ƒ Check-Cap Reports Fourth Quarter and Full Year 2019 Financial Results - Mar 6, 2020

Press Releases

Check-Cap Reports Fourth Quarter and Full Year 2019 Financial Results
Company planning to initiate a U.S. pivotal study of the C-Scan System in late 2020
Strengthened balance sheet through a $4.76 million private placement of ordinary shares

ISFIYA, Israel, March 6, 2020 /PRNewswire/ -- Check-Cap Ltd. (the "Company" or "Check-Cap") (NASDAQ: CHEK) (NASDAQ: CHEKZ), a clinical stage medical diagnostics company advancing the development of C-Scan®, the first and only patient-friendly preparation-free screening test to detect polyps before they transform into colorectal cancer, today announced financial results for the fourth quarter and full year ended December 31, 2019.

 

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2019 and Recent Highlights:

  • Continued to advance the pre-submission process with FDA towards the initiation of a pivotal trial of the C-Scan System in late 2020 
  • In February 2020, strengthened its balance sheet through a $4.76 million private placement of ordinary shares
  • In December 2019, announced positive results from the U.S. pilot study of C-Scan that was performed at the NYU Grossman School of Medicine and Mayo Clinic of Rochester  
  • In August 2019, announced the completion of manufacturing line transfer implementation and qualification for the C-Scan System to our manufacturing partner, GE Healthcare, a leading global medical technology and life sciences company
  • In July 2019, announced positive results from the post-CE approval study of C-Scan, which further validated the importance and potential of the system. 

"We ended 2019 on a high note with the successful completion of our U.S. pilot study of the C-Scan System which, pending FDA approval, sets the stage for the initiation of a U.S. pivotal trial in late 2020," said Alex Ovadia, Chief Executive Officer of Check-Cap. "There exists a significant global unmet need for a colon cancer screening and detection technology that is preparation free and non- invasive compared to the current standard of care, colonoscopy. We believe the patient-friendly C-Scan System can increase screening rates globally by eliminating the rigorous and unpleasant preparation that colonoscopy and other tests require.

"Colon cancer is a highly preventable disease, and an increase in global screening rates that we believe C-Scan can facilitate will result in earlier detection and improved long-term patient outcomes. We look forward to initiating a U.S. pivotal trial, as we work to introduce this groundbreaking technology in the important US market," Mr. Ovadia concluded.

Financial Results for the Fourth Quarter Ended December 31, 2019

Research and development expenses, net, were $2.8 million for the three months ended December 31, 2019, compared to $2.4 million for the same period in 2018.  The increase is primarily due to a $0.4 million increase in salaries and related expenses and a $0.2 million increase in materials, subcontractor and consultant expenses, primarily in connection with our U.S. pilot study and regulatory expenses, offset in part by a $0.1 million decrease in share-based compensation expenses. 

General and administrative expenses were $1.0 million for the three months ended December 31, 2019, compared to $1.1 million for the same period in 2018. The decrease is primarily due to a $0.2 million decrease in professional services, offset in part by a $0.1 million increase in salaries and related expenses. 

Operating loss was $3.9 million for the three months ended December 31, 2019, compared to an operating loss of $3.5 million for the same period in 2018.

Financial income, net was $19,000 for the three months ended December 31, 2019, compared to $366,000 for the same period in 2018.  The change is primarily as a result of a change in royalties' provision of $3,000 in 2019 compared to $295,000 in 2018 and $29,000 financial income from interest compared to $80,000 in 2018.

Net loss was $3.8 million for the three months ended December 31, 2019, compared to $3.1 million for the same period in 2018.

Cash and cash equivalents, restricted cash and short-term bank deposits as of December 31, 2019 were $8.0 million as compared to $14.6 million as of December 31, 2018. Subsequent to the end of the fourth quarter, in February 2020, we raised gross proceeds of $4.76 million in a private placement.

