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Check-Cap Reports First Quarter 2021 Financial Results and Corporate Update

Check-Cap Reports First Quarter 2021 Financial Results and Corporate Update

PR Newswire

ISFIYA, Israel, May 12, 2021 /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, 2021 and provided a corporate update.

Check_Cap_Logo

Q1 2021 and Recent Highlights:

  • The U.S. Food and Drug Administration (FDA) has approved the Company's Investigational Device Exemption (IDE) application permitting Check-Cap to begin a pivotal study of C-Scan in the U.S.
  • The FDA has granted the Company Breakthrough Device Designation for C-Scan.
  • The Company continues to scale up manufacturing to support upcoming clinical trials, primarily the Company's U.S. pivotal study.
  • Due to technical issues associated with a single source supplier, the Company has recently experienced some manufacturing delays, but continues to expand its entire production process to meet its target manufacturing capacity. The Company expects a delay in its clinical trials, including the initiation of the U.S. pivotal trial, which is now projected to begin by the end of the first quarter of 2022.
  • Strengthened balance sheet during the first quarter of 2021 through a total of $19.2 million proceeds from warrant exercises. Cash and cash equivalents, restricted cash and short-term bank deposits as of March 31, 2021 were $34.0 million.

"We met a crucial milestone this quarter with the FDA approval of the IDE to begin the pivotal trial of C-Scan in the U.S.," said Alex Ovadia, chief executive officer of Check-Cap. "While we anticipate a slight delay in our clinical trials, including the U.S. pivotal trial initiation, now projected for March 2022, we are laser-focused on advancing manufacturing activities to ensure a successful trial launch. We look forward to continuing to advance C-Scan as a colorectal cancer screening patient-friendly solution that has potential to enable early intervention and cancer prevention."

Financial Results for the First Quarter Ended March 31, 2021

Research and development expenses were $2.4 million for the three months ended March 31, 2021, compared to $2.5 million for the same period in 2020.  The decrease is primarily due to a $0.3 million grant received from the Israel Innovation Authority, which amount is reduced from research and development expenses, and $0.2 million decrease in other expenses and clinical-related expenses, offset in part by a $0.2 million increase in material and subcontractors' expenses and $0.2 million increase in salary and related expense.

General and administrative expenses were $1.2 million for the three months ended March 31, 2021, compared to $1.0 million for the same period in 2020. The increase is primarily due to a $0.2 million increase in professional services and other expenses.

Operating loss was $3.6 million for the three months ended March 31, 2021, compared to $3.4 million for the same period in 2020.

Finance expense was $9,000 for the three months ended March 31, 2021, compared to $12,000 for the same period in 2020.

Net loss was $3.6 million for the three months ended March 31, 2021, compared to $3.4 million for the same period in 2020.

Cash and cash equivalents, restricted cash and short-term bank deposits as of March 31, 2021 were $34.0 million as compared to $18.1 million as of December 31, 2020. During the first quarter of 2021, certain warrant holders exercised warrants to purchase an aggregate 24,204,682 ordinary shares, which had been issued in 2020, at exercise prices ranging from $0.75-$0.80, which generated total gross proceeds of approximately $19.2 million to the Company.

The number of outstanding ordinary shares as of March 31, 2021 was 70,468,260. As of May 10, 2021, the number of our outstanding ordinary shares was 70,472,316.

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 to enable early intervention and cancer prevention. The Company's disruptive capsule-based screening technology aims to significantly increase screening adherence worldwide and 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. Unlike other capsule technologies, 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.

