Spectral Medical Announces First Quarter Results and Provides Corporate Update

Tigris Trial Enrollment Reaches 106 Patients

Bought Deal Financing Expected to Fund Completion of Tigris Trial Enrollment

TORONTO, May 13, 2024 (GLOBE NEWSWIRE) -- Spectral Medical Inc. (“Spectral” or the “Company”) (TSX: EDT), a late-stage theranostic company advancing therapeutic options for sepsis and septic shock, today announced its financial results for the first quarter ended March 31, 2024, and provided a corporate update.

Spectral has continued its significant progress throughout the first quarter of 2024 both clinically and operationally and year-to-date enrolled 25 patients for a total of 106 patients out of the 150 total patients target. The Company is focused on the final push to fully enroll and finish the Tigris trial and believes that the continued onboarding of new Tigris sites since the fourth quarter of 2023 could further accelerate enrollment and allow Spectral to rapidly reach the 150-patients target, bringing the Company closer to FDA submission and potential FDA approval. In parallel to its clinical trial, the Company continues to work closely with its commercialization partner, Baxter. In Q1 2024, Baxter exercised its right to maintain its exclusive distribution for PMX products in the U.S. and Canada and paid Spectral a non-dilutive milestone payment. Additionally, Spectral and Baxter mutually agreed to amend the initial term of their commercial partnership to ten years post-FDA approval of PMX. The Company believes this amendment provides a mutually beneficial runway for the parties to maximize PMX commercial economics, while providing motivation for continued support and allocation of resources to the PMX partnership.

Dr. John Kellum, Chief Medical Officer of Spectral Medical, stated, “We continue to witness robust enrollment activity in 2024, with record enrollment rates since the beginning of the year. As we enter the final push to finish Tigris, our clinical team is focused on trial site support with activities such as site visits, refresher training, and clinical communications, and workshops. We are also activating our last group of sites. Ultimately, we want to ensure that our Tigris sites have the support and resources to enroll patients as efficiently as possible. We are committed alongside our trial sites to advancing Tigris and believe PMX, if ultimately approved, will play a major role in reducing the tragic rates of mortality caused by sepsis.”

“I am pleased with the increased level of activity across the Company and its impact on establishing robust trial sites, thus resulting in a significant ramp up of patient enrollment. The recent pace of enrollment, combined with the quality and focus of the current and planned trial sites provide us with confidence in continued robust enrollment activity. The potential to sustain our current pace of enrollment could see us rapidly advance the trial towards completion in the late 2024 to early 2025 timeframe,” said Chris Seto, CEO of Spectral. “Additionally, with our recently announced financing, we have secured funding to finalize Tigris enrollment.”

Corporate Highlights

Tigris:

• Total of 106 patients randomized to date out of the 150 total patients to be enrolled in the Tigris trial.
  • accelerated enrollment experienced in 2024 to date, with 25 patients enrolled so far – represents the most robust enrollment rates since the start of the Tigris trial.
• Currently 22 Tigris sites onboarded
  • addition of three new trial sites in the first quarter – the University of Texas Health Sciences Center at Houston, The Institute for Extracorporeal Life Support (San Antonio, TX), and UCLA.
  • subsequent to the first quarter, the Company added one new site – University of Virginia Health Sciences.
• Investigator Meeting held March 12th and 13th
  • The Company held a Tigris trial Investigator Meeting in conjunction with the 29th International Conference on Advances in Critical Care Nephrology in San Diego.
  • In-person meeting well-attended with multiple stakeholders present, including principal investigators and clinical research coordinators from existing and new trial sites, CRO, Beaufort, and representatives from the Spectral’s strategic partner Baxter.
  • Focus of the meeting was on the practical aspects of diagnosing endotoxic septic shock and treating with PMX, as well as featuring several talks from trial sites on how EAA and PMX could be implemented into routine clinical practice after potential regulatory approval of PMX.
    

