Check-Cap Reports Third Quarter 2022 Financial Results and Provides a Corporate Update
ISFIYA, Israel, Nov. 30, 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 and provided a corporate update for the third quarter and nine months ended September 30, 2022.
Third Quarter and Recent Highlights:
- Continued effort to expand number of U.S. sites that will participate in the calibration and statistically powered portions of the U.S. pivotal study of C-Scan. In parallel, the Company has significantly increased the enrollment pace of average risk patients in the Israeli sites, contributing to the calibration portion of the study. The calibration portion of the study is designed to provide further optimization of C-Scan functionality and patient experience towards the statistically powered portion of the U.S. pivotal study. The required lead time to activate new sites in the U.S. is still longer than expected. Also, patient recruitment rate in the activated U.S. sites is still lower than expected. Consequently, the Company has initiated an extensive patient outreach effort, expected to expedite the enrollment pace within the upcoming months. Assuming sites' activation and calibration proceeds as planned, the Company continues to expect the second part of the U.S. pivotal study to start in mid-2023.
- On November 23, 2022, the Company effected a reverse share split of the Company's ordinary shares at the ratio of 1-for-20, such that each twenty (20) ordinary shares, par value NIS 2.40 per share, consolidated into one (1) ordinary share, par value NIS 48.00. The first date the Company's ordinary shares commenced trading on the Nasdaq Capital Market after implementation of the reverse split was Friday, November 25, 2022. Following the implementation of the reverse split, the Company's authorized share capital is comprised of 18 million ordinary shares. Issued and outstanding shares are approximately 5.8 million ordinary shares, from approximately 116 million ordinary shares previously. In addition, a proportionate adjustment was made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding options and warrants entitling the holders to purchase ordinary shares.
"During the third quarter, we have significantly accelerated the pace of patient enrollment in Israel, following an extensive patient outreach campaign which brought high interest and response from average risk patients. In our effort to expand U.S. site participation, our clinical team is working to implement similar patient outreach strategies as those in Israel, which we believe will help accelerate patient enrollment pending IRB approvals," said Alex Ovadia, chief executive officer of Check-Cap. "We have also scaled-up our manufacturing, as well as engagement with key suppliers, which further enables the Company to secure and sustain the entire production process and robust supply chain of C-Scan devices during the trial."
Financial Results for the Third Quarter Ended September 30, 2022
Research and development expenses were $3.6 million for the three months ended September 30, 2022, compared to $3.0 million for the same period in 2021. The increase is primarily due to (i) an increase of approximately $0.3 million in salary and related expenses, mainly as a result of increased employee head count, and (ii) an increase of approximately $0.3 million in clinical related expenses and regulatory consultants. The Company expects that clinical expenses will increase in the upcoming quarters as it progresses in its ongoing U.S. pivotal study.
General and administrative expenses were $1.4 million for the three months ended September 30, 2022, compared to $1.2 million for the same period in 2021. The increase is primarily due to 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 $5.0 million for the three months ended September 30, 2022, compared to $4.3 million for the same period in 2021.
Net finance income was $0.3 million for the three months ended September 30, 2022, compared to $22,000 for the same period in 2021.
Net loss was $4.7 million for the three months ended September 30, 2022, compared to $4.2 million for the same period in 2021.
Cash and cash equivalents, restricted cash and short-term bank deposits as of September 30, 2022 were $46.0 million, compared with $50.2 million as of June 30, 2022 and $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 second quarter of 2024.
Financial Results for the Nine Months Ended September 30, 2022
Research and development expenses were $11.3 million for the nine months ended September 30, 2022, compared to $8.2 million for the same period in 2021. The increase is primarily due to (i) an increase of approximately $1.5 million in salary and related expenses, mainly as a result of increased employee head count, (ii) an increase of approximately $1.0 million in other research and development expenses, including clinical related expenses and regulatory consultants and (iii) an increase of approximately $0.2 million in share-based compensation. 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 nine months ended September 30, 2021.
General and administrative expenses were $4.5 million for the nine months ended September 30, 2022, compared to $3.5 million for the same period in 2021. The increase is primarily due to a $0.4 million increase in professional services, a $0.3 million increase in other general expenses, mainly associated with directors' and officers' liability insurance, and a $0.3 million increase in share-based compensation.
Operating loss was $15.8 million for the nine months ended September 30, 2022, compared to $11.7 million for the same period in 2021.
Net finance income was $0.4 million for the nine months ended September 30, 2022, compared to $18,000 for the same period in 2021.
Net loss was $15.4 million for the nine months ended September 30, 2022, compared to $11.7 million for the same period in 2021.
