Profound Medical Corp. Announces Third Quarter 2016 Financial Results

TORONTO, Nov. 16, 2016 (GLOBE NEWSWIRE) -- Profound Medical Corp. (TSX-V:PRN) ("Profound" or the "Company"), an emerging medical device company focused on prostate care, today reported financial results for the three months ended September 30, 2016. All amounts, unless specified otherwise, are expressed in Canadian dollars and are presented in accordance with International Financial Reporting Standards.

Corporate Highlights
  • On August 15, 2016, Profound announced the appointment of Arun Menawat, Ph.D. as its new Chief Executive Officer, the transition of its former Chief Executive Officer, Steven Plymale, to President and Chief Operating Officer, and the promotion of Rashed Dewan from Corporate Controller to Vice President, Finance. 
  • On September 22, 2016, the Company announced that the first patient had been treated in the TACT Pivotal Clinical Trial, designed to further evaluate the safety and efficacy of TULSA-PRO to ablate prostate tissue in patients with localized, organ-confined prostate cancer, at Vanderbilt University Medical Center in Nashville, TN. 
  • On October 5, 2016, the Company announced that it had received Frost & Sullivan's 2016 European Prostate Ablation System New Product Innovation Award for its TULSA-PRO™ system. 
  • On October 17, 2016, Profound announced that it had entered into an agreement with a syndicate of underwriters led by GMP Securities L.P. (the "Underwriters"), pursuant to which the Underwriters agreed to purchase, on a bought deal basis pursuant to the filing of a short form prospectus, 15,820,000 common shares of the Company at a price of $1.10 per common share for aggregate gross proceeds to Profound of $17,402,000. 
  • On November 14, 2016, Profound announced that it has completed its previously announced bought deal offering resulting in the issuance of 15,820,000 common shares for gross proceeds of $17,402,000.

"The third quarter of 2016 was another period of good progress for Profound," said Dr. Menawat. "Importantly, the bought deal financing arranged during the quarter provides us with the financial resources needed to support the completion of the TACT pivotal trial and, at the same time, to further advance our pilot TULSA-PRO sales activities in Europe.  We look forward to updating our stakeholders as we progress."

Summary Third Quarter 2016 Results

The Company recorded a net loss for the three months ended September 30, 2016 of $4,061,208 or $0.10 per common share, compared with a net loss of $2,957,179 or $0.08 per common share, for the three months ended September 30, 2015. For the three months ended September 30, 2016, the net loss was primarily attributed to R&D expenses of $2,506,112, SG&A expenses of $1,273,521 and interest and accretion expense of $302,122 partially offset by interest income of $25,270.  For the three months ended September 30, 2015, the net loss was attributed to the ongoing R&D expenses of $1,657,700, SG&A expenses of $1,099,798, and interest and accretion expense of $266,603, partially offset by interest income of $66,922.

Expenditures for R&D for the three months ended September 30, 2016 were higher by $848,412 compared to the three months ended September 30, 2015. The increase was primarily due to the activities in preparing regulatory filings for marketing approval of TULSA-PRO in Canada, and preparation for the initiation of the multi-jurisdictional Pivotal Trial.  Preparations for the Pivotal Trial include organizing the IDE submission for approximately 15 clinical sites, designed to support a 510(k) submission in the United States to provide a pathway for Class II classification for the TULSA-PRO system. As a result consulting expense increased by $432,202 and validation expense for clinical trials increased by $71,711. The number of employees involved in R&D also increased during this period, resulting in salaries and benefits increasing by $377,741.  These increases were offset by reduction in materials expense of $162,571 as costs related to prototyping decreased.

SG&A expenses for the three months ended September 30, 2016 were higher by $173,723 compared to the three months ended September 30, 2015, primarily due to a $218,400 increase in salary and benefits expenses at the Company's German sales office, established in January 2016.  Rent and office expenses also increased by $108,369 due to relocation to the new larger office building on July 1, 2016, which was partially offset by lower share based compensation expense.

Liquidity and Outstanding Share Capital

As of September 30, 2016, the Company had cash and short-term investments of $9,567,378.  This did not include any of the proceeds from the bought deal offering, which closed on November 14, 2016. 

As at November 16, 2016, Profound had an unlimited number of authorized common shares with 55,305,577 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 16, 2016, at 4:30 p.m. ET during which time the results will be discussed.
         
Live Call:       1-877-407-9210 (Canada and the United States)
        1-201-689-8049 (International)
Conference ID:       13648483
         
Replay:       1-877-481-4010 (Canada and the United States)
        1-919-882-2331 (International)
Replay ID:       10119
         

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 the effort to achieve a new therapeutic standard in prostate cancer. For the millions of men currently living with prostate cancer, and the thousands more who are diagnosed with it every year, current treatment options often mean having to make difficult choices based on potential side effects that can significantly impact quality of life.  Our mission is to profoundly change the standard of care by creating a tomorrow where clinicians can confidently ablate cancerous prostate tissue with precision, while actively protecting critical anatomy from potential side effects; a tomorrow where patients have access to a safe, fast and effective treatment option, so they can quickly return to their daily lives.

Established in 2008, 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 is sponsoring a multicenter, prospective FDA-registered clinical trial, TACT, which is designed to further demonstrate the safety and effectiveness of this innovative technology.

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. 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) accepts responsibility for the adequacy or accuracy of this release.

