EX-99.1 2 exhibit_99-1.htm EXHIBIT 99.1

Exhibit 99.1
 
 
Check-Cap Reports Fourth Quarter and Full-Year 2018 Financial Results
 
ISFIYA, Israel, March 28, 2019 -- Check-Cap Ltd. (the "Company" or "Check-Cap") (NASDAQ: CHEK) (NASDAQ: CHEKW), (NASDAQ: CHEKZ), a clinical stage medical diagnostics company advancing the development of C-Scan®, the first and only preparation-free capsule based screening method for the prevention of colorectal cancer through the detection of precancerous polyps, today announced financial results for the fourth quarter and full-year ended December 31, 2018.
 
Recent Highlights:
 
·
Announced appointment of Mira Rosenzweig as Chief Financial Officer, bringing nearly 20 years of executive financial management experience to the Check-Cap team.
 
·
Announced approval by the New York University School of Medicine Institutional Review Board (IRB) of a single-arm U.S. pilot study of the C-Scan® system to evaluate its safety, usability, and subject compliance.
 
·
Continued to move forward with the Company’s collaboration with its manufacturing partner, GE Healthcare.
 
·
Completed a registered direct offering that raised gross proceeds of $7.5 million, which provides additional funding to advance the clinical development of the C-Scan® system in the U.S. while preparing for commercialization in Israel and the E.U.
 
Alex Ovadia, chief executive officer of Check-Cap, stated, “During 2018, we made significant progress on a number of fronts, as we are working to develop clear paths to commercialization in major markets worldwide.”
 
“In parallel, we continued to advance regulatory and development activities in the United States, including a single-arm U.S pilot study. We look forward to data from this important study as we work to advance the C-Scan® system toward commercialization in the U.S., which remains our highest corporate priority. “
 
“The C-Scan® system has the potential to increase screening rates by offering patients a non-invasive, preparation-free alternative to colonoscopy for the detection of precancerous polyps, and we are excited about the potential of this technology to improve patient outcomes globally,” Mr. Ovadia concluded.
 
Financial Results for the Fourth Quarter Ended December 31, 2018
 
Research and development expenses, net were $2.4 million for the three months ended December 31, 2018, compared to $1.4 million for the same period in 2017. The increase is primarily attributable to a $266,000 increase in in salaries and related expenses, a $185,000 increase in share-based compensation, a $476,000 increase in materials and a $152,000 increase in other research and development expenses. The increase in materials and other research and development expenses relate to the Company’s clinical trials, primarily its post-CE Mark study and ongoing preparations for its U.S. pilot study. The increase was partially offset by a $57,000 grant received from the Israel Innovation Authority.
 
 
General and administrative expenses were $1.1 million for the three months ended December 31, 2018, compared to $658,000 for the same period in 2017. The increase was primarily due to a $219,000 increase in professional fees, a $176,000 increase in other general and administrative expenses, both as a result of being a public company, and a $68,000 increase in salaries and related expenses. The increase was partially offset by a $48,000 decrease in share-based compensation.
 
Cash and cash equivalents, restricted cash and short-term bank deposits totaled $14.6 million at December 31, 2018, compared to $17.6 million at September 30, 2018 and $7 million at December 31, 2017.
 
Operating loss was $3.5 million for the three months ended December 31, 2018, compared to $2.1 million for the same period in 2017.
 
Finance income, net was $365,000 for the three months ended December 31, 2018, compared to $156,000 for the same period in 2017, as a result of higher income from a change in royalties’ provision and higher interest income on short term deposits.
 
Net loss was $3.1 million for the three months ended December 31, 2018, compared to $1.9 million for the same period in 2017.
 
Financial Results for the Twelve Months Ended December 31, 2018
 
Research and development expenses net, were $7.62 million for the year ended December 31, 2018, compared to $6.84 million for the same period in 2017. The increase is primarily due to a $894,000 increase in materials and a $206,000 increase in other research and development expenses, both relating to the Company’s clinical trials, primarily in connection with the Company’s post-CE Mark clinical study and the preparation for the U.S. pilot study, including obtaining FDA approval. The increase in research and development expenses, was partially offset by a $246,000 decrease in salaries and related expenses, primarily due to the shift of Mr. Ovadia from research and development to general and administrative as the company CEO.
 
