Check-Cap Reports Third Quarter 2017 Financial Results
ISFIYA, Israel and BOSTON, Nov. 6, 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 announced its financial results for the third quarter and nine months ended September 30, 2017.
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Recent Highlights
Continued advancements on C-Scan regulatory, clinical performance, and development programs:
-- Filed CE Mark registration for the C-Scan system. Data from the
multi-center clinical safety and performance study to support the
submission showed safety and encouraging results for detecting patients
with polyps in an un-prepped colon. Data from the study demonstrated a
44% sensitivity for patients with polyps in the 45 subjects included in
the analysis. Specificity was 89%. Sensitivity strongly correlated
(R-squared = 0.98) to the percentage of the colon scanned. Sensitivity
was 78% and 100% for subjects where greater than 50% and 70% of the
colon was scanned, respectively.
-- Late breaking, oral presentation of clinical safety and performance
study abstract, "Clinical Performance of a Novel X-ray Based Imaging
Capsule for Colonic Screening", at the United European Gastroenterology
(UEG) Week 2017 in Barcelona, Spain on October 30(th).
-- Progress made with advanced C-Scan version. Subsequent improvements made
to software algorithms showed enhanced colon scanning in an internal
analysis using the original 45 subjects from the multi-center study.
The number of subjects with greater than 50% of the colon scanned
increased by 74% to 33/45 from 19/45. Further algorithm optimization and
clinical evaluations are ongoing.
Bill Densel, CEO of Check-Cap, stated: "We are pleased to have filed our CE Mark application during the quarter, with encouraging clinical data supporting this submission, which was presented at the late breaking session at UEG." Mr. Densel continued, "We are committed to providing an alternative to today's invasive and preparation-intensive approaches to colorectal cancer prevention. We continue to make progress with our short-term development objectives for an advanced C-Scan version, which we believe will enhance performance for consistent scan coverage. We also look forward to EU post-market and US pilot trial initiations, expected to begin in the first half of 2018."
Financial Results for the Third Quarter Ended September 30, 2017
Research and development expenses, net were $1.6 million in the three months ended September 30, 2017, compared to $1.0 million in the same period in 2016. The increase is primarily attributable to (1) $332,000 decrease in grant received from the Israel Innovation Authority (the "IIA") which was credited to research and development expenses, net; (2) $62,000 increase in share based compensation; and (3) $182,000 related primarily to the Company's clinical trial to support CE Marking of the C-Scan system.
General and administrative expenses were $0.8 million in the three months ended September 30, 2017, in line with expenses for the same period in 2016.
Operating loss was $2.4 million for the three months ended September 30, 2017, compared to $1.8 million in the same period in 2016.
Finance expenses, net were $10,000 in the three months ended September 30, 2017, compared to $61,000 in finance income in the same period in 2016.
Net loss was $2.4 million in the three months ended September 30, 2017, compared to $1.7 million in the same period in 2016.
Non-GAAP net loss was $2.0 million in the three months ended September 30, 2017, compared to $1.4 million in the same period in 2016.
Cash, cash equivalents and short-term bank deposits totaled $6.9 million at September 30, 2017, compared to $9.2 million at June 30, 2017.
Financial Results for the Nine Months Ended September 30, 2017
Research and development expenses, net were $5.4 million in the nine months ended September 30, 2017, compared to $3.9 million in the same period in 2016. The increase is primarily attributable to (1) $983,000 decrease in grant received from the IIA which was credited to research and development expenses, net and (2) $584,000 related primarily to the Company's clinical trial to support CE Marking for the C-Scan system.
General and administrative expenses were $2.5 million in the nine months ended September 30, 2017, compared to $2.8 million in the same period in 2016. The decrease was primarily due to a $372,000 decrease in share-based compensation, which was offset primarily by an increase in payroll and related expenses ($117,000).
Operating loss was $7.9 million for the nine months ended September 30, 2017, compared to $6.6 million in the same period in 2016.
Finance income, net was $80,000 in the nine months ended September 30, 2017, compared to $204,000 in the same period in 2016.
