ƒ Check-Cap Reports Fourth Quarter and Full-Year 2018 Financial Results - Mar 28, 2019

Press Releases

Check-Cap Reports Fourth Quarter and Full-Year 2018 Financial Results

ISFIYA, Israel, March 28, 2019 /PRNewswire/ -- Check-Cap Ltd. (the "Company" or "Check-Cap") (NASDAQ: CHEK) (NASDAQ: CHEKW), (NASDAQ: CHEKZ), a clinical stage medical diagnostics company advancing the development of C-Scan®, the first and only preparation-free capsule based screening method for the prevention of colorectal cancer through the detection of precancerous polyps, today announced financial results for the fourth quarter and full-year ended December 31, 2018.

Check-Cap Ltd. logo (PRNewsfoto/Check-Cap Ltd.)

Recent Highlights:

  • Announced appointment of Mira Rosenzweig as Chief Financial Officer, bringing nearly 20 years of executive financial management experience to the Check-Cap team.
  • Announced approval by the New York University School of Medicine Institutional Review Board (IRB) of a single-arm U.S. pilot study of the C-Scan® system to evaluate its safety, usability, and subject compliance.
  • Continued to move forward with the Company's collaboration with its manufacturing partner, GE Healthcare.
  • Completed a registered direct offering that raised gross proceeds of $7.5 million, which provides additional funding to advance the clinical development of the C-Scan® system in the U.S. while preparing for commercialization in Israel and the E.U.

Alex Ovadia, chief executive officer of Check-Cap, stated, "During 2018, we made significant progress on a number of fronts, as we are working to develop clear paths to commercialization in major markets worldwide."

"In parallel, we continued to advance regulatory and development activities in the United States, including a single-arm U.S pilot study. We look forward to data from this important study as we work to advance the C-Scan® system toward commercialization in the U.S., which remains our highest corporate priority. "

"The C-Scan® system has the potential to increase screening rates by offering patients a non-invasive, preparation-free alternative to colonoscopy for the detection of precancerous polyps, and we are excited about the potential of this technology to improve patient outcomes globally," Mr. Ovadia concluded.

Financial Results for the Fourth Quarter Ended December 31, 2018

Research and development expenses, net were $2.4 million for the three months ended December 31, 2018, compared to $1.4 million for the same period in 2017. The increase is primarily attributable to a $266,000 increase in in salaries and related expenses, a $185,000 increase in share-based compensation, a $476,000 increase in materials and a $152,000 increase in other research and development expenses. The increase in materials and other research and development expenses relate to the Company's clinical trials, primarily its post-CE Mark study and ongoing preparations for its U.S. pilot study. The increase was partially offset by a $57,000 grant received from the Israel Innovation Authority.

General and administrative expenses were $1.1 million for the three months ended December 31, 2018, compared to $658,000 for the same period in 2017. The increase was primarily due to a $219,000 increase in professional fees, a $176,000 increase in other general and administrative expenses, both as a result of being a public company, and a $68,000 increase in salaries and related expenses. The increase was partially offset by a $48,000 decrease in share-based compensation.

Cash and cash equivalents, restricted cash and short-term bank deposits totaled $14.6 million at December 31, 2018, compared to $17.6 million at September 30, 2018 and $7 million at December 31, 2017.

Operating loss was $3.5 million for the three months ended December 31, 2018, compared to $2.1 million for the same period in 2017.

Finance income, net was $365,000 for the three months ended December 31, 2018, compared to $156,000 for the same period in 2017, as a result of higher income from a change in royalties' provision and higher interest income on short term deposits.

Net loss was $3.1 million for the three months ended December 31, 2018, compared to $1.9 million for the same period in 2017.

Financial Results for the Twelve Months Ended December 31, 2018

Research and development expenses net, were $7.62 million for the year ended December 31, 2018, compared to $6.84 million for the same period in 2017. The increase is primarily due to a $894,000 increase in materials and a $206,000 increase in other research and development expenses, both relating to the Company's clinical trials, primarily in connection with the Company's post-CE Mark clinical study and the preparation for the U.S. pilot study, including obtaining FDA approval. The increase in research and development expenses, was partially offset by a $246,000 decrease in salaries and related expenses, primarily due to the shift of Mr. Ovadia from research and development to general and administrative as the company CEO.

General and administrative expenses were $3.45 million for the year ended December 31, 2018, compared to $3.16 million for the same period in 2017. The increase was primarily due to a $444,000 increase in salaries and related expenses, primarily due to a $281,000 in severance paid to the Company's former CEO, a $419,000 increase in professional fees primarily due to a $202,000 increase in legal fees, and a $325,000 increase in other general and administrative expenses, primarily associated with consulting fees and services incurred as a result of being a public company. The increase was partially offset by a $909,000 decrease in share-based compensation, of which $502,000 relates to reversal of expenses associated with an equity award to our former CEO which was forfeited as a result of his separation from employment.

Operating loss was $11.1 million for the year ended December 31, 2018, compared to $10.0 million for the same period in 2017.

Finance income, net was $473,000 for the year ended December 31, 2018, compared to $236,000 for the same period in 2017, as a result of higher income from a change in royalties' provision and higher interest income on short term deposits.

Net loss was $10.6 million for the year ended December 31, 2018, compared to $9.8 million for the same period in 2017.