PMX Commercialization:

• 90 patient enrollment interim milestone achieved
  • On February 15, 2024, Spectral announced that it had reached the 90-patient enrollment threshold and provided written notification to Baxter of this achievement. Subsequently, Baxter exercised its option to maintain exclusive distribution rights and paid Spectral an ~C$2 million non-dilutive payment.
  • Since inception of partnership, funding support from Baxter has amounted to ~C$15 million – comprised of non-dilutive payments and convertible notes subscriptions.
• Amendment of Initial Term of Exclusive Distribution Agreement
  • In February 2024, the Company and Baxter mutually agreed to amend the initial term of the exclusive distribution agreement to 10 years post-FDA approval; the Company believes the 10-year term provides mutually beneficial runway to maximize PMX commercial economics.
• Commercialization Activities
  • In anticipation of a positive Tigris trial outcome, the Company has been working closely with Baxter on post-approval marketing plans for PMX commercialization. This includes developing product branding, pricing and roll-out plans with numerous Baxter departments, including marketing, regulatory, clinical and reimbursement. Baxter has communicated its intention to undertake a broad marketing campaign on day one of FDA approval for PMX.
  • The Company is also working with Baxter on a sub-study to obtain FDA clearance for hemoperfusion for Baxter’s Prismax device. The Prismax, with its leading installed base in ICUs throughout the U.S., is anticipated to be the primary ICU device utilized for PMX treatments on commercial launch.

Funding:

• On May 9, 2024, Spectral announced a bought deal private placement of convertible notes for gross proceeds of $8,500,000.
  • Based on recent enrollment rates, provides funding beyond full Tigris enrollment of 150 patients.

Financial Review

Revenue for the three-months ended March 31, 2024 was $668,000 compared to $530,000 for the same three-month period last year, representing an increase of $138,000, or 26%. Royalty revenue for the three-months ended March 31, 2024 was $135,000 an increase of $9,000 from $126,000 for the same period in the prior year. This is due to an increase in usage of the Company’s IP from one customer. Product revenue increased by $113,000.

Operating expenses for the three-months ended March 31, 2024, were $4,825,000, compared to $1,625,000 for the same period in the preceding year, an increase of $3,200,000, or 197%. The increase in operating expenses were primarily due to off-setting income booked for fair value adjustment of derivative liabilities in the first quarter of 2023 and an expense booked on the same during the period ended March 31, 2024 with a net impact of $1,591,000. Results were also affected by an increase in the raw material and consumables used, Consulting and Professional fees and foreign exchange loss.

Clinical development and regulatory program costs were $964,000 for the three-months ended March 31, 2024 compared to $431,000 for the same period in the prior year. A significant portion of clinical trial and regulatory costs consists of consulting and professional fees paid to contract research organizations, clinical sites, and other clinical and regulatory consultants. The increase in costs reflects increased activity with respect to the initialization of clinical sites and the randomization of patients into the Tigris clinical trial.

Loss for the three-months ended March 31, 2024 was $4,160,000 ($0.01 per share) compared to a loss of $1,138,000 ($0.01 per share) for the same period in the prior year. The increased loss of $3,067,000 was due to increased operating expenses, partially offset by a reduction in loss from discontinued operations of $40,000 related to the reduction in Dialco operating expenses.

The Company concluded the first quarter of 2024 with cash of $2,074,000 compared to $2,952,000 of cash on hand as of December 31, 2023.

The total number of common shares outstanding for the Company was 279,394,428 at March 31, 2024.

About Spectral

Spectral is a Phase 3 company seeking U.S. FDA approval for its unique product for the treatment of patients with septic shock, Toraymyxin (“PMX”). PMX is a therapeutic hemoperfusion device that removes endotoxin, which can cause sepsis, from the bloodstream and is guided by the Company’s Endotoxin Activity Assay (EAA), the only FDA cleared diagnostic for the risk of developing sepsis.

