Check-Cap Reports Fourth Quarter and Full Year 2019 Financial Results
ISFIYA, Israel, March 6, 2020 /PRNewswire/ -- Check-Cap Ltd. (the "Company" or "Check-Cap") (NASDAQ: CHEK) (NASDAQ: CHEKZ), a clinical stage medical diagnostics company advancing the development of C-Scan®, the first and only patient-friendly preparation-free screening test to detect polyps before they transform into colorectal cancer, today announced financial results for the fourth quarter and full year ended December 31, 2019.
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2019 and Recent Highlights:
-- Continued to advance the pre-submission process with FDA towards the
initiation of a pivotal trial of the C-Scan System in late 2020
-- In February 2020, strengthened its balance sheet through a $4.76 million
private placement of ordinary shares
-- In December 2019, announced positive results from the U.S. pilot study
of C-Scan that was performed at the NYU Grossman School of Medicine and
Mayo Clinic of Rochester
-- In August 2019, announced the completion of manufacturing line transfer
implementation and qualification for the C-Scan System to our
manufacturing partner, GE Healthcare, a leading global medical
technology and life sciences company
-- In July 2019, announced positive results from the post-CE approval study
of C-Scan, which further validated the importance and potential of the
system.
"We ended 2019 on a high note with the successful completion of our U.S. pilot study of the C-Scan System which, pending FDA approval, sets the stage for the initiation of a U.S. pivotal trial in late 2020," said Alex Ovadia, Chief Executive Officer of Check-Cap. "There exists a significant global unmet need for a colon cancer screening and detection technology that is preparation free and non- invasive compared to the current standard of care, colonoscopy. We believe the patient-friendly C-Scan System can increase screening rates globally by eliminating the rigorous and unpleasant preparation that colonoscopy and other tests require.
"Colon cancer is a highly preventable disease, and an increase in global screening rates that we believe C-Scan can facilitate will result in earlier detection and improved long-term patient outcomes. We look forward to initiating a U.S. pivotal trial, as we work to introduce this groundbreaking technology in the important US market," Mr. Ovadia concluded.
Financial Results for the Fourth Quarter Ended December 31, 2019
Research and development expenses, net, were $2.8 million for the three months ended December 31, 2019, compared to $2.4 million for the same period in 2018. The increase is primarily due to a $0.4 million increase in salaries and related expenses and a $0.2 million increase in materials, subcontractor and consultant expenses, primarily in connection with our U.S. pilot study and regulatory expenses, offset in part by a $0.1 million decrease in share-based compensation expenses.
General and administrative expenses were $1.0 million for the three months ended December 31, 2019, compared to $1.1 million for the same period in 2018. The decrease is primarily due to a $0.2 million decrease in professional services, offset in part by a $0.1 million increase in salaries and related expenses.
Operating loss was $3.9 million for the three months ended December 31, 2019, compared to an operating loss of $3.5 million for the same period in 2018.
Financial income, net was $19,000 for the three months ended December 31, 2019, compared to $366,000 for the same period in 2018. The change is primarily as a result of a change in royalties' provision of $3,000 in 2019 compared to $295,000 in 2018 and $29,000 financial income from interest compared to $80,000 in 2018.
Net loss was $3.8 million for the three months ended December 31, 2019, compared to $3.1 million for the same period in 2018.
Cash and cash equivalents, restricted cash and short-term bank deposits as of December 31, 2019 were $8.0 million as compared to $14.6 million as of December 31, 2018. Subsequent to the end of the fourth quarter, in February 2020, we raised gross proceeds of $4.76 million in a private placement.
Financial Results for the Twelve Months Ended December 31, 2019
Research and development expenses, net, were $10.5 million for the twelve months ended December 31, 2019, compared to $7.6 million for the same period in 2018. The increase is primarily due to a $0.9 million increase in salaries and related expenses, $0.2 million increase in share-based compensation, $0.4 million increase in materials, $0.5 million increase in subcontractor and consultant expenses and a $0.8 million increase in other research and development expenses, mainly related to our clinical trials, primarily in connection with our post-CE Mark clinical study and the U.S. pilot study. The increase in research and development expenses, net between 2019 and 2018 also includes a $0.1 million decrease in grants received from the Israel Innovation Authority.
