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Check-Cap Reports Second Quarter 2023 Financial Results

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ISFIYA, Israel, Aug. 4, 2023 /PRNewswire/ -- Check-Cap Ltd. (the "Company" or "Check-Cap") (NASDAQ: CHEK),  today announced financial results for the second quarter and six months ended June 30, 2023.

Financial Results for the Second Quarter Ended June 30, 2023

Research and development expenses, net, were $4.5 million for the three months ended June 30, 2023, compared to $3.5 million for the same period in 2022, an increase of $1.0 million

The increase is primarily due to (i) an increase of approximately $0.4 million in materials and subcontractors, mainly associated with the termination of clinical studies and operations, (ii) an increase of approximately $0.3 million mainly due to termination expenses on account of prior notice period to employees and employee retention costs, and (iii) an increase of approximately $0.2 million in other research and development expenses, including clinical related expenses and regulatory consultants. 

General and administrative expenses were $1.6 million for the three months ended June 30, 2023, compared to $1.3 million for the same period in 2022, an increase of $0.3 million. The increase is primarily due to (i) an increase of approximately $0.2 million in salary and related expenses, mainly due to termination expenses on account of prior notice period to employees and employee retention costs and (ii) an increase of approximately $0.4 million in professional services, offset in part as a result of a reduction in share-based compensation of $0.1 million and  a $0.2 million decrease in other general expenses, mainly associated with directors' and officers' liability insurance. 

Impairment of fixed assets was $1.4 million for the three months ended June 30, 2023. Due to the changes in circumstances that indicate that the carrying amount of an asset may not be recoverable, the Company reviewed its long-lived assets for impairment in accordance with ASC 360-10 "Accounting for the Impairment or Disposal of Long-Lived Assets". Therefore, the Company recorded an impairment loss of $1.4 million.

Operating loss was $7.4 million for the three months ended June 30, 2023, compared to an operating loss of $4.9 million for the same period in 2022.

Finance income, net, was approximately $0.5 million for the three months ended June 30, 2023, compared to $0.1 million for the same period in 2022, an increase of approximately $0.4 million. The increase in finance income, net is primarily due to an increase in interest income on short-term deposits of $0.3 million as compared to the three months ended June 30, 2022 and $0.1 million for exchange rate differences.

Net loss was $6.9 million for the three months ended June 30, 2023, compared to $4.8 million for the same period in 2022.

Cash and cash equivalents, restricted cash and short-term bank deposits as of June 30, 2023 were $32.4 million, compared to $37.4 million as of March 31, 2023 and $42.1 million as of December 31, 2022.

The number of outstanding ordinary shares as of June 30, 2023 was 5,849,216.

Financial Results for the Six Months Ended June 30, 2023

Research and development expenses, net, were $8.2 million for the six months ended June 30, 2023, compared to $7.7 million for the same period in 2022, an increase of $0.5 million. The increase is primarily due to (i) an increase of approximately $0.4 million in materials and subcontractors, mainly associated with the termination of clinical studies and operations (ii) an increase of approximately $0.4 million in other research and development expenses, including clinical related expenses and regulatory consultants. The increase in expenses was offset in part by a decrease in salary and related expenses of $0.1 million mainly as a result of a reduction in bonus expenses and currency exchange rate fluctuation as compared to the same period in 2022, net of termination expenses on account of prior notice period to employees and employee retention costs and by $0.1 million decrease in share-based compensation.

General and administrative expenses were $2.8 million for the six months ended June 30, 2023, compared to $3.1 million for the same period in 2022 a decrease of $0.3 million. The decrease is primarily due to a $0.3 million decrease in general expenses and (ii) a decrease of $0.2 million in share-based compensation. The decrease in expenses was offset in part by an increase in salary and related expenses of $0.1 million mainly due to employee retention costs and termination expenses on account of prior notice period, offset in part by a reduction in bonus expenses and currency exchange rate fluctuation as compared to the same period in 2022.

Impairment of fixed assets was $1.4 million for the six months ended June 30, 2023.

Operating loss was $12.3 million for the six months ended June 30, 2023, compared to $10.8 million for the same period in 2022.

Net finance income was $1.0 million for the six months ended June 30, 2023, compared to $0.1 million for the same period in 2022. The increase in finance income, net is primarily due to an increase in interest income on short-term deposits of $0.7 million as compared to the second quarter of 2022 and $0.1 million for exchange rate differences.

Net loss was $11.3 million for the six months ended June 30, 2023, compared to $10.6 million for the same period in 2022.

Net cash used in operating activities was $9.8 million for the six months ended June 30, 2023, compared to $10.3 million for the same period in 2022.

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 and enable early intervention and cancer prevention. The Company's disruptive capsule-based screening technology aims to 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. 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.  C-Scan is an investigational device and is not available for sale in the United States.