A copy of the Company's annual report on Form 20-F for the year ended December 31, 2018 has been filed with the U.S. Securities and Exchange Commission at www.sec.gov and posted on the Company's investor relations website at http://ir.check-cap.com/. The Company will deliver a hard copy of its annual report, including its complete audited consolidated financial statements, free of charge, to its shareholders upon request to Rachel.Cohen-Menirom@check-cap.com.

About Check-Cap

Check-Cap is a clinical-stage medical diagnostics company developing C-Scan®, an ingestible capsule-based device 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.

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 "Forward-Looking Statements" and "Risk Factors" in the Company's Annual Report on Form 20-F for the year ended December 31, 2018 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.

 

CHECK CAP LTD

CONSOLIDATED BALANCE SHEETS

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




















December 31,




Note



2018



2017


Assets










Current assets










Cash and cash equivalents






8,572




6,997


Restricted cash






350




-


Short-term bank deposit






5,643




-


Prepaid expenses and other current assets






419




406


Total current assets







14,984




7,403















Non-current assets













Property and equipment, net






452




503


Total non-current assets







452




503


Total assets







15,436




7,906















Liabilities and shareholders' equity













Current liabilities













Accounts payable and accruals













  Trade







1,113




608


  Other







214




347


Other current liabilities







35




5


Employees and payroll accruals






859




602


Total current liabilities







2,221




1,562















Non-current liabilities













Royalties provision






185




439


Total non-current liabilities







185




439















Shareholders' equity












Share capital







3,456




974


Additional paid-in capital







72,888




57,643


Other comprehensive loss







(13)




-


Accumulated deficit







(63,301)




(52,712)


Total shareholders' equity







13,030




5,905















Total liabilities and shareholders' equity







15,436




7,906















The accompanying notes to the consolidated financial statements are an integral part of them.

 

 

CHECK CAP LTD

CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS

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




















Year ended



Three months ended





December 31,



December 31,





2018



2017



2018



2017



Research and development expenses, net



7,618




6,837




2,396




1,400



General and administrative expenses



3,445

 




3,164

 




1,073

 




658

 



Operating loss



11,063




10,001




3,469




2,058





















Finance income, net



473




236




365




156



Loss before tax



10,590




9,765




3,104




1,902



Tax expenses (gains) on income



(1)




6




-




-



Net loss for the period



10,589




9,771




3,104




1,902



Comprehensive loss:


















Net loss



10,589




9,771




3,104




1,902



Change in fair value of cash flow hedge



13




-




(28)




-





















Comprehensive loss



10,602




9,771




3,076




1,902



Loss per share: 


















Net loss per ordinary share basic and diluted



2.61




6.72




0.58




1.22





















Weighted average number of ordinary shares 

outstanding - basic and diluted (in thousands)



4,058




1,455




5,352




1,562



 

 

 

CHECK-CAP LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

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










Year ended
December 31,




Three months ended
December 31,




2018




2017




2018


2017

CASH FLOWS FROM OPERATING ACTIVITIES














Net loss for the period



(10,589)




(9,771)




(3,104)


(1,902)

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














Depreciation and amortization



147




157




29


42

Share-based compensation



(65)




726




206


69

Financial expenses (income), net



67




(165)




110


(10)

Changes in assets and liabilities items:














Decrease (increase) in prepaid and other current
assets and non-current assets



(13)




(164)




77


(91)

Increase in trade accounts payable, accruals and
other current liabilities



416




275




356


211

Increase (decrease) in employees and payroll
accruals



258




(126)




(92)


(288)

Decrease in royalties provision



(255)




(82)




(294)


(160)

Net cash used in operating activities



(10,034)




(9,150)




(2,712)


(2,129)















CASH FLOWS FROM INVESTING ACTIVITIES














Purchase of property and equipment



(94)




(231)




(80)


(10)

Proceeds from short-term bank deposit



(5,629)




-




3,371


-

Net cash provided by (used in) investing activities



(5,723)




(231)




3,291


(10)















CASH FLOWS FROM FINANCING ACTIVITIES














Exercise of warrants into ordinary shares



-




196




(4)


114

Issuance of ordinary shares in the RD offering,
net of issuance expenses



(30)




4,379




(30)


2,071

Issuance of ordinary shares in the 2018 Public
Offering



17,792




-




(66)


-

Net cash provided by financing activities



17,762




4,575




(100)


2,185















Effect of exchange rate changes on cash and cash
equivalents



(80)




164




(42)


11

Net increase (decrease) in cash and cash
equivalents



1,925




(4,642)




437


57

Cash and cash equivalents at the beginning of the
period



6,997




11,639




8,485


6,940

Cash and cash equivalents at the end of the
period



8,922




6,997




8,922


6,997

Supplemental disclosure of non-cash flow
information:














Cashless exercise of warrants to purchase ordinary  
shares into ordinary shares



33




8




24


-

Purchase of property and equipment



3




15




35


10

Issuance expenses in the registered direct offering



-




30




-


30

Supplemental disclosure of cash flow information














Cash paid for income taxes



5




3




-


-












































 

Investor Contacts
Jeremy Feffer
LifeSci Advisors, LLC
+1-212-915-2568
jeremy@lifesciadvisors.com

Meirav Gomeh-Bauer
LifeSci Advisors, LLC
+972(0)-54-476-4979
Meirav@lifesciadvisors.com

 

SOURCE Check-Cap Ltd.