PMX is approved for therapeutic use in Japan and Europe and has been used safely and effectively on more than 340,000 patients to date. In March 2009, Spectral obtained the exclusive development and commercial rights in the U.S. for PMX, and in November 2010, signed an exclusive distribution agreement for this product in Canada. In July 2022, the U.S. FDA granted Breakthrough Device Designation for PMX for the treatment of endotoxic septic shock. Approximately 330,000 patients are diagnosed with septic shock in North America each year.

The Tigris Trial is a confirmatory study of PMX in addition to standard care vs standard care alone and is designed as a 2:1 randomized trial of 150 patients using Bayesian statistics. Endotoxic septic shock is a malignant form of sepsis https://www.youtube.com/watch?v=6RANrHHi9L8.

The trial methods are detailed in “Bayesian methods: a potential path forward for sepsis trials”.

Spectral is listed on the Toronto Stock Exchange under the symbol EDT. For more information, please visit www.spectraldx.com.

Forward-looking statement

Information in this news release that is not current or historical factual information may constitute forward-looking information within the meaning of securities laws. Implicit in this information, particularly in respect of the future outlook of Spectral and anticipated events or results, are assumptions based on beliefs of Spectral's senior management as well as information currently available to it. While these assumptions were considered reasonable by Spectral at the time of preparation, they may prove to be incorrect. Readers are cautioned that actual results are subject to a number of risks and uncertainties, including the availability of funds and resources to pursue R&D projects, the successful and timely completion of clinical studies, the ability of Spectral to take advantage of business opportunities in the biomedical industry, the granting of necessary approvals by regulatory authorities as well as general economic, market and business conditions, and could differ materially from what is currently expected.

The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this statement.

For further information, please contact:

Ali Mahdavi		Chris Seto
Capital Markets & Investor Relations		CEO
Spinnaker Capital Markets Inc.		Spectral Medical Inc.
416-962-3300
[e-mail]		[e-mail]

Spectral Medical Inc. Condensed Interim Consolidated Statements of Financial Position In CAD (000s), except for share and per share data (Unaudited)
	Notes	March 31,	December 31,
		2024	2023
		$	$
Assets
Current assets
Cash		2,074	2,952
Trade and other receivables		482	186
Inventories		319	366
Prepayments and other assets		980	621
		3,855	4,125
Non-current assets
Right-of-use-asset		536	567
Property and equipment		314	326
Intangible asset		189	193
Investment in iDialco	5	-	-
Total assets		4,894	5,211
Liabilities
Current liabilities
Trade and other payables		2,611	2,820
Current portion of contract liabilities	6	496	727
Current portion of lease liability		123	121
Notes payable	7	278	264
Derivative Liability	7	7,250	6,310
		10,758	10,242
Non-current liability
Lease liability		468	500
Non-current portion of contract liabilities	6	5,412	3,342
Notes payable	7	8,393	7,676
Total liabilities		25,031	21,760
Shareholders' (deficiency) equity	9
Share capital		87,561	87,061
Contributed surplus		8,916	8,916
Share-based compensation		10,547	10,385
Warrants		2,436	2,526
Deficit		(129,597)	(125,437)
Total shareholders' (deficiency) equity		(20,137)	(16,549)
Total liabilities and shareholders' (deficiency) equity		4,894	5,211

Spectral Medical Inc. Condensed Interim Consolidated Statements of Loss and Comprehensive Loss In CAD (000s), except for share and per share data (Unaudited)
	Notes	Three months ended March 31, 2024		Revised (Refer Note 15) Three months ended March 31, 2023
		$		$
Revenue		668		530
Expenses
Raw materials and consumables used		279		137
Salaries and benefits	13	1,000		956
Consulting and professional fees		925		628
Regulatory and investor relations		175		108
Travel and entertainment		76		84
Facilities and communication		120		83
Insurance		105		87
Depreciation and amortization		131		61
Interest expense	7	540		247
Foreign exchange loss		464		(51	)
Share-based compensation		177		(26	)
Other expense		(12	)	(28	)
Net loss on joint arrangement	5	-		85
Fair value adjustment derivative liabilities	7	845		(746	)
		4,825		1,625
Loss and comprehensive loss for the period from continuing operations		(4,157	)	(1,095	)
Loss from discontinued operations	5	(3	)	(43	)
Loss and comprehensive loss for the period		(4,160	)	(1,138	)
Basic and diluted loss from continuing operations per common share	9	(0.01	)	(0.01	)
Basic and diluted loss from discontinued operations per common share	9	0.00		0.00
Basic and diluted loss per common share	9	(0.01	)	(0.01	)
Weighted average number of common shares outstanding - basic and diluted	9	279,472,325		278,547,804

