Profound Medical Corp. Announces Third Quarter 2017 Financial Results

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| Source: Profound Medical Corp.

TORONTO, Nov. 07, 2017 (GLOBE NEWSWIRE) -- Profound Medical Corp. (TSX-V:PRN) (OTCQX:PRFMF) (“Profound” or the “Company”), the only company to provide a therapeutics platform that provides the precision of real-time Magnetic Resonance (“MR”) imaging combined with the safety and ablation power of directional (inside-out) and focused (outside-in) ultrasound technology for the incision-free ablation of diseased tissue, today reported financial results for the three and nine months ended September 30, 2017. All amounts, unless specified otherwise, are expressed in Canadian dollars and are presented in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, applicable to the preparation of interim financial statements, including IAS-34, Interim Financial Reporting.

Corporate Highlights 

  • On July 31, 2017, Profound completed the Sonalleve® MR-HIFU Transaction, establishing Profound as a market leader in MR-ultrasound ablation therapy.
     
  • On September 20, 2017, Profound completed a bought deal financing pursuant to a short form prospectus (the “2017 Offering”), for total gross proceeds of $10 million. The 2017 Offering was completed through a syndicate of underwriters led by Echelon Wealth Partners Inc. and including CIBC World Markets Inc.

“We became a dramatically different company in the third quarter of 2017,” said Arun Menawat, Profound’s CEO.  “With the acquisition of Philips’ Sonalleve® business, Profound began to make the leap from a medical device company focused exclusively on prostate cancer ablation to a platform company, offering incision-free ablative technology to clinicians targeting various unmet needs of patients in many different anatomies and disease states. The transaction also allowed Profound to immediately transition from a development-stage company to one focused on growth. As always, we look forward to updating our stakeholders as we progress.”

Summary Third Quarter 2017 Results

For the quarter ended September 30, 2017, the Company recorded revenues of $1,465,412, with $1,452,773 from the sale of products and $12,639 from installation and training services. The third quarter 2017 revenues compared to $nil in the third quarter of 2016, and reflected a 53% increase sequentially over $957,139 recorded in the previous quarter.

The Company recorded a net loss for the three months ended September 30, 2017 of $5,520,074, or $0.09 per common share, compared with a net loss of $4,061,208, or $0.10 per common share, for the three months ended September 30, 2016. For the three months ended September 30, 2017, the increase in net loss was primarily attributed to an increase in selling and distribution expenses of $429,057, general and administrative expenses of $633,172 and an increase in financing costs of $357,780, partially offset by gross profits of $279,738.

Expenditures for R&D for the three months ended September 30, 2017 were higher by $306,572 compared to the three months ended September 30, 2016. Overall, the increase in R&D spending was attributed to the TACT Pivotal Clinical Trial ongoing activities, increased workforce costs and the inclusion of the Sonalleve® MR-HIFU operations. Clinical trial costs, salaries and benefits, rent and travel increased by $232,446, $389,947, $102,739 and $35,650, respectively, resulting from ongoing activities related to the initiation of clinical sites visits, enrollment initiatives and patient treatment. Amortization of intangible assets increased by $186,847 due to the Sonalleve® Transaction, license agreement costs and software upgrades. Offsetting this amount was a decrease in materials, consulting fees and other expenses by $360,512, $173,805, and 127,533 respectively. These costs were lower compared to the three months ended September 30, 2016, due to lower R&D initiatives and the in-house manufacturing of disposables.

General and administrative expenses for the three months ended September 30, 2017 were higher by $633,172 compared to the three months ended September 30, 2016. Professional and consulting fees increased by $240,720, primarily due to the legal fees associated with the Transaction and the inclusion of Sonalleve® MR-HIFU operations relating to bookkeeping and IT costs. Share-based compensation increased by $277,835 due to due to options vesting to board members and executive officers and depreciation expense increased by $104,248 primarily due to property and equipment for the new facility.

Selling and distribution expenses for the three months ended September 30, 2017 were higher by $429,057 compared to the three months ended September 30, 2016. The increase is attributable to the commission payable provision of $50,798 related to the Siemens Healthcare estimated shortfall of revenue share payments compared to the minimum amounts contractually required. In addition, salaries and benefits increased by $151,382 compared to the three months ended September 30, 2016, resulting from additional direct sales force personnel. Professional and consulting fees, marketing and travel expenses increased by $98,491, $32,028 and $65,743, respectively. These increases relate directly to marketing-related efforts and increased sales force.

