ƒ Check-Cap Reports First Quarter 2017 Financial Results - May 9, 2017

Press Releases

Check-Cap Reports First Quarter 2017 Financial Results

ISFIYA, Israel, May 9, 2017 /PRNewswire/ -- Check-Cap Ltd. (the "Company" or "Check-Cap") (NASDAQ: CHEK; NASDAQ: CHEKW), a clinical-stage medical diagnostics company engaged in the development of C-Scan®, an ingestible capsule for preparation-free, colorectal cancer screening, today provided a corporate update and announced its financial results for the three months ended March 31, 2017.

Check-Cap Ltd.

"Throughout the past quarter, we continued to advance our clinical trial to support CE Marking for the C-Scan® system and plan to submit our CE Mark application during the summer of this year, " said Bill Densel, CEO of Check-Cap. "Having completed the first critical phase of our ongoing collaboration with GE Healthcare, we are very encouraged in our progress to develop and validate high-volume manufacturing of X-ray source production and assembly for use in future U.S. clinical trials."

Financial Results for the First Quarter Ended March 31, 2017

Research and development expenses, net were $1.9 million in the three months ended March 31, 2017, compared to $1.8 million in the same period in 2016. This increase was primarily due to the initiation of the Company's trial to support CE Marking for the C-Scan® system.

General and administrative expenses were $890,000 in the three months ended March 31, 2017, compared to $1.1 million in the same period in 2016. This decrease was primarily due to a decrease in share-based compensation ($170,000).

Operating loss was $2.8 million in the three months ended March 31, 2017, compared to an operating loss of $2.9 million in the same period in 2016.

Finance income, net was $110,000 in the three months ended March 31, 2017, compared to $158,000 in the same period in 2016.

Net loss was $2.7 million in the three months ended March 31, 2017, compared to $2.7 million in the same period in 2016.

Non-GAAP net loss, as defined below, was $2.4 million in the three months ended March 31, 2017, compared to $2.3 million in the same period in 2016. A reconciliation of GAAP results to non-GAAP results is provided below.

Cash, cash equivalents and short-term bank deposits totaled $9.4 million as of March 31, 2017, compared with $11.6 million as of December 31, 2016.

Net cash used in operating activities was $2.3 million in the three months ended March 31, 2017, compared to $2.5 million in the same period in 2016.

The number of outstanding ordinary shares as of March 31, 2017 was 15,629,696.

Use of Non-GAAP Financial Results

In addition to disclosing financial results calculated in accordance with U.S. GAAP, the Company's financial results release contains Non-GAAP financial measures of net loss for the period that exclude the effects of share-based compensation and changes in royalties provision. The Company's management believes the Non-GAAP financial information provided in this release is useful to investors' understanding and assessment of the Company's on-going operations.  Management also uses both GAAP and Non-GAAP information in evaluating and operating business internally and as such deemed it important to provide all this information to investors. The Non-GAAP financial measures disclosed by the Company should not be considered in isolation or as a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated. Reconciliations between GAAP measures and Non-GAAP measures are provided later in this press release.

About Check-Cap

Check-Cap is a clinical-stage medical diagnostics company developing C-Scan®, the first capsule-based system for preparation-free colorectal cancer screening.

Utilizing innovative ultra-low dose X-ray and wireless communication technologies, the capsule generates information on the contours of the inside of the colon as it passes naturally.  This information is used to create a 3D map of the colon, which allows physicians to look for polyps and other abnormalities. Designed to improve the patient experience and increase the willingness of individuals to participate in recommended colorectal cancer screening, C-Scan® removes many frequently-cited barriers, such as laxative bowel preparation, invasiveness and sedation. The C-Scan® system is currently not cleared for marketing in any jurisdiction.

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 "Special Note On Forward-looking Statements" and "Risk Factors" in the Company's Annual Report on Form 20-F 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.

