Check-Cap Reports Third Quarter 2019 Financial Results and Corporate Highlights
ISFIYA, Israel, Nov. 6, 2019 /PRNewswire/ -- Check-Cap Ltd. (the "Company" or "Check-Cap") (NASDAQ: CHEK) (NASDAQ: CHEKW), (NASDAQ: CHEKZ), a clinical stage medical diagnostics company advancing the development of the C-Scan® System, the first and only preparation-free ingestible scanning capsule based system for the prevention of colorectal cancer through the detection of precancerous polyps, today announced financial results for the third quarter and nine months ended September 30, 2019.
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Third Quarter and Recent Highlights:
-- Continued to advance the U.S. pilot study of the C-Scan System,
conducted at the NYU School of Medicine and Mayo Clinic, toward
completion by year-end 2019.
-- Announced positive final results from its post-CE approval study of the
C-Scan System. The study met its primary endpoint, achieving sensitivity
of 76% in patients with polyps >=10 mm and specificity of 82% in all
patients, compared to fecal immunochemical test (FIT) that achieved 29%
sensitivity and 96% specificity. In addition, the C-Scan System detected
all 4 patients (100%) with polyps >=40 mm, while FIT detected only 1 of
the 4 patients (25%) with polyps >=40mm. Overall, the C-Scan System
achieved a sensitivity of 66% in all patients (including patients with
polyps <10mm), while FIT achieved a sensitivity of 23% for the same
population.
-- Announced completion of the manufacturing line transfer implementation
and qualification for the C-Scan System operated by GE Healthcare.
-- Strengthened leadership team with appointment of Dr. Vardit Segal as
Vice President of Clinical Affairs.
"During the third quarter of 2019, we continued to advance our U.S. pilot study of the C-Scan System and anticipate study completion by year-end," said Alex Ovadia, Chief Executive Officer of Check-Cap. "If the results of the pilot study are positive, we intend to meet with the FDA as expeditiously as possible to obtain approval to initiate a pivotal trial next year. At the same time, we continue to collect additional clinical data, as we work to introduce this novel screening and detection technology to the broadest possible patient population.
"Colorectal cancer screening rates remain low globally, generally believed to be due in large part to the burdensome preparation required by currently available tests. As a result, colorectal cancer is the third most diagnosed cancer, despite the lengthy opportunity for prevention or early detection that exists given that can take up to ten years for a precancerous polyp to become cancerous. We believe a preparation-free ingestible capsule based system such as the C-Scan System can meaningfully increase screening rates, resulting in superior long-term outcomes for patients and significant savings for healthcare systems," concluded Mr. Ovadia.
Financial Results for the Third Quarter Ended September 30, 2019
Research and development expenses, net, were $2.7 million for the three months ended September 30, 2019, compared to $1.9 million for the same period in 2018. The increase is primarily due to an increase of $0.6 million in expenses for the ongoing pilot study and subcontractors and materials, as well an increase of $0.1 million in salaries and related expenses as a result of expansion in head count and $0.2 million decrease in grants received in 2018 from the Israel Innovation Authority (IIA), which was recorded as a credit to research and development expenses in 2018.
General and administrative expenses were $0.8 million for the three months ended September 30, 2019, compared to $0.9 million for the same period in 2018.
Operating loss was $3.6 million for the three months ended September 30, 2019, compared to an operating loss of $2.8 million for the same period in 2018.
Financial income, net was $62,000 for the three months ended September 30, 2019, compared to $99,000 for the same period in 2018.
Net loss was $3.5 million for the three months ended September 30, 2019, compared to $2.7 million for the same period in 2018.
Cash and cash equivalents, restricted cash and short-term bank deposits totaled $11.5 million as of September 30, 2019, compared with $14.7 million at June 30, 2019 and $14.6 million as of December 31, 2018.
Financial Results for the Nine Months Ended September 30, 2019
Research and development expenses, net were $7.7 million for the nine months ended September 30, 2019, compared to $5.2 million for the same period in 2018. The increase is primarily due to an increase of $1.6 million in expenses related to the post-CE approval study and ongoing pilot study and subcontractors and materials, as well as an increase of $0.5 million in salaries and related expenses as a result of expansion in head count, an increase of $0.2 million in share-based compensation and a $0.1 million decrease in grants received from the IIA.
General and administrative expenses were $2.6 million for the nine months ended September 30, 2019, compared to $2.4 million for the same period in 2018. The increase was primarily due to an increase of $0.4 million in share-based compensation and $0.1 in professional services. This increase was partially offset by a $0.4 million decrease in salaries and related expenses.
Operating loss was $10.2 million for the nine months ended September 30, 2019, compared to $7.6 million in the same period in 2018.