Financial Results for the Twelve Months Ended December 31, 2019

Research and development expenses, net, were $10.5 million for the twelve months ended December 31, 2019, compared to $7.6 million for the same period in 2018. The increase is primarily due to a $0.9 million increase in salaries and related expenses, $0.2 million increase in share-based compensation, $0.4 million increase in materials, $0.5 million increase in subcontractor and consultant expenses and a $0.8 million increase in other research and development expenses, mainly related to our clinical trials, primarily in connection with our post-CE Mark clinical study and the U.S. pilot study.  The increase in research and development expenses, net between 2019 and 2018 also includes a $0.1 million decrease in grants received from the Israel Innovation Authority.

General and administrative expenses were $3.6 million for the twelve months ended December 31, 2019, compared to $3.5 million for the same period in 2018. The increase is primarily due to an increase of $0.4 million in share-based compensation expenses and $0.2 million increase in other general expenses, offset in part by a $0.3 million decrease in salaries and related expenses and $0.1 million decrease in professional services expenses.

Operating loss was $14.1 million for the twelve months ended December 31, 2019, compared to $11.1 million in the same period in 2018.

Finance income, net, was $234,000 for the twelve months ended December 31, 2019, compared to $473,000 for the same period in 2018. The decrease in finance income, net was primarily as a result of a $252,000 decrease in finance income from a change in royalties' provision.

Net loss was $13.8 million for the twelve months ended December 31, 2019, compared to $10.6 million for the same period in 2018.

Net cash used in operating activities was $12.8 million for the twelve months ended December 31, 2019, compared to $10.1 million for the same period in 2018.

The number of outstanding ordinary shares as of December 31, 2019 was 8,272,906. Subsequent to December 31, 2019, the Company issued 2,720,178 ordinary shares in a private placement. As of February 25, 2020, the number of our outstanding ordinary shares was 10,997,714.

A copy of the Company's annual report on Form 20-F for the year ended December 31, 2019 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/home. 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 Mira Rosenzweig, Chief Financial Officer, at mira.rosenzweig@check-cap.com.

 

[Financial Tables to Follow]

About Check-Cap

Check-Cap is a clinical stage medical diagnostics company aiming to redefine colorectal cancer (CRC) prevention through the introduction of C-Scan®, the first and only patient-friendly preparation-free screening test to detect polyps before they transform into colorectal cancer. The Company's disruptive capsule-based screening technology aims to significantly increase screening adherence worldwide and enable millions of people to stay healthy. The C-Scan System uses an ultra-low dose X-ray capsule, an integrated positioning, control, and recording system, as well as proprietary software to generate a 3D map of the inner lining of the colon. C-Scan is non-invasive and requires no preparation or sedation, allowing the patients to continue their daily routine with no interruption as the capsule is propelled through the gastrointestinal tract by natural motility. 

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 "Forward-looking Statements" and "Risk Factors" in the Company's Annual Report on Form 20-F for the year ended December 31, 2019 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 data)

           
 

December 31,

 

2 0 1 9

 

2 0 1 8

Assets

     

Current assets

     

Cash and cash equivalents

 

7,685

   

8,572

Restricted cash

 

350

   

350

Short-term bank deposit

 

-

   

5,643

Prepaid expenses and other current assets

 

400

   

419

Total current assets

 

8,435

   

14,984

           

Non-current assets

         

Property and equipment, net

 

540

   

452

Operating lease assets

 

454

   

-

Total non-current assets

 

994

   

452

Total assets

 

9,429

   

15,436

           

Liabilities and shareholders' equity

         

Current liabilities

         

Accounts payable and accruals

         

  Trade

 

989

   

1,113

  Other

 

490

   

214

Other current liabilities

 

-

   

35

Employees and payroll accruals

 

1,101

   

859

Operating lease liabilities- current

 

222

   

-

Total current liabilities

 

2,802

   

2,221

           

Non-current liabilities

         

Royalties provision

 

182

   

185

Operating lease liabilities- net of current portion

 

211

   

-

Total non-current liabilities

 

393

   

185

           

Shareholders' equity

         

Share capital, Ordinary shares, 2.4 NIS par value (90,000,000 and 30,000,000
authorized shares as of December 31, 2019 and 2018, respectively; 8,272,908 and
5,330,684 shares issued and outstanding as of December 31, 2019 and 2018,
respectively)

