on SEDAR+ at www.sedarplus.ca and filed as an exhibit to
the 40-F, available on EDGAR at www.sec.gov.
In addition, the Company is exposed to a variety of financial risks in
the normal course of operations, including risks relating to cash flows from operations, liquidity, capital reserves, market rate fluctuations
and internal controls over financial reporting. Profound’s overall risk management program and business practices seek to minimize
any potential adverse effects on the Company’s consolidated financial performance. Financial risk management is carried out under
practices approved by Profound’s audit committee. This includes reviewing and making recommendations to the board of directors regarding
the adequacy of the Company’s risk management policies and procedures with regard to identification of the Company’s principal
risks, and implementation of appropriate systems and controls to manage these risks.
ADDITIONAL INFORMATION
Additional information relating to the Company, including the AIF the other
exhibits to the 40-F, is available on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov. The Common Shares are listed for trading
on the TSX under the symbol “PRN” and on Nasdaq under the symbol “PROF”.
Page 21
Exhibit 99.4
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Arun Menawat, the Chief Executive
Officer of Profound Medical Corp., certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the
“interim filings”) of Profound Medical Corp. (the “issuer”) for the interim period ended March 31, 2024. |
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the
interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that
is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered
by the interim filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim
financial report together with the other financial information included in the interim filings fairly present in all material respects
the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim
filings. |
| 4. | Responsibility: The issuer’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those
terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the
issuer. |
| 5. | Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s
other certifying officer(s) and I have, as at the end of the period covered by the interim filings |
| (a) | designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance
that |
| (i) | material information relating to the issuer is made known to us by others, particularly during the period
in which the interim filings are being prepared; and |
| (ii) | information required to be disclosed by the issuer in its annual filings, interim filings or other reports
filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified
in securities legislation; and |
| (b) | designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s
GAAP. |
| 5.1 | Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s
ICFR is the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). |
| 5.2 | ICFR – material weakness relating to design: N/A |
| 5.3 | Limitation on scope of design: N/A |
| 6. | Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in
the issuer’s ICFR that occurred during the period beginning on January 1, 2024 and ended on March 31, 2024 that has materially affected,
or is reasonably likely to materially affect, the issuer’s ICFR. |
Date: May 9, 2024
_(signed) Arun Menawat_
Arun Menawat
Chief Executive Officer
Exhibit 99.5
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Rashed Dewan, Chief Financial Officer of Profound Medical Corp., certify
the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the
“interim filings”) of Profound Medical Corp. (the “issuer”) for the interim period ended March 31, 2024. |
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the
interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that
is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered
by the interim filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim
financial report together with the other financial information included in the interim filings fairly present in all material respects
the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim
filings. |
| 4. | Responsibility: The issuer’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those
terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the
issuer. |
| 5. | Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s
other certifying officer(s) and I have, as at the end of the period covered by the interim filings |
| (a) | designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance
that |
| (i) | material information relating to the issuer is made known to us by others, particularly during the period
in which the interim filings are being prepared; and |
| (ii) | information required to be disclosed by the issuer in its annual filings, interim filings or other reports
filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified
in securities legislation; and |
| (b) | designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s
GAAP. |
| 5.1 | Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s
ICFR is the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). |
| 5.2 | ICFR – material weakness relating to design: N/A |
| 5.3 | Limitation on scope of design: N/A |
| 6. | Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in
the issuer’s ICFR that occurred during the period beginning on January 1, 2024 and ended on March 31, 2024 that has materially affected,
or is reasonably likely to materially affect, the issuer’s ICFR. |
Date: May 9, 2024
_(signed) Rashed Dewan_
Rashed Dewan
Chief Financial Officer
Profound Medical (NASDAQ:PROF)
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