Company initiated first part of its U.S. pivotal study in early May 2022
ISFIYA, Israel, June 1, 2022 /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 may transform into colorectal cancer (CRC), today announced financial results for the first quarter ended March 31, 2022.
Q1 2022 and Recent Highlights:
- Earlier in May ,after successfully obtaining Institutional Review Board approval, the Company announced the initiation of the first part of its U.S. pivotal study of C-Scan that focuses on device calibration and enhancement of C-Scan algorithms among the average risk U.S. population at Mayo Clinic in Rochester, Minnesota. Elizabeth Rajan, M.D., gastroenterologist, and professor of medicine at Mayo Clinic, is the principal investigator of the study at this site. The Pivotal Study is expected to enroll approximately 1,000 subjects ages 50-75 and will be conducted at up to 15 clinical sites in the U.S. The first part of the trial will enroll up to 200 subjects. The Company is working to enroll new additional study sites in the U.S. and plans to provide updates in the future. The second portion of the trial, anticipated to begin in Q4 2022, will enroll approximately 800 subjects and will compare performance of C-Scan to traditional colonoscopy. Data from this second comparative portion of the study will be analyzed for statistical significance and are intended to serve as the basis for the Company's filing for FDA approval in the U.S.
- In March 2022, the Company consummated a $10 million registered direct offering. The Company believes that it has sufficient capital to fund its ongoing operations and plans into the first quarter of 2024.
"The initiation of the U.S pivotal study in May 2022 represents a key milestone in our path to demonstrate the clinical potential of C-Scan and gather final data to support regulatory approval in the U.S.," said Alex Ovadia, chief executive officer of Check-Cap. "We are progressing towards agreements with additional reputable gastroenterology centers in the U.S. to expand patient enrollment across different U.S. geographies. We believe that C-Scan system has the potential to address a significant unmet need, through the introduction of potentially the first patient-friendly and preparation-free screening test to detect polyps before they may transform into cancer, and look forward to advancing to the final clinical stages of research."
Financial Results for the First Quarter Ended March 31, 2022
Net research and development expenses were $4.1 million for the three months ended March 31, 2022 compared to $2.4 million for the same period in 2021. The increase is primarily due to (i) an increase of approximately $0.7 million in salary and related expenses, mainly as a result of increased employee head count, (ii) an increase of approximately $0.4 million in other research and development expenses, including clinical related expenses, (iii) a $0.2 million increase in material, subcontractors and consultants' expenses, and (iv) an increase of approximately $0.1 million in share-based compensation. The Company expects that clinical related expenses will increase in the upcoming quarters as it progresses in its ongoing U.S. pivotal study.
The increase in net research and development expenses between 2022 and 2021 is also due to a $0.3 million grant from the Israel Innovation Authority, which amount was recorded as a deduction from research and development expenses in the three months ended March 31, 2021.
General and administrative expenses were $1.8 million for the three months ended March 31, 2022, compared to $1.2 million for the same period in 2021. The increase is primarily due to a $0.4 million increase in professional services, a $0.1 million increase in other general expenses, mainly associated with directors' and officers' liability insurance, and a $0.1 million increase in share-based compensation.
Operating loss was $5.9 million for the three months ended March 31, 2022, compared to an operating loss of $3.6 million for the same period in 2021.
Net finance income was $51,000 for the three months ended March 31, 2022, compared to net finance expenses of $9,000 for the same period in 2021.
Net loss was $5.8 million for the three months ended March 31, 2022, compared to $3.6 million for the same period in 2021.
Cash and cash equivalents, restricted cash and short-term bank deposits as of March 31, 2022 were $55.7 million as compared to $51.9 million as of December 31, 2021. On March 3, 2022, the Company consummated a registered direct offering for the sale of 20,000,000 of the Company's ordinary shares and accompanying warrants to purchase up to an aggregate of 15,000,000 of the Company's ordinary shares. The registered direct offering resulted in gross proceeds to the Company of $10.0 million or approximately $8.9 million net of offering expenses. The Company believes that it has sufficient capital to fund its ongoing operations and plans into the first quarter of 2024.