General and administrative expenses were $3.6 million for the twelve months ended December 31, 2019, compared to $3.5 million for the same period in 2018. The increase is primarily due to an increase of $0.4 million in share-based compensation expenses and $0.2 million increase in other general expenses, offset in part by a $0.3 million decrease in salaries and related expenses and $0.1 million decrease in professional services expenses.
Operating loss was $14.1 million for the twelve months ended December 31, 2019, compared to $11.1 million in the same period in 2018.
Finance income, net, was $234,000 for the twelve months ended December 31, 2019, compared to $473,000 for the same period in 2018. The decrease in finance income, net was primarily as a result of a $252,000 decrease in finance income from a change in royalties' provision.
Net loss was $13.8 million for the twelve months ended December 31, 2019, compared to $10.6 million for the same period in 2018.
Net cash used in operating activities was $12.8 million for the twelve months ended December 31, 2019, compared to $10.1 million for the same period in 2018.
The number of outstanding ordinary shares as of December 31, 2019 was 8,272,906. Subsequent to December 31, 2019, the Company issued 2,720,178 ordinary shares in a private placement. As of February 25, 2020, the number of our outstanding ordinary shares was 10,997,714.
A copy of the Company's annual report on Form 20-F for the year ended December 31, 2019 has been filed with the U.S. Securities and Exchange Commission at www.sec.gov and posted on the Company's investor relations website at http://ir.check-cap.com/home. The Company will deliver a hard copy of its annual report, including its complete audited consolidated financial statements, free of charge, to its shareholders upon request to Mira Rosenzweig, Chief Financial Officer, at mira.rosenzweig@check-cap.com.
[Financial Tables to Follow]
About Check-Cap
Check-Cap is a clinical stage medical diagnostics company aiming to redefine colorectal cancer (CRC) prevention through the introduction of C-Scan®, the first and only patient-friendly preparation-free screening test to detect polyps before they transform into colorectal cancer. The Company's disruptive capsule-based screening technology aims to significantly increase screening adherence worldwide and enable millions of people to stay healthy. The C-Scan System uses an ultra-low dose X-ray capsule, an integrated positioning, control, and recording system, as well as proprietary software to generate a 3D map of the inner lining of the colon. C-Scan is non-invasive and requires no preparation or sedation, allowing the patients to continue their daily routine with no interruption as the capsule is propelled through the gastrointestinal tract by natural motility.
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 "Forward-looking Statements" and "Risk Factors" in the Company's Annual Report on Form 20-F for the year ended December 31, 2019 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.
CHECK CAP LTD.
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CONSOLIDATED BALANCE SHEETS
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(U.S. dollars in thousands except share data)
December 31,
2 0 1 9 2 0 1 8
Assets
Current assets
Cash and cash equivalents 7,685 8,572
Restricted cash 350 350
Short-term bank deposit 5,643
Prepaid expenses and other current assets 400 419
Total current assets 8,435 14,984
Non-current assets
Property and equipment, net 540 452
Operating lease assets 454
Total non-current assets 994 452
Total assets 9,429 15,436
Liabilities and shareholders' equity
Current liabilities
Accounts payable and accruals
Trade 989 1,113
Other 490 214
Other current liabilities 35
Employees and payroll accruals 1,101 859
Operating lease liabilities- current 222
Total current liabilities 2,802 2,221
Non-current liabilities
Royalties provision 182 185
Operating lease liabilities- net of current portion 211
Total non-current liabilities 393 185
Shareholders' equity
Share capital, Ordinary shares, 2.4 NIS par value (90,000,000 and 30,000,000 5,407 3,456
authorized shares as of December 31, 2019 and 2018, respectively; 8,272,908 and
5,330,684 shares issued and outstanding as of December 31, 2019 and 2018,
respectively)
Additional paid-in capital 77,964 72,888
Accumulated other comprehensive loss (13)
Accumulated deficit (77,137) (63,301)
Total shareholders' equity 6,234 13,030
Total liabilities and shareholders' equity 9,429 15,436
CHECK CAP LTD.