Financial Tables Follow:

 

CHECK CAP LTD

CONSOLIDATED UNAUDITED BALANCE SHEETS

 (U.S. dollars in thousands, except share and per share data)









March 31,


December 31,




2017


2016


Asset






Current assets






Cash and cash equivalents



9,380



11,639


Prepaid expenses and other current assets



441



242


Total current assets



9,821



11,881










Non-current assets








Property and equipment, net



460



414


Total non-current assets



460



414


Total assets



10,281



12,295










Liabilities and shareholders' equity








Current liabilities








Accounts payable and accruals








  Trade



586



393


  Other



238



235


Other current liabilities



11



11


Employees and payroll accruals



921



728


Total current liabilities



1,756



1,367










Non-current liabilities








Royalties provision



545



521


Total non-current liabilities



545



521










Shareholders' equity








Share capital



793



771


Additional paid-in capital



52,783



52,577


Accumulated deficit



(45,596)



(42,941)


Total shareholders' equity



7,980



10,407










Total liabilities and shareholders' equity



10,281



12,295


 

 

CHECK-CAP LTD.

CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS

 (U.S. dollars in thousands, except per share data)




Three months ended

March 31,




2017



2016






Research and development expenses, net



1,877




1,802


General and administrative expenses



886




1,098


Operating loss



2,763




2,900











Finance income, net



110




158


Loss before tax



2,653




2,742


Taxes on income



3




-


Net loss



2,656




2,742











 Net loss per ordinary share basic and diluted



0.16




0.21











Weighted average number of ordinary shares outstanding
- basic and diluted (in thousands)



16,427




13,279


 

 

CHECK-CAP LTD.

CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands, except per share data)




Three months ended

March 31,




2017



2016


CASH FLOWS FROM OPERATING ACTIVITIES




Net loss for the period



(2,656)




(2,742)


Adjustments required to reconcile net loss to net cash used in operating activities:









Depreciation and amortization



36




31


Share-based compensation



214




436


Financial income, net



(138)




-


Changes in assets and liabilities items:









Increase (decrease) in prepaid and other current assets and non-current assets



(199)




32


Increase in trade accounts payable, accruals and other current liabilities



180




18


Increase (decrease) in employees and payroll accruals



193




(211)


Increase (decrease) in royalties provision



24




(24)


Net cash used in operating activities



(2,346)




(2,460)











CASH FLOWS FROM INVESTING ACTIVITIES









Purchase of property and equipment



(66)




(42)


Proceeds from short-term investments



-




1,811


Net cash provided by (used in) investing activities



(66)




1,769











CASH FLOWS FROM FINANCING ACTIVITIES









Exercise of warrants into ordinary shares



15




6


Net cash provided by financing activities



15




6











Effect of exchange rate changes on cash and cash equivalents



138




-


Net decrease in cash and cash equivalents



(2,259)




(685)


Cash and cash equivalents at the beginning of the period



11,639




9,392


Cash and cash equivalents at the end of the period



9,380




8,707


 

 

CHECK-CAP LTD.

SUPPLEMENTAL RECONCILIATION OF GAAP TO NON-GAAP RESULTS

 (U.S. dollars in thousands)




Three months ended

March 31,




2017


2016

GAAP net loss for the period



(2,656)



(2,742)

Share-based compensation (1)



214



436

Changes in royalties



24



(24)

Non-GAAP net loss for the period



(2,418)



(2,330)

 (1) Share-based compensation:







Research and development expenses, net



44



96

General and administrative expenses



170



340




214



436








 

CONTACT:

Investors
David Carey
Lazar Partners Ltd.
+1-212-867-1768
dcarey@lazarpartners.com

Vivian Cervantes
PCG Advisory
+1-212-554-5482
vivian@pcgadvisory.com

Media
Erich Sandoval or Rob Sawyer
Lazar Partners Ltd.
+1-213-908-6226 or +1-212-843-0209
esandoval@lazarpartners.com   
rsawyer@lazarpartners.com 

 

SOURCE Check-Cap Ltd.