TORONTO, Aug. 13 /CNW/ - Spectral Diagnostics Inc. (TSX: SDI) today announced its financial results for the second quarter ended June 30, 2008.
"The clinical and commercial adoption of our Endotoxin Activity Assay (EAA(TM)) remains our primary focus. During the quarter we continued to establish the value of our EAA(TM) diagnostic, both as a stand-alone product and also in combination with therapeutics, through the expansion of our collaboration agreement with Toray, the inclusion of EAA(TM) in a Phase III study with a major international pharmaceutical company, and our prominence at several important scientific conferences," said Dr. Paul Walker, President and CEO of Spectral Diagnostics. "We believe this strategy will increase awareness and uptake globally of our unique EAA(TM) product for the diagnosis, treatment and monitoring of patients with endotoxemia."
Highlights
- Selected by a major international pharmaceutical company to use
EAA(TM) to measure endotoxin levels during the enrolment of patients
in a Phase III sub study, part of a multinational clinical trial
evaluating the safety and effectiveness of a treatment for severe
sepsis
- Expanded collaboration agreement with Toray, gaining access to
Toray's distributors in new geographic territories including China,
India, Russia and Canada for the sales and promotion of EAA(TM) in
combination with its Toraymyxin blood purification device and as a
stand-alone product
- Data demonstrating the clinical utility of the EAA(TM) in combination
with Toraymyxin was presented at the Practical Aspects of
Extracorporeal Blood Purification in Intensive Care Medicine 6th
Annual Conference held in Moscow, Russia in May
- Findings showing the clinical effectiveness of EAA(TM) to identify
patients with elevated endotoxin levels and to guide endotoxin
reducing strategies presented at a symposium entitled "Blood
Purification in the Treatment of Sepsis," at the International Shock
Congress in Cologne, Germany in June
- On June 30, the Company entered into a exclusive distribution
agreement in Russia with BB Medical to market and sell EAA(TM)
throughout the Russian Federation
Financial Review
Although EAA(TM) product sales increased more than 20% from the first quarter and were 90% higher than for the first half of last year, this improvement was not enough to offset a decline of $319,000 in royalty revenues from licenses of the Company's Troponin I technology. For the six months ended June 30, 2008, Spectral reported sales of $1,449,000, compared to sales of $1,579,000 for the corresponding period in 2007, due entirely to the lower royalties. Certain pre-established royalty plateaus were reached in 2007, resulting in an estimated reduction of $600,000 in related revenues for 2008. In future years, this temporary decrease will be offset as revenues from a new license agreement, which was signed in late 2007, are realized.
For the six months ended June 30, 2008, the Company reported a loss of $867,000 or ($0.04) per share, compared with a loss of $586,000 or ($0.02) per share for the corresponding period in 2007.The higher loss is attributable solely to the reduction in royalties.
Cash and short term investments at June 30, 2008 totalled $4,398,000. Management expects that the Company will maintain a cash and short term investment balance in excess of $4 million for the rest of the year.
About Spectral Diagnostics
Spectral is a leader in the battle against sepsis. Spectral's lead product is its Endotoxin Activity Assay (EAA(TM)), the only FDA cleared assay for the measurement of endotoxin. With the growing awareness for the role of endotoxemia in sepsis and the increasing number of therapies being developed for this indication, Spectral is well-positioned to drive the adoption of the EAA(TM), which can be used to identify patients, enable therapeutics and monitor treatment. Spectral is listed on TSX under the symbol SDI.
Forward-looking statement
Information in this news release that is not current or historical factual information may constitute forward-looking information within the meaning of securities laws. Implicit in this information, particularly in respect of the future outlook of Spectral and anticipated events or results, are assumptions based on beliefs of Spectral's senior management as well as information currently available to it. While these assumptions were considered reasonable by Spectral at the time of preparation, they may prove to be incorrect. Readers are cautioned that actual results are subject to a number of risks and uncertainties, including the availability of funds and resources to pursue R&D projects, the successful and timely completion of clinical studies, the ability of Spectral to take advantage of business opportunities in the biomedical industry, the granting of necessary approvals by regulatory authorities as well as general economic, market and business conditions, and could differ materially from what is currently expected.
