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SPECTRAL ANNOUNCES FIRST QUARTER RESULTS

^{Published on 2011-05-12 14:15:37 - Market Wire}
 

TORONTO, May 12 /CNW/ - Spectral Diagnostics Inc., (TSX:SDI), a Phase III company developing the first theranostic treatment for patients with septic shock, today announced its financial results for the first quarter ended March 31, 2011.

First Quarter Highlights:

• Jointly announced with Medwell Capital Corp., ("Medwell"), (TSX-V:MWC), a non-brokered arrangement whereby Medwell and a consortium of buyers purchased, in private transactions, 12,449,501 common shares and 962,500 common share purchase warrants of Spectral from GrowthWorks Canadian Fund Ltd., representing 15.6% of the issued and outstanding shares. Medwell now owns approximately 45% of the outstanding common shares of Spectral;
  
  
• Continued to effectively manage its U.S. pivotal trial for Toraymyxin, a therapeutic hemoperfusion device that removes endotoxin from the bloodstream. The EUPHRATES trial is targeted to enrol approximately 360 patients at 15 sites in the U.S. over a period of 24 to 30 months, with interim results expected at the midpoint of the trial by the end of the first half of 2012;
  
  
• Subsequent to quarter end, announced that all 15 carefully chosen clinical sites for the EUPHRATES trial are screening patients and enrolment in the Company's Phase III sepsis trial is underway;
  
  
• Concluded the reporting period with $13.6 million in cash and short term investments.

"We continued to execute on all aspects of our unique Phase III clinical trial, the EUPHRATES trial, in the first quarter of this year," said Dr. Paul Walker, President and CEO of Spectral. "In addition, we solidified our investor base during the reporting period. We believe we have laid a strong foundation and look forward to the continued successful implementation of our EUPHRATES trial."

Financial Review

The first quarter ended March 31, 2011 was the Company's first reporting period under International Financial Reporting Standards (IFRS). As anticipated and disclosed in the fourth quarter of 2010, the transition to IFRS had no material impact on Spectral's financial results.

Revenues for the three months ended March 31, 2011 were $622,000 compared to $825,000 for the same period in 2010. Revenues were lower in the first quarter of 2011 compared to the same period in 2010 due primarily to the impact of certain expired distribution contracts which are now in the process of renegotiation.

Operating expenses were consistent year over year, with the exception of employee benefits, which expense category included $126 of stock option expense in the first quarter of 2011 compared to $792 in the same period last year. In addition, management services fees paid to Medwell were $125,000 higher in the quarter as a result of increased management activities in clinical trial oversight and investor relations.

For the three-months ended March 31, 2011, the Company reported a loss of $1,458,000 ($0.02 per share) compared to $1,940,000 ($0.05 per share) for the corresponding period in 2010. The first quarter loss in 2011 was $482 lower than in the same period a year ago due to the lower stock option expense, offset by higher management service fees.

Cash and short term investments on hand at March 31, 2011 were $13.6 million compared with $15.3 million at December 31, 2010. The cash was used to fund operations and for working capital purposes.

The total number of shares outstanding for the Company was 80,550,061 as at March 31, 2011.

About Spectral Diagnostics

Spectral is a Phase III company seeking U.S. FDA approval for its lead theranostics product for the treatment of septic shock. Toraymyxin is a therapeutic hemoperfusion device that removes endotoxin, which can cause sepsis, from the bloodstream. Directed by the Company's Endotoxin Activity Assay (EAA™), the only FDA cleared diagnostic for the risk of developing sepsis, Spectral's EUPHRATES trial is the world's first theranostics trial in the area of sepsis.

Toraymyxin has been approved for therapeutic use in 18 countries, and has been used safely and effectively in more than 80,000 patients to date. In March, 2009, Spectral obtained the exclusive development and commercial rights in the U.S. for Toraymyxin, and in November, 2010, signed an exclusive distribution agreement for this product in Canada. More than 250,000 patients are diagnosed with severe sepsis and septic shock in North America each year, representing a greater than $1 billion market opportunity for Spectral. Spectral is listed on the Toronto Stock Exchange under the symbol SDI. 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 forwardlooking 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

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Spectral Diagnostics Inc.
Condensed Interim Statement of Financial Position
(unaudited)

Spectral Diagnostics Inc.
Condensed Interim Statement of Loss and Comprehensive Loss
For the three months ended March 31, 2011 and 2010
(unaudited)

Spectral Diagnostics Inc.
Condensed Interim Statement of Changes in Equity
(unaudited)

Spectral Diagnostics Inc.
Condensed Interim Statement of Cash Flows
For the three months ended March 31, 2011 and 2010
(unaudited)