Spectral Medical Inc. Condensed Interim Consolidated Statements of Changes in Shareholders’ Deficiency In CAD (000s) (Unaudited)
	Notes		Number of Shares		Share Capital		Contributed surplus		Share-based compensation		Warrants		Deficit		Total Shareholders’ (deficiency) equity
					$		$		$		$		$		$
Balance January 1, 2023			278,547,804		87,050		8,773		8,908		2,490		(109,744	)	(2,523	)
Loss and comprehensive loss for the year					-		-		-		-		(1,138	)	(1,138	)
Share-based compensation	9				-		-		(26	)	-		-		(26	)
Revised (Refer note 15) Balance, March 31, 2023			278,547,804		87,050		8,773		8,882		2,490		(110,882	)	(3,687	)
RSU released			28,457		11				(11	)			-		-
Warrants issued											179				179
Warrants expired			-		-		143		-		(143	)	-		-
Loss and comprehensive loss for the period			-		-		-		-		-		(14,555	)	(14,555	)
Share-based compensation			-		-		-		1,514		-		-		1,514
Balance December 31, 2023			278,576,261		87,061		8,916		10,385		2,526		(125,437	)	(16,549	)
Balance January 1, 2024			278,576,261		87,061		8,916		10,385		2,526		(125,437	)	(16,549	)
Warrants exercised			750,000		463		-		-		(90	)	-		373
Share options exercised			68,167		37		-		(15	)	-		-		22
Loss and comprehensive loss for the period			-		-		-		-		-		(4,160	)	(4,160	)
Share-based compensation	9		-		-		-		177		-		-		177
Balance March 31, 2024			279,394,428		87,561		8,916		10,547		2,436		(129,597	)	(20,137	)

Spectral Medical Inc. Condensed Interim Consolidated Statements of Cash Flows In CAD (000s) (Unaudited)
	Notes	Three months ended March 31, 2024		Revised (Refer note 15) Three months ended March 31, 2023
		$		$
Cash flow provided by (used in)
Operating activities
Loss for the period		(4,160	)	(1,138	)
Adjustments for:
Depreciation on right-of-use asset		31		24
Depreciation on property and equipment		27		24
Amortization of intangible asset		4		11
Amortization of deferred financing fee		69		24
Unrealized foreign exchange gain/loss		464		(24	)
Interest expense on lease liability		9		10
Accreted interest on notes payable		531		238
Share-based compensation (reversal)		177		(26	)
Net loss on joint venture arrangement		-		85
Fair value adjustment derivative liabilities		846		(746	)
Changes in items of working capital:
Trade and other receivables		(296	)	174
Inventories		47		(9	)
Prepayments and other assets		(359	)	(577	)
Trade and other payables		(453	)	(1,371	)
Contract liabilities		1,839		(194	)
Net cash used in operating activities		(1,224	)	(3,495	)
Investing activities
Purchase of property and equipment		(16	)	-
Net cash used in investing activities		(16	)	-
Financing activities
Lease liability payments		(33	)	(33	)
Proceeds from share options exercised		22		-
Proceeds from warrants exercised		373		-
Net cash provided by financing activities		362		(33	)
Change in cash		(878	)	(3,528	)
Cash, beginning of period		2,952		8,414
Cash, end of period		2,074		4,886