The number of outstanding ordinary shares as of March 31, 2022 was 116,411,949. As of May 30, 2022, the number of outstanding ordinary shares was 116,411,949.
About Check-Cap
Check-Cap is a clinical stage medical diagnostics company aiming to redefine colorectal cancer (CRC) screening through the introduction of C-Scan®, the first and only patient-friendly preparation-free screening test to detect polyps before they may transform into colorectal cancer and enable early intervention and cancer prevention. The Company's disruptive capsule-based screening technology aims to help millions of people to stay healthy through preventive CRC screening. C-Scan 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 as it travels naturally along the gastrointestinal tract. C-Scan is non-invasive and requires no sedation. It requires no bowel preparation, allowing the patients to continue their daily routine with no interruption. C-Scan is not intended to replace colonoscopy. A positive C-Scan result should be followed by colonoscopy. C-Scan is an investigational device and is not available for sale in the United States.
Legal Notice Regarding Forward-Looking Statements
This press release contains "forward-looking statements" about the Company's expectations, beliefs or intentions regarding, among other things, its product development efforts, business, financial condition, results of operations, strategies or prospects. 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, 2021 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
Investor Contacts
Irina Koffler
LifeSci Advisors, LLC
646.970.4681
ikoffler@lifesciadvisors.com
Meirav Gomeh-Bauer
LifeSci Advisors, LLC
+972(0)-54-476-4979
Meirav@lifesciadvisors.com
Media Contact
Mónica Rouco Molina
Account Supervisor - Europe
LifeSci Communications
mroucomolina@lifescicomms.com
CHECK CAP LTD. | |||||
CONSOLIDATED UNAUDITED BALANCE SHEETS | |||||
(U.S. dollars in thousands except share and per share data) | |||||
March 31, | December 31, | ||||
2 0 2 2 | 2 0 2 1 | ||||
Assets | |||||
Current assets | |||||
Cash and cash equivalents | $ | 11,263 | $ | 26,457 | |
Restricted cash | 350 | 350 | |||
Short-term bank deposit | 44,127 | 25,104 | |||
Prepaid expenses and other current assets | 860 | 839 | |||
Total current assets | 56,600 | 52,750 | |||
Non-current assets | |||||
Property and equipment, net | 1,828 | 1,793 | |||
Operating leases | 1,162 | 1,116 | |||
Total non-current assets | 2,990 | 2,909 | |||
Total assets | $ | 59,590 | $ | 55,659 | |
Liabilities and shareholders' equity | |||||
Current liabilities | |||||
Accounts payable and accruals | |||||
Trade | $ | 970 | $ | 1,050 | |
Other | 1,102 | 680 | |||
Employees and payroll accruals | 2,257 | 1,961 | |||
Operating lease liabilities | 370 | 350 | |||
Total current liabilities | 4,699 | 4,041 | |||
Non-current liabilities | |||||
Royalties provision | 134 | 132 | |||
Operating lease liabilities | 800 | 795 | |||
Total non-current liabilities | 934 | 927 | |||
Shareholders' equity | |||||
Share capital, Ordinary shares, 2.4 NIS par value (360,000,000 | |||||
83,602 | 68,787 | ||||
Additional paid-in capital | 84,374 | 90,089 | |||
Accumulated deficit | (114,019) | (108,185) | |||
Total shareholders' equity | 53,957 | 50,691 | |||
Total liabilities and shareholders' equity | $ | 59,590 | $ | 55,659 | |
CHECK CAP LTD. | ||||||||
CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS | ||||||||
(U.S. dollars in thousands, except share and per share data) | ||||||||
Three months ended March 31, | ||||||||
2022 | 2021 | |||||||
