Theralase Releases 2019 Financial Results
Toronto, Ontario – April 29, 2020, Theralase® Technologies Inc. (“Theralase” or “Company“) (TSXV:TLT) (OTCQB:TLTFF), a clinical stage pharmaceutical company focused on the research and development of light activated Photo Dynamic Compounds (“PDCs“) and their associated drug formulations intended to safely and effectively destroy various cancers, releases the audited annual consolidated financial statements for the year ended December 31, 2019.
Total revenue for the year ended December 31, 2019 decreased $964,051 from $1,734,073 for the same period in 2018, a 44% decrease. The TLC-2000 represented 66% of sales in 2019 and 70% of sales in 2018.
In Canada, revenue decreased 31% to $835,403 from $1,205,312. In the US, revenue decreased 68% to $96,574 from $304,785 and international revenue decreased 86% to $32,074 from $223,975. The decrease in total revenue in 2019 is due to the restructuring of the sales and marketing departments resulting in the resignation and/or termination of certain sales and marketing personnel.
Cost of sales for the year ended December 31, 2019 was $903,296 which included a one-time provision for inventory of $277,896 resulting in an adjusted cost of sales of $625,400 (65% of revenue) with an adjusted gross margin of $338,651 (35% of revenue), compared to a cost of sales of $786,433 (45% of revenue) in 2018, resulting in a gross margin of $947,639 or 55% of revenue. The gross margin decrease, year over year, is attributed to decreased revenues and fixed production salaries for the TLC-1000 and TLC-2000 product lines.
For the year ended December 31, 2019, selling expenses decreased to $716,343 (74% of revenues), from $871,405 (50% of revenues) in 2018, an 18% decrease. The decrease in selling expenses is primarily due to the restructuring of the Canadian and US sales and marketing departments, resulting in the resignation and/or termination of certain sales and marketing personnel.
Administrative expenses for the year ended December 31, 2019 increased to $2,604,808 from $1,739,665 in 2018, representing a 50% increase.The increase in administrative expenses is attributed to increased spending on administrative salaries (70%), director and advisory fees (198%) and stock based compensation (137%).
Net research and development expenses for the year ended December 31, 2019 increased to $4,159,724 from $1,703,803 in 2018, a 144% increase.
Increases in research and development expenses are primarily due to:
- Increased expenses for enrolling and treating patients in the Non-Muscle Invasive Bladder Cancer (“NMIBC“) Phase II study (“Study II“).
- Development of the TLC-2000 laser system.
Research and development expenses represented 56% of the Company’s operating expenses for the year ended December 31, 2019, and represent an investment into the research and development of the Company’s Photo Dynamic Therapy (“PDT“) technology.
The net loss for the year ended December 31, 2019 was $7,413,914 which included $677,224 of net non-cash expenses (i.e.: amortization, stock-based compensation expense and foreign exchange gain/loss). This compared to a net loss for the same period in 2018 of $3,356,877, which included $409,816 of net non-cash expenses. The PDT division represented $4,579,855 of this loss (62%) for the year ended December 31, 2019.
The increase in net loss is primarily attributed to:
- Increased investment in research, development and clinical expense of Study II.
- Decreased revenues of the TLC-1000 and TLC-2000.
- Study II progress. Theralase is conducting a NMIBC Phase II clinical study with 4 Canadian study sites, specifically, University Health Network (“UHN“), London Health Science Centre (“LHSC“), McGill University Health Centre (“MUHC“) and Nova Scotia Health Authority (“NSHA“). To date, 8 patients have been treated at UHN and 4 patients treated at MUHC for a total of 12 patients.
