Theralase Reports Fiscal Year 2016 Financial Statements
ACCESSWIRE
TORONTO, ON / ACCESSWIRE / May 1, 2017 / Theralase Technologies Inc. ("Theralase®" or the "Company") (TLT:TSX-V) (TLTFF:OTC), a leading biotech company focused on the commercialization of medical devices to eliminate pain and the development of Photo Dynamic Compounds ("PDCs") to destroy cancer, announced today that for the year ended December 31, 2016, total revenue decreased to $1,918,893 from $1,945,246 for the same period in 2015, a 1% decrease.
In Canada, revenue decreased 16% to $1,423,181 from $1,691,087. In the US, revenue increased 94% to $416,812 from $214,744 and international revenue increased 100% to $78,900 from $39,415. The decrease in Canadian revenue in 2016 and the corresponding increase in US and international revenue is attributable to the Company's ramp-up of the TLC-2000 therapeutic laser system to commercial volumes, systematically building the sales and marketing teams in the Canadian and US market and the learning curves associated with training and developing a new sales force.
As detailed in the Company's clarifying press release dated November 1, 2016, the Company's ability to achieve its revenue targets was reliant on a number of factors including:
Ability to ramp up manufacture of the TLC-2000 to commercial production levels;
Ability to optimize the software for ease of use and functionality;
Ability to execute on a strategic marketing strategy, which introduced and positioned the TLC-2000 in relation to legacy and competitive products;
Ability to recruit, train and retain an experienced sales force to levels required to attain projected sales growth; and
Ability to attract Key Opinion Leaders ("KOLs") to utilize the TLC-2000 to provide support for the wide spread implementation of the technology.
A number of factors contributed to the slower than expected sales growth of the TLC-2000 in 2016, including:
Delays associated with the growth of the Company's sales force in Canada and the US;
Durability and reliability of the TLC-1000 system in the field has slowed the initial trade-up effort;
Substantial development time required to ramp-up the TLC-2000 to commercial levels and to optimize the software; and
KOL recruitment remains ongoing and did not make a major impact on the market in 2016.
In approximately December 2015, the next generation TLC-2000 therapeutic laser technology received FDA 510(k) clearance and Health Canada approval, allowing Theralase the opportunity to introduce the technology to the US and Canadian healthcare markets, respectively.
Theralase commenced recruiting a high performance sales and marketing team in Canada and the US, with the mandate of increasing sales of the TLC-2000 across Canada and the United States, in 2016 and beyond. Once these strategic markets have been established and running independently, Theralase will focus on growing its international revenues through exclusive international distribution agreements.
Cost of sales in 2016 was 796,569 (42% of revenue) resulting in a gross margin of $1,122,324 (58% of revenue), compared to a cost of sales of $629,607 (32% of revenue) in 2015, resulting in a gross margin of $1,315,639 (68% of revenue). Cost of sales is represented by the following costs: raw materials, subcontracting, direct and indirect labour and the applicable share of manufacturing overhead. As revenues increase, volume purchasing should reduce the cost of goods sold.
Selling and marketing expenses in 2016 were $1,614,680 representing 84% of sales, compared with $1,086,354 or 56% of sales in 2015.
The increase is primarily due to increased spending in marketing and sales personnel, which will augment sales of the TLC-2000 in future financial quarters. Selling expenses are expected to continue to increase in future quarters, as the Company expands in Canada, the US and international markets. On-going investment in sales personnel, marketing events and advertising are required to generate and increase revenues in subsequent financial quarters. As revenues increase, selling and marketing expenses should decrease as a percentage of revenue.
Administrative expenses in 2016 were $2,546,706 representing a 4% increase from $2,452,328 in 2015.
Increases in administrative expenses are attributed to the following:
Insurance expenses increased 29% due to increased product liability coverage
Stock based compensation increased by 15%, as a result of vesting of stock options to certain employees, directors and officers of the Company in 2016
Administrative salaries increased by 24%, as a result of hiring clinical and educational staff.
Research and development expenses totaled $1,867,621 in 2016 compared to $3,029,369 in 2015 (38% decrease). Research and development expenses represented 31% of the Company's operating expenses for the period and represent direct investment into the research and development of the TLC-3000 anti-cancer technology.
The net loss in 2016 was $4,921,248, which included $613,521 of net non-cash expenses (i.e.: amortization, stock-based compensation expense, foreign exchange gain/loss and lease inducements). This compared to a net loss for the same period in 2015 of $5,208,144, which included $648,361 of net non-cash expenses, a reduction of 6%.
The PDT division represented $2,813,381 of this loss (57%).
The decrease in net loss is primarily due to:
Decreased investment in research and development of the next generation TLC-2000 therapeutic laser technology
Maintaining investment in research and development of the TLC-3200 Medical Laser and TLC-3400 Dosimetry Fibre Optic Cage ("DFOC") related to the support of a Phase Ib clinical study for NMIBC
Increase in sales, marketing and administrative personnel initiatives, related to the commercialization of the next generation TLC-2000 therapeutic medical laser system
The Photo Dynamic Therapy ("PDT") division is focused on successfully completing a Phase Ib clinical trial for patients afflicted with Non-Muscle Invasive Bladder Cancer ("NMIBC"), utilizing its novel next generation light-activated, anti-cancer drug, TLD-1433.
The Phase Ib clinical trial is designed as follows:
Lead Institution: Princess Margaret Cancer Centre, University Health Network ("UHN")
Lead Scientific Principal Investigator: Lothar Lilge Ph.D.