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CONSOLIDATED STATEMENTS OF OPERATIONS
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(U.S. dollars in thousands, except per share data)
Year Three months
ended ended
December 31, December 31,
---
2019 2018 2019 2018
---
Research and development expenses, net 10,474 7,618 2,819 2,396
General and administrative expenses 3,595 3,445 1,028 1,073
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Operating loss 14,069 11,063 3,847 3,469
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Finance income, net 233 473 19 365
Loss before income tax 13,836 10,590 3,828 3,104
Taxes on income (1) -
Net loss for the period 13,836 10,589 3,828 3,104
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Comprehensive loss:
Net loss 13,836 10,589 3,828 3,104
Change in fair value of cash flow hedge (13) 13 (28)
Comprehensive loss 13,823 10,602 3,828 3,076
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Loss per share:
Net loss per ordinary share basic and diluted 1.73 2.61 0.46 0.58
7,986 4,058 8,270 5,352
Weighted average number of ordinary shares outstanding
- basic and diluted (in thousands)
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CHECK-CAP LTD.
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CONSOLIDATED STATEMENTS OF CASH FLOWS
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(U.S. dollars in thousands)
Year Three months
ended ended
December 31, December 31,
2019 2018 2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss (13,836) (10,589) (3,829) (3,104)
Adjustments required to reconcile net
loss to net cash used in
operating activities:
Depreciation 115 147 31 29
Share-based compensation 516 (65) 110 206
Financial expenses (income),
net 40 (13) 85 110
Changes in assets and liabilities items:
Decrease (increase) in prepaid
and other current assets and
non- (420) (13) (383) 77
current assets
Increase (decrease) in trade
accounts payable, accruals and 503 416 399 356
other current liabilities
Increase (decrease) in
employees and payroll accruals 242 258 266 (92)
Decrease in royalties provision (3) (255) (10) (294)
Net cash used in operating
activities (12,843) (10,114) (3,331) (2,712)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and
equipment (167) (94) (36) (80)
Proceeds from (investment in)
short-term bank and other 5,612 (5,629) 3,939 3,371
deposit
Net cash provided by (used in)
investing activities 5,445 (5,723) 3,903 3,291
CASH FLOWS FROM FINANCING ACTIVITIES
Exercise of warrants into
ordinary shares (4)
Issuance of ordinary shares in
the registered direct
offerings, 6,511 (30) (30)
net of issuance expenses
Issuance of ordinary shares in
the 2018 Public Offering 17,792 (66)
Net cash provided by financing
activities 6,511 17,762 (100)
Net increase (decrease) in
cash, cash equivalents and (887) 1,925 572 437
restricted cash
Cash, cash equivalents and
restricted cash at the 8,922 6,997 7,463 8,485
beginning of the period
Cash, cash equivalents and
restricted cash at the end of 8,035 8,922 8,035 8,922
the period
Supplemental disclosure of non-cash
flow information:
Cashless exercise of warrants
to purchase ordinary shares 24 33 11 24
into ordinary shares
Purchase of property and
equipment 32 3 32 35
Recognition of operating leases
and operating lease
liabilities 369 -
from adoption of ASU 2016-02
Right of use asset obtained in
exchange for new operating 223 117 -
lease
Supplemental disclosure of cash flow
information
Cash paid for taxes 15 5 -
Investor Contacts
Jeremy Feffer
LifeSci Advisors, LLC
+1 212-915-2568
jeremy@lifesciadvisors.com
Meirav Gomeh-Bauer
LifeSci Advisors, LLC
+972(0)-54-476-4979
Meirav@lifesciadvisors.com
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SOURCE Check-Cap Ltd.