 
Profound Medical Corp.
Interim Condensed Consolidated Balance Sheets
(Unaudited)
 
    September 30, 2016 $   December 31, 2015 $   
         
Assets        
         
Current assets        
Cash     9,567,378         10,522,520    
Short-term investment     -         10,000,000    
HST receivable and other assets     156,259         92,479    
Investment tax credits receivable     198,000         173,000    
Prepaid expenses and deposits     826,505         139,305    
                 
      10,748,142         20,927,304    
         
Property and equipment     1,057,989         229,112    
         
Intangible assets     245,165         32,500    
                 
      12,051,296         21,188,916    
                 
Liabilities        
         
Current liabilities        
Accounts payable and accrued liabilities     2,159,774         980,278    
Long-term debt     2,450,906         286,700    
Provisions     40,594         -    
                 
      4,651,274         1,266,978    
         
Long-term debt     3,915,489         5,560,674    
         
Provisions     111,100         -    
         
Other liability     453,920         397,814    
                 
      9,131,783         7,225,466    
                 
Shareholders' Equity        
         
Share capital     67,089,681         67,082,821    
         
Contributed surplus     2,500,040         2,002,190    
         
Foreign currency translation reserve     (10,495 )       -    
         
Deficit     (66,659,713 )       (55,121,561 )  
                 
      2,919,513         13,963,450    
                 
      12,051,296         21,188,916    
                 

Profound Medical Corp.
Interim Condensed Consolidated Statements of Loss and Comprehensive Loss
(Unaudited)
 
    Three months ended September 30, 2016 $   Three months ended September 30, 2015 $   Nine months ended September 30, 2016 $   Nine months ended September 30, 2015 $  
                 
Expenses                
Research and development     2,506,112       1,657,700       7,229,806         3,598,282    
Selling, general and administrative     1,273,521       1,099,798       3,582,523         5,075,436    
                         
Total operating expenses     3,779,633       2,757,498       10,812,329         8,673,718    
                         
Finance costs - net                
Preferred share dividend expense     -       -       -         481,354    
Interest and accretion expense     302,122       266,603       840,228         5,348,895    
Interest income     (25,270 )     (66,922 )     (123,785 )       (80,311 )  
Listing expense     -       -       -         2,058,234    
Loss on recognition of convertible notes     -       -       -         2,094,565    
Change in fair value of convertible notes     -       -       -         (334,680 )  
Gain on conversion of convertible notes     -       -       -         (1,759,885 )  
Gain on extinguishment of long-term debt     -       -       -         (63,568 )  
Change in fair value of derivatives     -       -       -         (2,086,406 )  
                         
Total finance costs     276,852       199,681       716,443         5,658,198    
                         
Loss before income taxes     4,056,485       2,957,179       11,528,772         14,331,916    
                 
Tax expense     4,723       -       9,380         (726,071 )  
                         
Net loss for the period     4,061,208       2,957,179       11,538,152         13,605,845    
                 
Item that may be reclassified to profit or loss                
Foreign currency translation adjustment     5,341       -       10,495         -    
                         
Net loss and comprehensive loss for the period     4,066,549       2,957,179       11,548,647         13,605,845    
                         
Basic and diluted weighted average shares outstanding     39,482,212       39,458,683       39,476,278         18,343,256    
                 
Basic and diluted net loss per common share     0.10       0.08       0.29         0.74    
                 

Profound Medical Corp.
Interim Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
    Nine months ended September 30, 2016 $   Nine months ended September 30, 2015 $  
         
Cash provided by (used in)        
         
Operating activities        
Net loss for the period     (11,538,152 )     (13,605,845 )  
Depreciation of property and equipment     113,336       85,714    
Amortization of intangible assets     7,889       1,875    
Preferred share dividend expense     -       481,354    
Share-based compensation     501,035       566,872    
Loss on recognition of convertible notes     -       2,094,565    
Gain on extinguishment of long-term debt     -       (63,568 )  
Change in fair value of convertible notes     -       (334,680 )  
Change in fair value of derivatives     -       (2,086,406 )  
General and administrative expenses     -       2,303,034    
Listing expense     -       2,058,234    
Gain on conversion of convertible notes     -       (1,759,885 )  
Interest and accretion expense     840,152       5,348,895    
Net change in non-cash working capital balances        
Prepaid expenses     (687,200 )     (33,565 )  
Accounts payable and accrued liabilities     1,088,126       (575,631 )  
Provisions     40,594       -    
Taxes payable     -       (726,071 )  
Investment tax credits receivable     (25,000 )     773,105    
HST receivable and other assets     (63,780 )     246,316    
               
      (9,723,000 )     (5,225,687 )  
               
Investing activities        
Cash acquired from Profound     -       1,157,535    
Sale (purchase) of short-term investment     10,000,000       (10,000,000 )  
Purchase of intangible assets     (139,679 )     -    
Purchase of property and equipment     (831,113 )     (158,774 )  
               
      9,029,208       (9,001,239 )  
               
Financing activities        
Proceeds from convertible notes     -       1,500,000    
Issuance of common shares     -       24,008,828    
Proceeds from long-term debt     -       4,000,000    
Payment of long-term debt     (265,025 )     (50,575 )  
Transaction costs paid     -       (1,657,860 )  
Repayment of bank loan     -       (700,000 )  
Proceeds from share option exercise     3,675       7,438    
Interest paid     -       (8,321 )  
               
      (261,350 )     27,099,510    
               
Increase (decrease) in cash during the period     (955,142 )     12,872,584    
         
Cash and cash equivalents - Beginning of period     10,522,520       406,495    
               
Cash and cash equivalents - End of period     9,567,378       13,279,079    
               
Supplemental information        
Transaction costs included in accounts payable and accrued liabilities     -       545,876    
Intangible asset additions included in accounts payable and accrued liabilities     80,875       -    
Property and equipment additions included in provisions     111,100       -    
                   
For further information, please contact:Stephen KilmerInvestor Relationsskilmer@profoundmedical.comT: 647.872.4849OrRashed DewanVice President, FinanceT: 647-476-1350

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