General and administrative expenses were $3.45 million for the year ended December 31, 2018, compared to $3.16 million for the same period in 2017. The increase was primarily due to a $444,000 increase in salaries and related expenses, primarily due to a $281,000 in severance paid to the Company’s former CEO, a $419,000 increase in professional fees primarily due to a $202,000 increase in legal fees, and a $325,000 increase in other general and administrative expenses, primarily associated with consulting fees and services incurred as a result of being a public company. The increase was partially offset by a $909,000 decrease in share-based compensation, of which $502,000 relates to reversal of expenses associated with an equity award to our former CEO which was forfeited as a result of his separation from employment.
 
Operating loss was $11.1 million for the year ended December 31, 2018, compared to $10.0 million for the same period in 2017.
 
 
Finance income, net was $473,000 for the year ended December 31, 2018, compared to $236,000 for the same period in 2017, as a result of higher income from a change in royalties’ provision and higher interest income on short term deposits.
 
Net loss was $10.6 million for the year ended December 31, 2018, compared to $9.8 million for the same period in 2017.
 
A copy of the Company’s annual report on Form 20-F for the year ended December 31, 2018 has been filed with the U.S. Securities and Exchange Commission at www.sec.gov and posted on the Company’s investor relations website at http://ir.check-cap.com/. The Company will deliver a hard copy of its annual report, including its complete audited consolidated financial statements, free of charge, to its shareholders upon request to Rachel.Cohen-Menirom@check-cap.com.
 
About Check-Cap
 
Check-Cap is a clinical-stage medical diagnostics company developing C-Scan®, an ingestible capsule-based device for preparation-free colorectal cancer screening.
 
Utilizing innovative ultra-low dose X-ray and wireless communication technologies, the capsule generates information on the contours of the inside of the colon as it passes naturally. This information is used to create a 3D map of the colon, which allows physicians to look for polyps and other abnormalities. Designed to improve the patient experience and increase the willingness of individuals to participate in recommended colorectal cancer screening, C-Scan removes many frequently-cited barriers, such as laxative bowel preparation, invasiveness and sedation.
 
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 “Forward-Looking Statements" and "Risk Factors" in the Company's Annual Report on Form 20-F for the year ended December 31, 2018 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
 
Jeremy Feffer
LifeSci Advisors, LLC
212.915.2568
jeremy@lifesciadvisors.com
 
Meirav Gomeh-Bauer
LifeSci Advisors, LLC
+972(0)-54-476-4979
Meirav@lifesciadvisors.com
 

 
 
CHECK CAP LTD
CONSOLIDATED BALANCE SHEETS
 (U.S. dollars in thousands, except share and per share data)
 
 
        
December 31,
  
 
  
Note
    
2 0 1 8
    
2 0 1 7
  
Assets
                  
Current assets
                  
Cash and cash equivalents
          
8,572
      
6,997
  
Restricted cash
          
350
      
-
  
Short-term bank deposit
          
5,643
      
-
  
Prepaid expenses and other current assets
            
419
      
406
  
Total current assets
            
14,984
      
7,403
  
 
                      
Non-current assets
                        
Property and equipment, net
            
452
      
503
  
Total non-current assets
            
452
      
503
  
Total assets
            
15,436
      
7,906
  
 
                        
Liabilities and shareholders' equity
                        
Current liabilities
                        
Accounts payable and accruals
                        
  Trade
            
1,113
      
608
  
  Other
            
214
      
347
  
Other current liabilities
            
35
      
5
  
Employees and payroll accruals
            
859
      
602
  
Total current liabilities
            
2,221
      
1,562
  
 
                        
Non-current liabilities
                        
Royalties provision
            
185
      
439
  
Total non-current liabilities
            
185
      
439
  
 
                        
Shareholders' equity
                        
Share capital
            
3,456
      
974
  
Additional paid-in capital
            
72,888
      
57,643
  
Other comprehensive loss
            
(13
)
    
-
  
Accumulated deficit
            
(63,301
)
    
(52,712
)
Total shareholders' equity
            
13,030
      
5,905
  
 
                        
Total liabilities and shareholders' equity
            
15,436
      
7,906
  
 
The accompanying notes to the consolidated financial statements are an integral part of them.
 