Net cash used in operating activities was $14.6 million for the nine months ended September 30, 2022, compared to $11.9 million for the same period in 2021.
Basis of Presentation
The financial information for the three and nine months ended September 30, 2022 included in this press release doesn't reflect the impact of the reverse split which became effective on November 25, 2022.
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, Ph.D.
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) | ||||||||
September 30, | December 31, | |||||||
2022 | 2021 | |||||||
Unaudited | Audited | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 9,348 | $ | 26,457 | ||||
Restricted cash | 354 | 350 | ||||||
Short-term bank deposit | 36,249 | 25,104 | ||||||
Prepaid expenses and other current assets | 591 | 839 | ||||||
Total current assets | 46,542 | 52,750 | ||||||
Non-current assets | ||||||||
Property and equipment, net | 1,846 | 1,793 | ||||||
Operating leases | 1,159 | 1,116 | ||||||
Total non-current assets | 3,005 | 2,909 | ||||||
Total assets | $ | 49,547 | $ | 55,659 | ||||
Liabilities and shareholders' equity | ||||||||
Current liabilities | ||||||||
Accounts payable and accruals | ||||||||
Trade | $ | 849 | $ | 1,050 | ||||
Other | 600 | 680 | ||||||
Employees and payroll accruals | 1,834 | 1,961 | ||||||
Other current liabilities | 198 | - | ||||||
Operating lease liabilities | 353 | 350 | ||||||
Total current liabilities | 3,834 | 4,041 | ||||||
Non-current liabilities | ||||||||
Royalties provision | 101 | 132 | ||||||
Operating lease liabilities | 687 | 795 | ||||||
Total non-current liabilities | 788 | 927 | ||||||
Shareholders' equity | ||||||||
Share capital, Ordinary shares, 2.4 NIS par value (360,000,000 authorized shares as of September 30, | ||||||||
31, 2021, respectively; 116,483,029 and 96,411,949 shares issued and outstanding as of September 30, | ||||||||
31, 2021, respectively) | 83,653 | 68,787 | ||||||
Additional paid-in capital | 84,852 | 90,089 | ||||||
Accumulated deficit | (123,580) | (108,185) | ||||||
Total shareholders' equity | 44,925 | 50,691 | ||||||
Total liabilities and shareholders' equity | $ | 49,547 | $ | 55,659 | ||||
CHECK CAP LTD | ||||||||||||||||
CONSOLIDATED UNAUDITED STATEMENTS OF COMPREHENSIVE LOSS | ||||||||||||||||
(U.S. dollars in thousands, except share and per share data) | ||||||||||||||||
Nine months ended September 30, | Three months ended September 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Research and | $ | 11,315 | $ | 8,223 | $ | 3,641 | $ | 3,036 | ||||||||
General and | 4,504 | 3,520 | 1,404 | 1,227 | ||||||||||||
Operating loss | 15,819 | 11,743 | 5,045 | 4,263 | ||||||||||||
Finance income, net | 424 | 18 | 291 | 22 | ||||||||||||
Loss before income tax | 15,395 | 11,725 | 4,754 | 4,241 | ||||||||||||
Net loss for the period | $ | 15,395 | $ | 11,725 | $ | 4,754 | $ | 4,241 | ||||||||
Loss per share: | ||||||||||||||||
Net loss per ordinary | $ | 0.14 | $ | 0.15 | $ | 0.04 | $ | 0.04 | ||||||||
Weighted average | 111,884,046 | 78,238,314 | 116,454,150 | 95,853,149 | ||||||||||||
CHECK CAP LTD. | |||||||||||||||||
CONSOLIDATED UNAUDITED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | |||||||||||||||||
(U.S. dollars in thousands, except share and per share data) | |||||||||||||||||
Number of | Additional | Total | |||||||||||||||
Ordinary | paid-in | Accumulated | shareholders' | ||||||||||||||
Shares | Amount | capital | deficit | equity | |||||||||||||
Balance as of January | 96,411,949 | $ | 68,787 | $ | 90,089 | $ | (108,185) | $ | 50,691 | ||||||||
Issuance of ordinary | 20,000,000 | 14,815 | (5,965) | - | 8,850 | ||||||||||||
RSUs vesting | 71,080 | 51 | (51) | - | |||||||||||||
Share-based | - | - | 779 | - | 779 | ||||||||||||
Net loss | - | - | - | (15,395) | (15,395) | ||||||||||||
Balance as of | 116,483,029 | $ | 83,653 | $ | 84,852 | $ | (123,580) | $ | 44,925 | ||||||||
Balance as of January | 46,239,183 | $ | 31,646 | $ | 75,715 | $ | (90,983) | $ | 16,378 | ||||||||||