Net loss was $7.9 million in the nine months ended September 30, 2017, compared to $6.4 million in the same period in 2016.
Non-GAAP net loss was $7.1 million in the nine months ended September 30, 2017, compared to $5.4 million in the same period in 2016.
A reconciliation of GAAP results to non-GAAP results is provided below.
Net cash used in operating activities was $7.0 million in the nine months ended September 30, 2017, compared to $6.2 million in the same period in 2016.
The number of outstanding ordinary shares as of September 30, 2017, was 16,986,051.
Use of Non-GAAP Financial Results
In addition to disclosing financial results calculated in accordance with U.S. GAAP, the Company's financial results release contains Non-GAAP financial measures of net loss for the period that exclude the effects of share-based compensation and changes in royalties provision. The Company's management believes the Non-GAAP financial information provided in this release is useful to investors' understanding and assessment of the Company's on-going operations. Management also uses both GAAP and Non-GAAP information in evaluating and operating business internally and as such deemed it important to provide all this information to investors. The Non-GAAP financial measures disclosed by the Company should not be considered in isolation or as a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated. Reconciliations between GAAP measures and Non-GAAP measures are provided later in this press release.
About Check-Cap
Check-Cap is a clinical-stage medical diagnostics company developing C-Scan®, the first capsule-based system for preparation-free colorectal cancer screening.
Utilizing innovative ultra-low dose X-ray and wireless communication technologies, the capsule generates information on the contours of the inside of the colon as it passes naturally. This information is used to create a 3D map of the colon, which allows physicians to look for polyps and other abnormalities. Designed to improve the patient experience and increase the willingness of individuals to participate in recommended colorectal cancer screening, C-Scan® removes many frequently-cited barriers, such as laxative bowel preparation, invasiveness and sedation. The C-Scan® system is currently not cleared for marketing in any jurisdiction.
Legal Notice Regarding Forward-Looking Statements
This press release contains "forward-looking statements." Words such as "may," "should," "could," "would," "predicts," "potential," "continue," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," and similar expressions, as well as statements in future tense, often signify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and may not be accurate indications of when such performance or results will be achieved. Forward-looking statements are based on information that the Company has when those statements are made or management's good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. For a discussion of these and other risks that could cause such differences and that may affect the realization of forward-looking statements, please refer to the "Special Note On Forward-looking Statements" and "Risk Factors" in the Company's Annual Report on Form 20-F and other filings with the Securities and Exchange Commission (SEC). Investors and security holders are urged to read these documents free of charge on the SEC's web site at http://www.sec.gov. The Company assumes no obligation to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise.
[Financial Tables to Follow]
CHECK CAP LTD
-------------
CONSOLIDATED UNAUDITED BALANCE SHEETS
-------------------------------------
(U.S. dollars in thousands, except share and per share data)
September 30, December 31,
------------- ------------
2017 2016
---- ----
Assets
------
Current assets
Cash and cash equivalents 6,940 11,639
Prepaid expenses and
other current assets 315 242
--- ---
Total current assets 7,255 11,881
----- ------
Non-current assets
Property and equipment,
net 525 414
--- ---
Total non-current assets 525 414
--- ---
Total assets 7,780 12,295
===== ======
Liabilities and
shareholders' equity
---------------------
Current liabilities
Accounts payable and
accruals
Trade 325 393
Other 403 235
Other current liabilities 5 11
Employees and payroll
accruals 890 728
--- ---
Total current liabilities 1,623 1,367
----- -----
Non-current liabilities
Royalties provision 599 521
--- ---
Total non-current
liabilities 599 521
--- ---
Shareholders' equity
--------------------
Share capital 861 771
Additional paid-in
capital 55,507 52,577
Accumulated deficit (50,810) (42,941)
------- -------
Total shareholders'
equity 5,558 10,407
----- ------
Total liabilities and
shareholders' equity 7,780 12,295
===== ======
CHECK CAP LTD
-------------
CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS
-----------------------------------------------
(U.S. dollars in thousands, except share and per share data)
Nine months ended Three months ended
----------------- ------------------
September 30, September 30,
------------- -------------
2017 2016 2017 2016
---- ---- ---- ----
Research and development expenses, net 5,437 1,564 988
3,870
General and administrative expenses 2,506 2,758 810 766
----- ----- --- ---
Operating loss 7,943 6,628 2,374 1,754
----- ----- ----- -----
Finance income (expenses), net 80 204 (10) 61
--- --- --- ---
Loss before tax 7,863 6,424 2,384 1,693
Taxes on income 6 - - -
--- --- --- ---
Net loss for the period 7,869 6,424 2,384 1,693
----- ----- ----- -----
Net loss per ordinary share basic and diluted 0.46 0.47 0.13 0.11
==== ==== ==== ====
Weighted average number of ordinary shares outstanding 17,019 13,794 17,775 14,817
- basic and diluted (in thousands)
CHECK-CAP LTD.
