Check-Cap Reports Second Quarter 2016 Financial Results

ISFIYA, Israel, Aug. 15, 2016 /PRNewswire/ -- Check-Cap Ltd. (the "Company" or "Check-Cap") (NASDAQ: CHEK, CHEKW), a clinical stage medical diagnostics company engaged in the development of an ingestible capsule for preparation-free, colorectal cancer screening, today provided a corporate update and announced its financial results for the second quarter and six months ended June 30, 2016.

"We are encouraged with the progress made in recent months in advancing both the Check Cap System and other key corporate objectives," said Bill Densel, CEO of Check-Cap.  "The recent registered direct financing and grant by the Israeli Office of the Chief Scientist furnishes us with financial flexibility which we believe provides us with funding through the end of 2017 for our ongoing clinical program and U.S. pilot study.  We are currently on target to submit the Check Cap System for CE Marking in the first half of 2017, and remain focused on bringing our system to market."

Recent Highlights:

• The Company closed a registered direct offering of ordinary shares and pre-paid warrants with gross proceeds of $5.9 million with a single health-care focused institutional investor.
• The Company entered into a strategic relationship with GE Healthcare to develop and validate high-volume manufacturing for X-ray source production and assembly into Check-Cap's capsule. Upon successful completion, the parties may discuss collaboration on execution of a high-volume manufacturing facility and distribution of the Check-Cap system.
• The Company received an award of a grant in the amount of NIS 4.8 million (or approximately $1.25 million) for 2016 from the Israeli Office of the Chief Scientist (the "OCS").
• The Company was granted two new patents, the first in the US and the second in Europe that broaden the intellectual property position covering its core X-ray technology. These latest additions build on an existing portfolio which includes 21 granted patents, 2 allowed patents and 35 pending patent applications.

Financial Results for the Second Quarter Ended June 30, 2016

Research and development expenses, net were $1.1 million in the three months ended June 30, 2016, compared to $1.4 million in the same period in 2015. This decrease was primarily due to a $561,000 increase in participation of the OCS (pro-rated credited to R&D expenses), a $119,000 decrease in subcontractors and materials and $50,000 decrease in share based compensation. This decrease was partially offset by an increase of $423,000 in salary and related expenses.

General and administrative expenses were $0.9 million in the three months ended June 30, 2016, compared to $1.2 million in the same period in 2015. This decrease was primarily due to a decrease in personnel related cost of $139,000 and other general and administrative expenses of $107,000.

Operating loss was $2.0 million for the three months ended June 30, 2016, compared to $2.6 million in the same period in 2015.

Finance expenses, net were $15,000 in the three months ended June 30, 2016, consisted primarily of $29,000 finance expenses as a result of exchange rate differences, compared to finance income, net of $132,000 in the same period in 2015, consisted primarily of $154,000 finance income as a result of exchange rate differences.

Net loss was $2.0 million in the three months ended June 30, 2016, compared to $2.4 million in the same period in 2015.

Non-GAAP net loss was $1.6 million in the three months ended June 30, 2016, compared to $2.0 million in the same period in 2015.

Cash, cash equivalents and short-term bank deposit totaled $9.4 million at June 30, 2016, compared to $11.7 million at March 31, 2016.  Check-Cap's cash balance as of June 30, 2016 does not include the grant from the OCS or net proceeds from the registered direct offering.

Financial Results for the Six Months Ended June 30, 2016

Research and development expenses, net were $2.9 million in the six months ended June 30, 2016, compared to $2.7 million in the same period in 2015. This increase was primarily due to the progress made in the development of the Check-Cap system and to ongoing clinical trial expenses, including an increase in salaries and related expenses of $1.1 million due to increased headcount and a $81,000 increase in other research and development expenses. This increase was partially offset by a decrease of $409,000 in share-based compensation and a $602,000 increase in participation of the OCS (pro-rated credited to R&D expenses).

General and administrative expenses were $2.0 million in the six months ended June 30, 2016, compared to $3.7 million in the same period in 2015. This decrease was primarily due to a decrease in share-based compensation of $1.5 million, a $131,000 decrease in personnel related expenses and a $79,000 decrease in other general and administrative related expenses.

Operating loss was $4.9 million for the six months ended June 30, 2016, compared to $6.4 million in the same period in 2015.

Finance income, net was $143,000 in the six months ended June 30, 2016, compared to $186,000 in the same period in 2015.

Net loss was $4.7 million in the six months ended June 30, 2016, compared to $6.2 million in the same period in 2015.

Non-GAAP net loss was $4.0 million in the six months ended June 30, 2016, compared to $3.7 million in the same period in 2015.

Net cash used in operating activities was $4.8 million in the six months ended June 30, 2016, compared to $3.8 million in the same period in 2015.

A reconciliation of GAAP results to non-GAAP results is provided below.

The number of outstanding ordinary shares as of June 30, 2016 was 12,254,479. This number does not include the ordinary shares that were issued in the registered direct offering.

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, changes in royalties provision and revaluation of warrants to purchase preferred shares. 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 the world's first ingestible capsule system for preparation-free, less-invasive colorectal cancer screening.

The capsule utilizes innovative ultra-low dose X-ray and wireless communication technologies to scan the inside of the colon as it moves naturally, while the patient follows his or her normal daily routine.   After passage, the system generates a 3D map of the inner surface of the colon which enables detection of polyps and cancer.  Designed to increase the willingness of individuals to participate in recommended colorectal cancer screening, the Check-Cap system addresses many frequently-cited barriers, including laxative bowel preparation, invasiveness, and sedation. The Check-Cap 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 to Follow

 

 

 

 

 

 

 

CONTACT:

Investors

David Carey

Lazar Partners Ltd.

212-867-1768

[email protected]

Vivian Cervantes

PCG Advisory

212-554-5482

[email protected]

Media

Erich Sandoval or Rob Sawyer

Lazar Partners Ltd.

213-908-6226 or 212-843-0209

[email protected]   

[email protected]

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/check-cap-reports-second-quarter-2016-financial-results-300313571.html

SOURCE Check-Cap Ltd.