The TSX has not reviewed and does not accept responsibility for the
adequacy or accuracy of this statement.
Spectral Diagnostics Inc.
Balance Sheets - unaudited
As at June 30, 2008 and December 31, 2007
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(in thousands of dollars)
2008 2007
$ $
Assets
Current assets
Cash and cash equivalents 8 638
Short-term investments 4,390 4,289
Accounts receivable 809 677
Inventories 214 249
Prepaid expenses 118 55
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5,539 5,908
Property, plant and equipment 436 379
Commercial instruments 149 164
Purchased technology and trademarks 1,294 1,529
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7,418 7,980
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Liabilities
Current liabilities
Bank indebtedness 195 -
Accounts payable and accrued liabilities 372 379
Deferred revenue 142 150
Convertible note payable 2,090 2,008
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2,799 2,537
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Shareholders' Equity
Common shares 2,524 2,524
Other equity 5,649 5,606
Deficit (3,554) (2,687)
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4,619 5,443
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7,418 7,980
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Spectral Diagnostics Inc.
Statements of Operations, Comprehensive Loss and Deficit - unaudited
For the six months ended June 30, 2008 and 2007
-------------------------------------------------------------------------
(in thousands of dollars, except share and per share data)
3 Months Ended 6 Months Ended
June 30 June 30
2008 2007 2008 2007
$ $ $ $
Sales 785 738 1,449 1,579
Cost of sales 189 157 389 379
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Gross margin 596 581 1,060 1,200
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Operating expenses
Selling, general and
administrative 774 763 1,566 1,576
Amortization 164 147 318 286
Foreign exchange loss 7 63 2 54
Stock-based compensation 22 2 43 31
Research and product
development, net of
tax credits 11 - 25 (125)
----------------------- -----------------------
978 975 1,954 1,822
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Loss before the following (382) (394) (894) (622)
Interest expense on
convertible notes payable (41) (41) (82) (83)
Net interest income 4 56 109 119
----------------------- -----------------------
Loss and comprehensive
loss for the period (419) (379) (867) (586)
Deficit - Beginning
of period (3,135) (1,228) (2,687) (1,021)
----------------------- -----------------------
Deficit - End of period (3,554) (1,607) (3,554) (1,607)
----------------------- -----------------------
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Basic and diluted loss
per common share (0.02) (0.01) (0.04) (0.02)
----------------------- -----------------------
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Weighted average number
of common shares
outstanding 24,118,424 24,118,424 24,118,424 24,116,225
----------------------- -----------------------
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Spectral Diagnostics Inc.
Statements of Cash Flows - unaudited
For the six months ended June 30, 2008 and 2007
-------------------------------------------------------------------------
(in thousands of dollars)
3 Months Ended 6 Months Ended
June 30 June 30
2008 2007 2008 2007
$ $ $ $
Cash provided by (used in)
Operating activities
Loss and comprehensive for
the period (419) (379) (867) (586)
Items not affecting cash
Amortization 164 147 318 286
Amortization of commercial
instruments included
in cost of sales 7 (1) 12 29
Stock-based compensation
expense 22 2 43 31
Interest on convertible
notes payable 41 41 82 83
Changes in non-cash
working capital - (76) (167) (497)
----------------------- -----------------------
(185) (266) (579) (654)
----------------------- -----------------------
Financing activities
Bank indebtedness 195 35 195 35
Issuance of common shares - - - 4
----------------------- -----------------------
195 35 195 39
----------------------- -----------------------
Investing activities
Purchase of property,
plant and equipment (101) (23) (115) (48)
Purchase of commercial
instruments - (108) (22) (119)
Purchase of technology
and trademarks - - - (44)
Decrease (increase) in
short-term investments 2 (39) (101) (102)
Decrease in deferred revenue (5) - (8) -
----------------------- -----------------------
(104) (170) (246) (313)
----------------------- -----------------------
Decrease in cash and cash
equivalents during
the period (94) (401) (630) (928)
----------------------- -----------------------
Cash and cash equivalents
- Beginning of period 102 418 638 945
----------------------- -----------------------
Cash and cash equivalents
- End of period 8 17 8 17
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%SEDAR: 00002006E