--------------
CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(U.S. dollars in thousands, except per share data)
Nine months ended
September 30,
-------------
2017 2016
---- ----
CASH FLOWS FROM
OPERATING
ACTIVITIES
Net loss for the
period (7,869) (6,424)
Depreciation and
amortization 115 96
Share-based
compensation 657 1,053
Financial income,
net (155) (124)
Changes in assets
and liabilities
items:
Decrease
(increase) in
prepaid and other
current assets
and non-current
assets (73) 165
Increase
(decrease) in
trade accounts
payable, accruals
and other current
liabilities 64 (324)
Increase
(decrease) in
employees and
payroll accruals 162 (619)
Increase in
royalties
provision 78 12
--- ---
Net cash used in
operating
activities (7,021) (6,165)
======
CASH FLOWS FROM
INVESTING
ACTIVITIES
Purchase of
property and
equipment (221) (166)
Decrease in
restricted
deposit - 46
Proceeds from
short-term
investments - 2,811
--- -----
Net cash provided
by (used in)
investing
activities (221) 2,691
==== =====
CASH FLOWS FROM
FINANCING
ACTIVITIES
Exercise of
warrants into
ordinary shares 82 34
Issuance of
ordinary shares
in RD, net of
issuance expenses
in an amount of
$615 - 1,123
Grant of pre-
funded warrants
in the registered
direct offering,
net of issuance
expenses - 4,271
Issuance of
ordinary shares
in RD, net of
issuance expenses
in an amount of
$349 2,308 -
---
Net cash provided
by financing
activities 2,390 5,428
===== =====
Effect of exchange
rate changes on
cash and cash
equivalents 153 110
Net increase
(decrease) in
cash and cash
equivalents (4,699) 2,064
Cash and cash
equivalents at
the beginning of
the period 11,639 9,392
------ -----
Cash and cash
equivalents at
the end of the
period 6,940 11,456
===== ======
CHECK-CAP LTD.
--------------
SUPPLEMENTAL RECONCILIATION OF GAAP TO NON-GAAP RESULTS
-------------------------------------------------------
(U.S. dollars in thousands)
Nine months ended September 30, Three months ended September
30,
------------------------------- -----------------------------
2017 2016 2017 2016
---- ---- ---- ----
GAAP net loss for the period (7,869) (6,424) (2,384) (1,693)
Share-based compensation (1) 657 1,053 310 259
Changes in royalties 78 12 29 25
--- --- --- ---
Non-GAAP net loss for the period (7,134) (5,359) (2,045) (1,409)
------ ------ ------ ------
(1) Share-based compensation:
Research and development expenses, net 182 207 108 45
General and administrative expenses 475 846 202 214
=== === === ===
657 1,053 310 259
=== ===== === ===
Investor Contacts
Vivian Cervantes
PCG Advisory
212-554-5482
vivian@pcgadvisory.com
Meirav Gomeh-Bauer
+972-54-4764979
Meirav@bauerg.com
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SOURCE Check-Cap Ltd.