Lead Clinical Principal Investigator: Girish Kulkarni MD
Title:
A Phase Ib Trial of Intravesical Photodynamic Therapy in Patients with Non-Muscle Invasive Bladder Cancer at High Risk of Progression Who are Refractory to Therapy with Bacillus Calmette-Guerin ("BCG") and Who are Medically Unfit for or Refuse a Cystectomy
Objectives:
Primary: Evaluate the safety and tolerability of PDT employing TLD-1433 and controlled uniform laser light (TLC-3200 System) in subjects with high risk, Ta/T1 or Tis NMIBC that are intolerant or refractory to BCG, and who are not candidates or refuse radical cystectomy
Secondary: Evaluate the pharmacokinetics ("PK") of TLD-1433
Exploratory: Efficacy of PDT employing TLD-1433 and controlled uniform laser light (TLC-3200 System)
Methodology:
Phase Ib, open-label, single-arm, single-center study conducted in Canada. BCG intolerance or refractory disease are defined as inability to tolerate or failure to achieve a tumour-free state after at least one induction (a minimum of 5 instillations) followed by either a second induction (a minimum of 5 instillations) or at least 2 maintenance instillations. Subjects experiencing disease relapse within 12 months or less after finishing the second course of BCG therapy are also considered refractory.
2 phases: In the first phase, 3 subjects will receive PDT (TLC-3200 System) employing 0.35 mg/cm2 (maximum recommended starting dose) TLD-1433. If treatment with the maximum recommended starting dose does not raise significant safety concerns, as determined by the Data Safety Monitoring Board, an additional 6 subjects will receive PDT with 0.70 mg/cm2 (therapeutic dose) TLD-1433
NMIBC PDT Treatment:
Intravesically instill a sterile water based solution of TLD-1433 via catheter, through the urethra, into the bladder of a patient inflicted with NMIBC, who has failed standard of care and who is not indicated or refuses to have their bladder removed
Allow the solution of TLD-1433 to absorb into any resident bladder cancer tumours for approximately sixty (60) minutes
Void the bladder and flush the bladder three times with sterile water to remove any non-adhering TLD-1433 solution not absorbed by any bladder tumours
Admit the patient into the operating room and administer a general anesthetic
Insert a rigid cystoscope through the urethra of the patient into the bladder
Fill the bladder with sterile water to provide shape to the bladder
Insert the TLC-3400 DFOC device into the bladder via the cystoscope's working channel and connect it to the TLC-3200 Medical Laser System
Deploy the DFOC in the bladder (like an umbrella) to strategically place optical detectors at twelve (12) predetermined locations along the bladder wall to precisely monitor the laser light, intended to provide a uniform distribution of laser light energy, in the correct dosage, to the bladder wall
Activate PDC for approximately thirty (30) minutes
Void bladder to remove destroyed bladder cancer cells
The TLC-3200 Medical Laser System delivers green laser light, at a wavelength of 525 nanometers ("nm"), while the DFOC technology monitors the laser light to help provide a uniform distribution of the laser light energy, in the correct dosage, to the bladder wall.
The Phase Ib NMIBC clinical study protocol commenced by instilling a low dose of TLD-1433 PDC into the bladders of three (3) patients with subsequent light activation using the TLC-3200 Medical Laser System. These patients were treated on March 30, 2017, April 12, 2017 and April 18, 2017, respectively. These three (3) patients are currently being monitored for thirty (30) days to ensure safety and tolerability of the procedure. If no Significant Adverse Events ("SAEs") are reported, then an additional six (6) patients will be enrolled at a therapeutic dose, followed by light activation and follow-up monitoring for six (6) months.
If safety and tolerability of the procedure is demonstrated in these nine (9) patients, the Phase Ib study results will support Health Canada approval and a Phase II multi-center efficacy study for NMIBC will be commenced in Canada, the United States and Europe.
Theralase's anti-cancer technology pipeline includes numerous highly effective drug candidates, in various advanced stages of preclinical development. Theralase will continue to validate its extensive data with additional cancer animal models and toxicology analyses to bring these PDC drug candidates online for various cancer and bacterial applications.
Mr. Dumoulin-White concluded that, "The Company looks forward to successfully reporting out on the first 3 patients treated in the Phase Ib clinical study for NMIBC in late May 2017. If successful, this will allow the Company to significantly de-risk its PDT technology and increase shareholder value by successfully transforming from a preclinical to a clinical organization in the field of oncology."
About Theralase Technologies Inc.
Theralase Technologies Inc. ("Theralase®" or the "Company") (TLT.V) (TLTFF:OTC) in its Therapeutic Laser Technology ("TLT") Division designs, manufactures, markets and distributes patented super-pulsed laser technology indicated for the treatment of chronic knee pain and in off-label use the elimination of pain, reduction of inflammation and dramatic acceleration of tissue healing for numerous nerve, muscle and joint conditions. Theralase's Photo Dynamic Therapy ("PDT") Division researches and develops specially designed molecules called Photo Dynamic Compounds ("PDCs"), which are able to localize to cancer cells and then when laser light activated, effectively destroy them.
This news release contains "forward-looking statements" which reflect the current expectations of management of the Corporation's future growth, results of operations, performance and business prospects and opportunities. Such statements include, but are not limited to, statements regarding the proposed use of proceeds. 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. Many factors could cause the Corporation'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 Corporation 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 news release are based upon what management currently believes to be reasonable assumptions, the Corporation cannot assure prospective investors that actual results, performance or achievements will be consistent with these forward-looking statements. The Corporation 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.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchanges) accepts responsibility for the adequacy or accuracy of this release.