Liquidity and Outstanding Share Capital

As of September 30, 2017, the Company had cash of $16,307,428. 

As at November 7, 2017, Profound had an unlimited number of authorized common shares with 73,117,377 common shares issued and outstanding.

For complete financial results, please see our filings at www.sedar.com and our website at www.profoundmedical.com

Conference Call Details

Profound Medical is pleased to invite all interested parties to participate in a conference call today, November 7, 2017, at 4:30 p.m. ET during which time the results will be discussed.

   
Live Call: 1- 888-567-1602 (Canada and the United States)
  1-404-267-0373 (International)
   
Replay: 1-877-481-4010 (Canada and the United States)
Replay ID: 21906

The call will also be broadcast live and archived on the Company's website at profoundmedical.com under "Investor Presentations" in the Investor Relations section.

About Profound Medical Corp.

The Profound Medical team is committed to creating the powerful combination of real-time MR-guidance as the imaging platform and ultrasound as the energy source for delivering non-invasive ablative tools to clinicians. These key technology pillars, linked with intelligent software and robotics, have the potential to fulfill unmet needs of patients and clinicians in many anatomies and disease states, including prostate cancer, uterine fibroids, and palliative pain treatment of bone metastases. Our mission is to profoundly change the standard of care by creating a tomorrow where clinicians can confidently ablate tissue with precision; a tomorrow where patients have access to safe and effective treatment options, so they can quickly return to their daily lives.

Profound Medical is commercializing a novel technology, TULSA-PRO®, which combines real-time Magnetic Resonance Imaging with transurethral, robotically-driven therapeutic ultrasound and closed-loop thermal feedback control that is designed to provide precise ablation of the prostate while simultaneously protecting critical surrounding anatomy from potential side effects.  TULSA-PRO® is CE marked and Profound Medical is currently conducting a pilot commercial launch of the technology in key European and other CE mark jurisdictions.  The Company is also sponsoring a multicenter, prospective FDA-registered clinical trial, TACT, which, if successful, is expected to support its application to the FDA for approval to market TULSA-PRO® in the United States. 

Profound Medical is also commercializing Sonalleve®, an innovative therapeutic platform that combines real-time MR imaging and thermometry with thermal ultrasound to enable precise and incision-free ablation of diseased tissue. Sonalleve® is CE marked for the treatment of uterine fibroids and palliative pain treatment of bone metastases. The Company is also in the early stages of exploring additional potential treatment markets for Sonalleve®, such as non-invasive ablation of abdominal cancers and hyperthermia for cancer therapy, where the technology has been shown to have clinical application.

Forward-Looking Statements 

This release includes forward-looking statements regarding Profound and its business which may include, but is not limited to, the expectations regarding the efficacy of Profound’s technology in the treatment of prostate cancer, uterine fibroids and palliative pain treatment. 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 pharmaceutical industry, economic factors, the equity markets generally and risks associated with growth and competition. 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.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange), nor the OTCQX accepts responsibility for the adequacy or accuracy of this release.

For further information, please contact:

Stephen Kilmer
Investor Relations
skilmer@profoundmedical.com
T: 647.872.4849

Or

Rashed Dewan
Vice President, Finance
T: 647.476.1350

Profound Medical Corp.
Interim Condensed Consolidated Balance Sheets
(Unaudited)

  September 30,
2017
$
 December 31,
2016
$
     
Assets    
     
Current assets    
Cash 16,307,428  20,833,061 
Trade and other receivables  2,576,170  266,336 
Investment tax credits receivable 180,000  264,000 
Inventory 1,062,446  416,823 
Prepaid expenses and deposits 641,827  696,909 
     
  20,767,871  22,477,129 
     
Property and equipment  1,810,625  953,029 
     
Intangible assets  5,424,108  262,685 
     
Goodwill 3,409,165  - 
     
  31,411,769  23,692,843 
     
Liabilities    
     
Current liabilities    
Accounts payable and accrued liabilities 4,712,012  1,771,427 
Customer deposits -  259,293 
Deferred revenue 149,298  - 
Long-term debt 4,920,830  2,877,050 
Provisions 42,923  - 
Other liabilities 479,022  39,357 
     