Exercise of warrants, | 24,204,682 | 18,099 | 1,120 | - | 19,219 | ||||||||||||||
Issuance of ordinary | 25,925,926 | 19,011 | 12,790 | - | 31,801 | ||||||||||||||
RSUs vesting | 35,158 | 26 | (26) | - | - | ||||||||||||||
Share-based | - | - | 268 | - | 268 | ||||||||||||||
Net loss | - | - | - | (11,725) | (11,725) | ||||||||||||||
Balance as of | 96,404,949 | $ | 68,782 | $ | 89,867 | $ | (102,708) | $ | 55,941 | ||||||||||
CHECK CAP LTD. | ||||||||||||||
CONSOLIDATED UNAUDITED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | ||||||||||||||
(U.S. dollars in thousands, except share and per share data) | ||||||||||||||
Number of | Additional | Total | ||||||||||||
Ordinary | paid-in | Accumulated | shareholders' | |||||||||||
Shares | Amount | capital | deficit | equity | ||||||||||
Balance as of June 30, 2022 | 116,411,949 | $ | 83,602 | $ | 84,648 | $ | (118,826) | $ | 49,424 | |||||
RSU's vesting | 71,080 | $ | 51 | (51) | - | |||||||||
Share-based compensation | - | - | $ | 255 | $ | 255 | ||||||||
Net loss | - | - | - | $ | (4,754) | $ | (4,754) | |||||||
Balance as of September 30, 2022 | 116,483,029 | $ | 83,653 | $ | 84,852 | $ | (123,580) | $ | 44,925 | |||||
Balance as of June 30, 2021 | 70,473,641 | $ | 49,767 | $ | 76,951 | $ | (98,467) | $ | 28,251 | |||||
Issuance of ordinary shares and | 25,925,926 | 19,011 | 12,790 | 31,801 | ||||||||||
RSU's vesting | 5,382 | $ | 4 | $ | (4) | - | - | |||||||
Share-based compensation | - | - | $ | 130 | - | $ | 130 | |||||||
Net loss | - | - | - | $ | (4,241) | (4,241) | ||||||||
Balance as of September 30, 2021 | 96,404,949 | $ | 68,782 | $ | 89,867 | $ | (102,708) | $ | 55,941 | |||||
CHECK-CAP LTD. | ||||||||
CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS | ||||||||
(U.S. dollars in thousands, except share and per share data) | ||||||||
Nine months ended | ||||||||
September 30, | ||||||||
2022 | 2021 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net loss | $ | (15,395) | $ | (11,725) | ||||
Adjustments required to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation | 254 | 139 | ||||||
Share-based compensation | 779 | 268 | ||||||
Financial income, net | (295) | (47) | ||||||
Changes in assets and liabilities items: | ||||||||
Decrease (Increase) in prepaid and other current assets and non-current assets | 248 | (819) | ||||||
Increase in trade accounts payable, accruals and other current liabilities | 6 | 243 | ||||||
(Decrease) Increase in employees and payroll accruals | (127) | 37 | ||||||
(Decrease) increase in royalties provision | (30) | 24 | ||||||
Net cash used in operating activities | $ | (14,560) | $ | (11,880) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Purchase of property and equipment | (395) | (743) | ||||||
Investment in short-term bank and other deposits | (11,000) | (6,700) | ||||||
Net cash used in investing activities | $ | (11,395) | $ | (7,443) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Exercise of warrants into ordinary shares, net of issuance expenses | — | 19,219 | ||||||
Issuance of ordinary shares in the registered direct offerings, net of issuance expenses | 8,850 | 32,008 | ||||||
Net cash provided by financing activities | $ | 8,850 | $ | 51,227 | ||||
Net (decrease) increase in cash, cash equivalents and restricted cash | (17,105) | 31,904 | ||||||
Cash, cash equivalents and restricted cash at the beginning of the period | 26,807 | 8,053 | ||||||
Cash, cash equivalents and restricted cash at the end of the period | $ | 9,702 | $ | 39,957 | ||||
Nine months ended | ||||||||
September 30, | ||||||||
2022 | 2021 | |||||||
Supplemental disclosure of non-cash flow information | ||||||||
Purchase of property and equipment included in accounts payable and accrued expenses | 89 | 133 | ||||||
Financing fees included in other account payable and accruals | — | 207 | ||||||
Assets acquired under operating lease | 307 | 968 | ||||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for taxes | 23 | 26 | ||||||
Interest received | 377 | 25 | ||||||
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SOURCE Check-Cap Ltd.