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, 2020 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

 

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 1



2 0 2 0


Assets










Current assets










Cash and cash equivalents






15,194




7,703


Restricted cash






350




350


Short-term bank deposit






18,470




10,079


Prepaid expenses and other current assets






440




285


Total current assets







34,454




18,417















Non-current assets













Property and equipment, net






847




823


Operating lease






1,223




398


Total non-current assets







2,070




1,221


Total assets







36,524




19,638















Liabilities and shareholders' equity













Current liabilities













Accounts payable and accruals













 Trade







1,028




862


 Other







295




345


Employees and payroll accruals






1,718




1,510


Operating lease liabilities






327




264


Total current liabilities







3,368




2,981















Non-current liabilities













Royalties provision






196




154


Operating lease liabilities






856




125


Total non-current liabilities







1,052




279















Shareholders' equity












Share capital, Ordinary shares, 2.4 NIS par value (360,000,000 authorized shares
as of March 31, 2021 and December 31, 2020; 70,468,260 and 46,239,183 shares
issued and outstanding as of March 31, 2021 and December 31, 2020, respectively)







49,763




31,646


Additional paid-in capital







76,890




75,715


Accumulated deficit







(94,549)




(90,983)


Total shareholders' equity







32,104




6,234















Total liabilities and shareholders' equity







36,524




19,638



 

CHECK CAP LTD.

CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS

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


Three months ended



March 31,




2021


2020

Research and development expenses, net

2,406


2,462

General and administrative expenses

1,151


957

Operating loss

3,557


3,419




Finance loss, net

9


12

Loss before income tax

3,566


3,431






Net loss for the period

3,566

3,431










Comprehensive loss

3,566

3,431

Loss per share:




Net loss per ordinary share basic and diluted

0.05

0.34





Weighted average number of ordinary shares outstanding - basic and
diluted

68,071,059


 

9,971,098




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 shares



Amount



Additional

paid-in capital



Accumulated

deficit



Total shareholders' equity

Balance as of January 1, 2021


46,239,183


$

31,646


$

75,715


$

(90,983)


$

16,378

Exercise of warrants, net of issuance expenses in an amount of $22


24,204,682



18,099



1,120



-



19,219

    RSU's 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

 


Number of ordinary shares


Amount


Additional

paid-in capital


Accumulated

deficit


Total shareholders' equity

Balance as of January 1, 2020


8,272,908


$

5,407


$

77,964


$

(77,137)


$

6,234

Issuance of ordinary shares in private
placement, net of issuance expenses in
an amount of $30


2,720,178



1,894



2,837



-



4,731

    RSU's vesting


6,633



4



(4)






-

Share-based compensation


-



-



123



-



123

Net loss


-



-



-



(3,431)



(3,431)

Balance as of March 31, 2020


10,999,719


$

7,305


$

80,920


$

(80,568)


$

7,657


















 

CHECK-CAP LTD.

CONSOLIDATED  UNAUDITED STATEMENTS OF CASH FLOWS 

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













Three months ended





March 31,





2021



2020

CASH FLOWS FROM OPERATING ACTIVITIES








Net loss 




(3,566)



(3,431)

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








Depreciation




43



34

Share-based compensation




73



123

Financial income, net




(57)



(15)

Changes in assets and liabilities items:








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




(142)



101

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




85



(325)

Increase in employees and payroll accruals




208



78

Increase in royalties provision




42



2

Net cash used in operating activities




(3,314)



(3,433)









CASH FLOWS FROM INVESTING ACTIVITIES






Purchase of property and equipment




(33)



(57)

Investment in short-term bank and other deposits


(8,381)



(2,258)

Net cash provided by (used in) investing activities




(8,414)



(2,315)







CASH FLOWS FROM FINANCING ACTIVITIES






Exercise of warrants into ordinary shares, net of issuance expenses

19,219



-

Issuance of ordinary shares in private placement, net of issuance expenses 


-



4,731

Net cash provided by financing activities


19,219



4,731






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

7,491



(1,017)

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


8,053



8,035

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




15,544



7,018

Supplemental disclosure of non-cash flow information:






Purchase of property and equipment included in accounts payable and accrued expenses



32



59

Assets acquired under operating leases



916



-

Supplemental disclosure of cash flow information













 

 

Cision View original content:http://www.prnewswire.com/news-releases/check-cap-reports-first-quarter-2021-financial-results-and-corporate-update-301289585.html

SOURCE Check-Cap Ltd.

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