Research and development expenses, net | $ | 4,128 | $ | 2,406 | ||||
General and administrative expenses | 1,757 | 1,151 | ||||||
Operating loss | 5,885 | 3,557 | ||||||
Finance Income (loss), net | 51 | (9) | ||||||
Net loss for the period | $ | 5,834 | $ | 3,566 | ||||
Loss per share: | ||||||||
Net loss per ordinary share basic and diluted | 0.06 | 0.05 | ||||||
Weighted average number of ordinary | 102,634,171 | 68,071,059 | ||||||
CHECK CAP LTD. | |||||||||||||
CONSOLIDATED UNAUDITED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | |||||||||||||
(U.S. dollars in thousands, except share and per share data) | |||||||||||||
Number of ordinary | Amount | Additional | Accumulated | Total | |||||||||
Balance as of January 1, 2022 | 96,411,949 | $ | 68,787 | $ | 90,089 | $ | (108,185) | $ | 50,691 | ||||
Issuance of ordinary shares | 20,000,000 | 14,815 | (5,965) | - | 8,850 | ||||||||
Share-based compensation | - | - | 250 | - | 250 | ||||||||
Net loss | - | - | - | (5,834) | (5,834) | ||||||||
Balance as of March 31, 2022 | 116,411,949 | $ | 83,602 | $ | 84,374 | $ | (114,019) | $ | 53,957 | ||||
Number of ordinary | Amount | Additional | Accumulated | Total shareholders' | |||||||||
Balance as of January 1, 2021 | 46,239,183 | $ | 31,646 | $ | 75,715 | $ | (90,983) | $ | 16,378 | ||||
Issuance of ordinary shares in | 24,204,682 | 18,099 | 1,120 | - | 19,219 | ||||||||
RSUs vesting | 24,395 | 18 | (18) | - | - | ||||||||
Share-based compensation | - | - | 73 | - | 73 | ||||||||
Net loss | - | - | - | (3,566) | (3,566) | ||||||||
Balance as of March 31, 2021 | 70,468,260 | $ | 49,763 | $ | 76,890 | $ | (94,549) | $ | 32,104 | ||||
CHECK-CAP LTD. | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
(U.S. dollars in thousands) | ||||
Three months ended | ||||
March 31, | ||||
2022 | 2021 | |||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
Net loss | $ | (5,834) | $ | (3,566) |
Adjustments required to reconcile net loss to net | ||||
Depreciation | 76 | 43 | ||
Share-based compensation | 250 | 73 | ||
Financial income, net | (51) | (57) | ||
Changes in assets and liabilities items: | ||||
Increase in prepaid and other current assets and non- | (18) | (142) | ||
Increase in trade accounts payable, accruals and other | 389 | 85 | ||
Increase in employees and payroll accruals | 296 | 208 | ||
Increase in royalties provision | 3 | 42 | ||
Net cash used in operating activities | $ | (4,889) | $ | (3,314) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Purchase of property and equipment | (200) | (33) | ||
Investment in short-term bank and other deposits, net | (18,999) | (8,381) | ||
Net cash used in investing activities | $ | (19,199) | $ | (8,414) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
Exercise of warrants into ordinary shares, net of issuance | - | 19,219 | ||
Issuance of ordinary shares in the registered direct offerings, | 8,894 | - | ||
Net cash provided by financing activities | $ | 8,894 | $ | 19,219 |
Net (decrease) increase in cash, cash equivalents | (15,194) | 7,491 | ||
Cash, cash equivalents and restricted cash at the | 26,807 | 8,053 | ||
Cash, cash equivalents and restricted cash at the end | $ | 11,613 | $ | 15,544 |
Supplemental disclosure of non-cash flow | ||||
Purchase of property and equipment included in accounts | $ | 71 | $ | 32 |
Payable due to issuance costs | 45 | - | ||
Assets acquired under operating leases | 129 | 916 | ||
Supplemental disclosure of cash flow information: | ||||
Cash paid for taxes | 1 | - | ||
Interest received | $ 61 | $ 6 | ||
SOURCE Check-Cap Ltd.