Finance income, net was $215,000 for the nine months ended September 30, 2019, compared to $108,000 for the same period in 2018. The increase was due to income from interest on bank deposits.
Net loss was $10.0 million for the nine months ended September 30, 2019, compared to $7.5 million for the same period in 2018.
Net cash used in operating activities was $9.5 million for the nine months ended September 30, 2019, compared to $7.3 million for the same period in 2018.
The number of outstanding ordinary shares as of September 30, 2019 was 8,266,062. This number includes the 2,906,376 ordinary shares that were issued in the February 2019 registered direct offering.
[Financial Tables to Follow]
About Check-Cap
Check-Cap is advancing the development of the C-Scan® System, the first and only preparation-free ingestible scanning capsule based system for the prevention of colorectal cancer (CRC) through the detection of precancerous polyps. The patient-friendly test has the potential to increase screening adherence and reduce the overall incidence of CRC. The C-Scan System utilizes 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, 2018 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 UNAUDITED BALANCE SHEETS
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(U.S. dollars in thousands)
September
December 31,
30,
---
2019 2018
Assets
---
Current assets
Cash and cash equivalents 7,113 8,572
Restricted cash 350 350
Short-term bank deposit 4,015 5,643
Prepaid expenses and other current assets 437 419
Total current assets 11,915 14,984
Non-current assets
Property and equipment, net 500 452
Operating leases 481 -
Total non-current assets 981 452
Total assets 12,896 15,436
Liabilities and shareholders' equity
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Current liabilities
Accounts payable and accruals
Trade 969 1,113
Other 484 249
Employees and payroll accruals 835 859
Operating lease liabilities 197 -
Total current liabilities 2,485 2,221
Non-current liabilities
Royalties provision 192 185
Operating lease liabilities 266 -
Total non-current liabilities 458 185
Shareholders' equity
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Share capital 5,402 3,456
Additional paid-in capital 77,859 72,888
Accumulated other comprehensive loss - (13)
Accumulated deficit (73,308) (63,301)
Total shareholders' equity 9,953 13,030
Total liabilities and shareholders' equity 12,896 15,436
CHECK CAP LTD
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CONSOLIDATED UNAUDITED STATEMENTS OF COMPREHENSIVE LOSS
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(U.S. dollars in thousands, except per share data)
Nine months ended Three months ended
September 30,
September 30,
2019 2018 2019 2018
Research and development expenses, net 7,655 5,222 2,746 1,865
General and administrative expenses 2,567 2,372 818 937
Operating loss 10,222 7,594 3,564 2,802
Finance income, net 215 108 62 99
Loss before income tax 10,007 7,486 3,502 2,703
Taxes on income (1)
Net loss 10,007 7,485 3,502 2,703
Other comprehensive loss:
Change in fair value of cash flow hedge 13
Comprehensive loss 10,020 7,485 3,502 2,703
Net loss per ordinary share - basic and diluted 1.27 2.07 0.42 0.5
Weighted average number of ordinary shares
outstanding - basic and diluted
7,863 3,622 8,254 5,356
CHECK-CAP LTD.
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CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS
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(U.S. dollars in thousands)
Nine months ended
September 30,
2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period (10,007) (7,485)
Adjustments required to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization 84 118
Share-based compensation 406 (271)
Financial (income) expenses, net (45) (81)
Increase in royalties provision 7 40
Changes in assets and liabilities items:
Increase in prepaid and other current assets and non-current assets (37) (90)
Increase in trade accounts payable, accruals and other current liabilities 104 60
Increase (decrease) in employees and payroll accruals (24) 349
Net cash used in operating activities (9,512) (7,360)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (131) (14)
Proceeds from short-term bank deposits, net 1,673 (9,000)
Net cash provided by (used in) investing activities 1,542 (9,014)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of ordinary shares in the 2018 public offering, net of issuance expenses 17,862
Issuance of ordinary shares in the 2019 registered direct offering, net of issuance expenses 6,511
Net cash provided by financing activities 6,511 17,862
Net increase (decrease) in cash and cash equivalents and restricted cash (1,459) 1,488
Cash and cash equivalents and restricted cash at the beginning of the period 8,922 6,997
Cash and cash equivalents and restricted cash at the end of the period 7,463 8,485
CHECK-CAP LTD.
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CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS
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(U.S. dollars in thousands)
Supplemental information for Cash Flow:
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Nine months ended
September 30,
2019 2018
Supplemental disclosure of non-cash information
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Cashless exercise of warrants to purchase ordinary shares into ordinary shares 19 37
Purchase of property and equipment on credit 40
Recognition of operating leases and operating lease liabilities from adoption of ASU 490
2016-02
Assets acquired under operating leases 106
Investor Contacts
Jeremy Feffer
LifeSci Advisors, LLC
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.
