Spectral announces third quarter 2010 results

Nov. 15, 2010 (Canada NewsWire Group) --

TORONTO, Nov. 15 /CNW/ - Spectral Diagnostics Inc., (TSX:SDI), today announced its financial results for the third quarter ended September 30, 2010.

"During the third quarter we continued our activities to implement the EUPHRATES trial. The clinical coordinating centre commenced operation, sites have been trained for EAA™/ Toraymyxin™ use, and selected sites have started enrolling patients," said Dr. Paul Walker, President and CEO of Spectral. "We are on target with the planned timeline for our EUPHRATES trial and anticipate that all 15 trial sites will be active and enrolling patients by early 2011."

Highlights:

• Initiated EUPHRATES trial - the first theranostics trial, a combination of a therapeutic and a diagnostic, in the area of sepsis
• Presented Spectral's theranostic strategy at the Rodman & Renshaw Annual Global Investment Conference in New York on September 13, 2010
• Continued to qualify and train additional EUPHRATES trial sites

Financial Review

For the third quarter ended September 30, 2010, Spectral reported revenues of $722,000, compared to $815,000 for the corresponding period in 2009. For the nine months ended September 30, 2010, revenues were $2,148,000 compared to $2,433,000 for the same 2009 period. EAA™ diagnostic sales and royalty revenues from the Company's proprietary Troponin I products were relatively consistent year over year. The lower sales in 2010, compared to 2009, were due primarily to the foreign exchange impact of a strengthening Canadian dollar versus the US and Euro currencies.

For the third quarter ended September 30, 2010, the Company reported a loss of $1,290,000 or ($0.02) per share, compared to a loss of $429,000 or ($0.01) per share for the corresponding period in 2009. For the nine months ended September 30, 2010, the Company reported a loss of $4,503,000 or ($0.07) per share, compared to a loss of $1,534,000 or ($0.06) per share for the corresponding period in 2009. The higher year to date loss is attributable to the increase in clinical trial costs related to IDE approval and to trial start-up ($1,258,000), service fees ($750,000) paid to Medwell Capital (formerly BioMS Medical) pursuant to a three year, $3 million service contract that became effective January 1, 2010; the stock based compensation expense ($792,000) that arose on the issuance of 1,800,000 stock options in the first quarter of 2010; and, higher operating expenses ($169,000) related to increased commercialization activities for Toraymyxin™ and EAA™.

Cash and cash equivalents as at September 30, 2010 totaled $16,353,000, compared to $2,944,000 as at December 31, 2009. The increase is due primarily to net proceeds of the financing completed in the first quarter ($17,608,000), reduced by the funding of operating losses and working capital for the nine months ended September 30, 2010 ($3,550,000) and $502,000 paid to a third party pursuant to the terms of a license agreement granting Spectral the exclusive development and commercial rights in the US for Toraymyxin™.

Total shares outstanding at September 30, 2010 amounted to 75,901,549 (September 30, 2009 - 24,118,424).

About Spectral Diagnostics

Spectral is a Phase III company seeking U.S. FDA approval for its lead theranostics product for the treatment for severe sepsis and septic shock. Toraymyxin™ is a therapeutic hemoperfusion device that removes endotoxin, which can cause sepsis, from the bloodstream. Directed by the Company's Endotoxin Activity Assay (EAA™), the only FDA cleared diagnostic for the detection of endotoxin. Spectral's EUPHRATES trial is the world's first theranostics trial in the area of sepsis.

Toraymyxin™ has been approved for therapeutic use in Japan and Europe, and has been used safely and effectively in more than 70,000 patients to date. In March 2009, Spectral obtained the exclusive development and commercial rights in the U.S. for Toraymyxin™. More than 250,000 patients are diagnosed with severe sepsis and septic shock in the U.S. each year, representing a greater than $1 billion market opportunity for Spectral.

Spectral is listed on the Toronto Stock Exchange 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 September 30, 2010 and December 31, 2009

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(in thousands of dollars)

Spectral Diagnostics Inc.
Statements of Operations, Comprehensive Loss and Deficit - unaudited
For the nine months ended September 30, 2010 and 2009

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(in thousands of dollars, except share and per share data)

Spectral Diagnostics Inc.
Notes to Financial Statements  - unaudited
September 30, 2010 and 2009

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(in thousands of dollars)

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