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