  10,304,085  4,947,127 
     
Long-term debt 452,347  3,760,826 
     
Provisions  682,013  39,619 
     
Other liabilities  1,592,463  109,044 
     
  13,030,908  8,856,616 
     
Shareholders’ Equity    
     
Share capital 98,386,770  83,272,678 
     
Contributed surplus 5,738,976  3,000,563 
     
Accumulated other comprehensive income (loss) (3,206) 11,316 
     
Deficit (85,741,679) (71,448,330)
     
  18,380,861  14,836,227 
     
  31,411,769  23,692,843 


Profound Medical Corp.
Interim Condensed Consolidated Statements of Loss and Comprehensive Loss
(Unaudited)

   Three
months
  ended
September 30, 2017
$
 Three
months
ended
September 30, 2016
$
 Nine months
ended
September 30, 2017
$
 Nine months
ended
September 30, 2016
$
         
Revenue        
Products 1,452,773  -  2,925,536  - 
Services 12,639  -  88,532  - 
         
  1,465,412  -  3,014,068  - 
         
Cost of sales 1,185,674  -  1,968,258  - 
         
Gross profit 279,738  -  1,045,810  - 
         
Expenses        
Research and development 2,812,684  2,506,112  7,113,785  7,229,806 
General and administrative 1,631,967  998,795  4,478,566  2,848,075 
Selling and distribution 703,783  274,726  2,751,435  734,448 
         
Total operating expenses 5,148,434  3,779,633  14,343,786  10,812,329 
         
Finance costs  659,902  302,122  1,080,038  840,228 
         
Finance income (8,524) (25,270) (89,318) (123,785)
         
Net finance costs 651,378  276,852  990,720  716,443 
         
Loss before income taxes 5,520,074  4,056,485  14,288,696  11,528,772 
         
Income taxes -  4,723  4,653  9,380 
         
Net loss for the period 5,520,074  4,061,208  14,293,349  11,538,152 
         
Item that may be reclassified to profit or loss        
Foreign currency translation adjustment (3,674) 5,341  14,522  10,495 
         
Net loss and comprehensive loss for the period 5,516,400  4,066,549  14,307,871  11,548,647 
         
Basic and diluted weighted average shares outstanding 61,614,117  39,482,212  57,456,823  39,476,278 
         
Basic and diluted net loss per common share   (0.09)   (0.10)   (0.25)   (0.29)


Profound Medical Corp.
Interim Condensed Consolidated Cash Flows
(Unaudited)

  Nine months
ended
September 30,
2017
$
 Nine months
ended
September 30,
2016
$
     
Cash provided by (used in)    
     
Operating activities    
Net loss for the period (14,293,349) (11,538,152)
Depreciation of property and equipment 271,225  113,336 
Amortization of intangible assets 218,408  7,889 
Share-based compensation 973,336  501,035 
Interest and accretion expense 1,135,008  840,152 
Change in fair value of contingent consideration 52,342  - 
Transaction costs related to business acquisition 716,767  - 
Net change in non-cash working capital balances    
Prepaid expenses and deposits 55,082  (687,200)
Accounts payable and accrued liabilities 2,892,346  1,088,126 
Provisions 685,317  40,594 
Inventory (645,623) - 
Investment tax credits receivable 84,000  (25,000)
Trade and other receivables (2,309,834) (63,780)
Deferred revenue 149,298  - 
         Customer deposits (259,293) - 
     
  (10,274,970) (9,723,000)
     
Investing activities    
Transaction costs related to business acquisition (716,767) - 
Sale of short-term investment -  10,000,000 
Purchase of intangible assets (34,079) (139,679)
Purchase of property and equipment (414,950) (831,113)
     
  (1,165,796) 9,029,208 
     
Financing activities    
Payment of long-term debt and interest (2,429,230) (265,025)
Payment of other liabilities (7,742) - 
Proceeds from share options exercised 100,301  3,675 
Issuance of common shares 10,000,000  - 
Transaction costs paid (748,196) - 
     
  6,915,133  (261,350)
     
Decrease in cash during the period (4,525,633) (955,142)
     
Cash - Beginning of period 20,833,061  10,522,520 
     
Cash - End of period 16,307,428  9,567,378