- Clinical study sites status. Canadian clinical study sites are currently on hold for patient enrolment, treatment and follow-up due to the current COVID-19 pandemic. Theralase will continue to monitor the COVID-19 pandemic, provincial and federal guidelines in order to manage its business in compliance with all health and safety best practices. No new patients will be enrolled or treated at any Canadian clinical study site, nor will any existing patient currently enrolled in the clinical study be treated a second time or be assessed by a Principal Investigator (“PI“) for their follow up visits, until the clinical study sites re-commence operation. Theralase is in constant communication with all Canadian clinical study sites for any update on re-commencing patient enrollment and treatment activities.
- Onboarding additional study sites. The Company has approximately 15 additional clinical study sites located in Canada & US that are at various stages of the on-boarding process. Moreover, under the agreement with the urology Trial Management Organization (“TMO“), the Company will start enrolling and treating patients in the US at various clinical study sites, subject to successful approval of the U.S. Food and Drug Administration (“FDA“) Investigational New Drug (“IND“) submission and COVID-19 pandemic status. The Company plans to launch a total of approximately 20 study sites in Canada and US.
- FDA IND status. On November 25, 2019, Theralase received a letter from the FDA placing the IND on Full Clinical Hold pending resolution of specific deficiencies identified in the letter. Theralase has addressed these deficiencies and expects a response from the FDA on or about mid May 2020.
- Breakthrough Therapy Designation. If the Company is able to show similar efficacy results observed in the Phase Ib NMIBC clinical study at an interim analysis when approximately 20 to 25 patients have been enrolled and treated, Theralase plans to submit the interim analysis to the FDA in support of a Breakthrough Therapy Designation (“BTD“) as proposed by the FDA. As of April 27, 2020, 12 patients have been treated representing approximately 50% of the interim milestone to submit an analysis to the FDA in support of a BTD.
- Additional cancer indications. Theralase is conducting pre-clinical studies to determine the next cancer indication for Rutherrin® a proprietary formulation of the lead Photo Dynamic Compound (“PDC“), TLD-1433 combined with transferrin. Once these studies have been completed, confirmatory Good Laboratory Practices (“GLP“) studies will be undertaken, prior to human use. When Study II is well underway; with the majority of 20 study sites open and recruiting patients, the Company expects to expand the breadth of indications by investigating an additional cancer indication in a Phase Ib human clinical studies.
About Theralase® Technologies Inc.
Theralase® is a clinical stage pharmaceutical company dedicated to the research and development of light activated Photo Dynamic Compounds and their associated drug formulations intended to safely and effectively destroy various cancers.
This news release contains “forward-looking statements” which reflect the current expectations of the Company’s management for: future growth, results of operations, performance, business prospects and opportunities. Such statements include, but are not limited to, statements regarding the Company’s proposed development plans with respect to Photo Dynamic Compounds and their drug formulations. Wherever possible, words such as “may“, “would“, “could“, “should“, “will“, “anticipate“, “believe“, “plan“, “expect“, “intend“, “estimate“, “potential for” and similar expressions have been used to identify these forward-looking statements. These statements reflect management’s current beliefs with respect to future events and are based on information currently available to management. Forward-looking statements involve significant risks, uncertainties and assumptions including with respect to the ability of the Company to: adequately fund, secure the requisite regulatory approvals to commence and successfully complete a Phase II NMIBC clinical study in a timely fashion and implement its development plans. Many factors could cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements; including, without limitation, those listed in the filings made by the Company with the Canadian securities regulatory authorities (which may be viewed at www.sedar.com). Should one or more of these risks or uncertainties materialize or should assumptions underlying the forward looking statements prove incorrect, actual results, performance or achievements may vary materially from those expressed or implied by the forward-looking statements contained in this news release. These factors should be considered carefully and prospective investors should not place undue reliance on the forward-looking statements. Although the forward-looking statements contained in the press release are based upon what management currently believes to be reasonable assumptions, the Company cannot assure prospective investors that actual results, performance or achievements will be consistent with these forward-looking statements. The Company disclaims any intention or obligation to revise forward-looking statements whether as a result of new information, future developments or otherwise except as required by law. All forward-looking statements are expressly qualified in their entirety by this cautionary statement.