 

5,407

   

3,456

Additional paid-in capital

 

77,964

   

72,888

Accumulated other comprehensive loss

 

-

   

(13)

Accumulated deficit

 

(77,137)

   

(63,301)

Total shareholders' equity

 

6,234

   

13,030

           

Total liabilities and shareholders' equity

 

9,429

   

15,436

           

 

 

 

CHECK CAP LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

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

 

Year
ended

Three months
ended

 

December 31,

December 31,

 

2019

 

2018

 

2019

 

2018

Research and development expenses, net

10,474

 

7,618

 

2,819

 

2,396

General and administrative expenses

3,595

 

3,445

 

1,028

 

1,073

Operating loss

14,069

 

11,063

 

3,847

 

3,469

               

Finance income, net

233

 

473

 

19

 

365

Loss before income tax

13,836

 

10,590

 

3,828

 

3,104

Taxes on income

-

 

(1)

 

-

 

-

Net loss for the period

13,836

 

10,589

 

3,828

 

3,104

               

Comprehensive loss:

             

Net loss

13,836

 

10,589

 

3,828

 

3,104

Change in fair value of cash flow hedge

(13)

 

13

 

-

 

(28)

               

Comprehensive loss

13,823

 

10,602

 

3,828

 

3,076

Loss per share:

             

Net loss per ordinary share basic and diluted

1.73

 

2.61

 

0.46

 

0.58

               
               

 

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

7,986

 

4,058

 

8,270

 

5,352

 
 
 


 

 

 

CHECK-CAP LTD.

CONSOLIDATED  STATEMENTS OF CASH FLOWS 

 (U.S. dollars in thousands)

 

Year
ended

 

Three months
ended

 

December 31,

 

December 31,

 

2019

2018

 

2019

2018

CASH FLOWS FROM OPERATING ACTIVITIES

         

Net loss 

(13,836)

(10,589)

 

(3,829)

(3,104)

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

         

Depreciation

115

147

 

31

29

Share-based compensation

516

(65)

 

110

206

Financial expenses (income), net

40

(13)

 

85

110

Changes in assets and liabilities items:

         

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

(420)

(13)

 

(383)

77

Increase (decrease) in trade accounts payable, accruals and
other current liabilities

503

416

 

399

356

Increase (decrease) in employees and payroll accruals

242

258

 

266

(92)

Decrease in royalties provision

(3)

(255)

 

(10)

(294)

Net cash used in operating activities

(12,843)

(10,114)

 

(3,331)

(2,712)

           

CASH FLOWS FROM INVESTING ACTIVITIES

         

Purchase of property and equipment

(167)

(94)

 

(36)

(80)

Proceeds from (investment in) short-term bank and other
deposit

5,612

(5,629)

 

3,939

3,371

Net cash provided by (used in) investing activities

5,445

(5,723)

 

3,903

3,291

               

CASH FLOWS FROM FINANCING ACTIVITIES

         

Exercise of warrants into ordinary shares

-

-

 

-

(4)

Issuance of ordinary shares in the registered direct offerings,
net of issuance expenses

6,511

(30)

 

-

(30)

Issuance of ordinary shares in the 2018 Public Offering

-

17,792

 

-

(66)

Net cash provided by financing activities

6,511

17,762

 

-

(100)

           

Net increase (decrease) in cash, cash equivalents and
restricted cash

(887)

1,925

 

572

437

Cash, cash equivalents and restricted cash at the
beginning of the period

8,922

6,997

 

7,463

8,485

           

Cash, cash equivalents and restricted cash at the end of
the period

8,035

8,922

 

8,035

8,922

           

Supplemental disclosure of non-cash flow information:

         

Cashless exercise of warrants to purchase ordinary shares
into ordinary shares

24

33

 

11

24

Purchase of property and equipment

32

3

 

32

35

Recognition of operating leases and operating lease liabilities
from adoption of ASU 2016-02

369

-

 

-

-

Right of use asset obtained in exchange for new operating
lease

223

-

 

117

-

Supplemental disclosure of cash flow information

         

Cash paid for taxes

15

5

 

-

-

 

 

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.