 
CHECK CAP LTD
CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
 
 
  
Year ended
    
Three months ended
  
 
  
December 31,
    
December 31,
  
 
  
2018
    
2017
    
2018
    
2017
  
Research and development expenses, net
    
7,618
      
6,837
      
2,396
      
1,400
  
General and administrative expenses
    
3,445
      
3,164
      
1,073
      
658
  
Operating loss
    
11,063
      
10,001
      
3,469
      
2,058
  
 
                                
Finance income, net
    
473
      
236
      
365
      
156
  
Loss before tax
    
10,590
      
9,765
      
3,104
      
1,902
  
Tax expenses (gains) on income
    
(1
)
    
6
      
-
      
-
  
Net loss for the period
    
10,589
      
9,771
      
3,104
      
1,902
  
Comprehensive loss:
                                
Net loss
    
10,589
      
9,771
      
3,104
      
1,902
  
Change in fair value of cash flow hedge
    
13
      
-
      
(28
)
    
-
  
                                 
Comprehensive loss
    
10,602
      
9,771
      
3,076
      
1,902
  
Loss per share: 
                                
Net loss per ordinary share basic and diluted
    
2.61
      
6.72
      
0.58
      
1.22
  
 
                                
Weighted average number of ordinary shares outstanding - basic and diluted (in thousands)
    
4,058
      
1,455
      
5,352
      
1,562
  
 
 
 
CHECK-CAP LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands, except share and per share data)
 
 
  
Year ended
December 31,
    
Three months ended
December 31,
  
 
  
2018
    
2017
    
2018
    
2017
  
CASH FLOWS FROM OPERATING ACTIVITIES
                  
Net loss for the period
    
(10,589
)
    
(9,771
)
    
(3,104
)
    
(1,902
)
Adjustments required to reconcile net loss to net cash used in operating activities:
                                
Depreciation and amortization
    
147
      
157
      
29
      
42
  
Share-based compensation
    
(65
)
    
726
      
206
      
69
  
Financial expenses (income), net
    
67
      
(165
)
    
110
      
(10
)
Changes in assets and liabilities items:
                                
Decrease (increase) in prepaid and other current assets and non-current assets
    
(13
)
    
(164
)
    
77
      
(91
)
Increase in trade accounts payable, accruals and other current liabilities
    
416
      
275
      
356
      
211
  
Increase (decrease) in employees and payroll accruals
    
258
      
(126
)
    
(92
)
    
(288
)
Decrease in royalties provision
    
(255
)
    
(82
)
    
(294
)
    
(160
)
Net cash used in operating activities
    
(10,034
)
    
(9,150
)
    
(2,712
)
    
(2,129
)
 
                                
CASH FLOWS FROM INVESTING ACTIVITIES
                                
Purchase of property and equipment
    
(94
)
    
(231
)
    
(80
)
    
(10
)
Proceeds from short-term bank deposit
    
(5,629
)
    
-
      
3,371
      
-
  
Net cash provided by (used in) investing activities
    
(5,723
)
    
(231
)
    
3,291
      
(10
)
                                 
CASH FLOWS FROM FINANCING ACTIVITIES
                                
Exercise of warrants into ordinary shares
    
-
      
196
      
(4
)
    
114
  
Issuance of ordinary shares in the RD offering, net of issuance expenses
    
(30
)
    
4,379
      
(30
)
    
2,071
  
Issuance of ordinary shares in the 2018 Public Offering
    
17,792
      
-
      
(66
)
    
-
  
Net cash provided by financing activities
    
17,762
      
4,575
      
(100
)
    
2,185
  
                                 
Effect of exchange rate changes on cash and cash equivalents
    
(80
)
    
164
      
(42
)
    
11
  
Net increase (decrease) in cash and cash equivalents
    
1,925
      
(4,642
)
    
437
      
57
  
Cash and cash equivalents at the beginning of the period
    
6,997
      
11,639
      
8,485
      
6,940
  
Cash and cash equivalents at the end of the period
    
8,922
      
6,997
      
8,922
      
6,997
  
Supplemental disclosure of non-cash flow information:
                                
Cashless exercise of warrants to purchase ordinary   shares into ordinary shares
    
33
      
8
      
24
      
-
  
Purchase of property and equipment
    
3
      
15
      
35
      
10
  
Issuance expenses in the registered direct offering
    
-
      
30
      
-
      
30
  
Supplemental disclosure of cash flow information
                                
Cash paid for income taxes
    
5
      
3
      
-
      
-
  
 
Investor Contacts          
 
Jeremy Feffer       
LifeSci Advisors, LLC    
212-915-2568   
jeremy@lifesciadvisors.com  
 
Meirav Gomeh-Bauer  
LifeSci Advisors, LLC   
+972(0)-54-476-4979     
Meirav@lifesciadvisors.com