Legal Notice Regarding Forward-Looking Statements

This press release contains "forward-looking statements" about the Company's expectations, beliefs or intentions regarding, among other things, its product development efforts, business, financial condition, results of operations, strategies or prospects. 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, 2022 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

Media Contact

Mónica Rouco Molina
Account Supervisor - Europe
LifeSci Communications
mroucomolina@lifescicomms.com

 

 

CHECK CAP LTD

CONSOLIDATED UNAUDITED BALANCE SHEETS

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


June 30,

December 31,


2023

2022


 Unaudited

 Audited

Assets






Current assets



Cash and cash equivalents

$

2,254

$

4,090

Restricted cash


350


352

Short-term bank deposit


29,815


37,609

Prepaid expenses and other current assets


838


579

Total current assets


33,257


42,630






Non-current assets





Property and equipment, net


245


1,751

Operating leases


223


1,060

Total non-current assets


468


2,811

Total assets

$

33,725

$

45,441






Liabilities and shareholders' equity










Current liabilities





Accounts payable and accruals





Trade

$

783

$

952

Other


675


802

Employees and payroll accruals


1,946


1,261

Other current liabilities


48


56

Operating lease liabilities


83


337

Total current liabilities


3,535


3,408






Non-current liabilities





Royalties provision


-


94

Operating lease liabilities


-


627

Total non-current liabilities


-


721






Shareholders' equity





Share capital, Ordinary shares, 48 NIS par value (18,000,000 authorized shares as of June 30, 2023
and December 31, 2022, respectively;5,849,216 and 5,844,463 shares issued and outstanding as of
June 30, 2023 and December 31, 2022, respectively) (1)


83,728


83,664

Additional paid-in capital


85,075


84,941

Accumulated deficit


(138,613)


(127,293)

Total shareholders' equity


30,190


41,312






Total liabilities and shareholders' equity

$

33,725

$

45,441

 

 

 

CHECK CAP LTD 


CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS


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





Six months ended June 30,

Three months ended June 30,



2023

2022

2023

2022








Research and development expenses, net

$

8,151

$

7,673

$

4,480

$

3,545


General and administrative expenses


2,762


3,100


1,583


1,343


Impairment of fixed assets


1,364


-


1,364


-


Operating loss


12,277


10,773


7,427


4,888












Finance Income , net


957


132


549


81


Loss before income tax


11,320


10,641


6,878


4,807












Net loss for the period

$

11,320

$

10,641

$

6,878

$

4,807


Loss per share:










Net loss per ordinary share basic and diluted

$

1.94

$

1.94

$

1.18

$

0.82












Weighted average number of ordinary shares outstanding - basic and diluted


5,847,392


5,497,548


5,848,565


5,840,089


 

 

 

CHECK CAP LTD.

CONSOLIDATED UNAUDITED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

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



Number of


Additional


Total


Ordinary


paid-in

Accumulated

shareholders'


Shares (1)

Amount

capital

deficit

equity







Balance as of January 1, 2023

5,844,463

$

83,664

$

84,941

$

(127,293)

$

41,312

Share-based compensation

-


-


156


-


156

Net loss

-


-


-


(4,442)


(4,442)

RSUs vesting

3,375


46


(46)


-



-

Balance as of March 31, 2023

5,847,838

$

83,710

$

85,051

$

(131,735)

$

37,026

Share-based compensation

-


-


42


-


42

RSUs vesting

1,378


18


(18)


-



-

Net loss

-


-


-


(6,878)


(6,878)

Balance as of June 30, 2023

5,849,216

$

83,728

$

85,075

$

(138,613)

$

30,190

 

Balance as of January 1, 2022

4,840,089

$

68,787

$

90,089

$

(108,185)

$

50,691

Issuance of ordinary shares and warrants in March 2022 registered
direct offerings, net of issuance expenses in an amount of $1,150

1,000,000


14,815


(5,965)


-


8,850

Share-based compensation

-


-


250


-


250

Net loss

-


-


-


(5,834)


(5,834)

Balance as of March 31, 2022

5,840,089

$

83,602

$

84,374

$

(114,019)

$

53,957

Share-based compensation

-


-


274


-


274

Net loss

-


-


-


(4,807)


(4,807)

Balance as of June 30, 2022

5,840,089

$


83,602

$


84,648


$


(118,826)

$

49,424

 

 

CHECK-CAP LTD.


CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS


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





Six months ended



June 30,



2023

2022


CASH FLOWS FROM OPERATING ACTIVITIES




Net loss

$

(11,320)

$

(10,641)


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






Depreciation


190


159


Impairment of fixed assets


1,364


-


Share-based compensation


198


525


Financial income, net


(323)


(239)


Changes in assets and liabilities items:






Increase in prepaid and other current assets and non-current assets


(255)


(152)


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


(270)


320


Increase (decrease) in employees and payroll accruals


686


(293)


Decrease in royalties provision


(94)


(25)


Net cash used in operating activities

$

(9,824)

$

(10,346)








CASH FLOWS FROM INVESTING ACTIVITIES






Purchase of property and equipment


(83)


(323)


Changes in short-term deposits


8,069


(13,000)


Net cash provided by (used in) investing activities

$

7,986

$

(13,323)








CASH FLOWS FROM FINANCING ACTIVITIES












Issuance of ordinary shares in the registered direct offerings, net of issuance expenses


-


8,850


Net cash provided by financing activities

$

-

$

8,850








Net increase in cash, cash equivalents and restricted cash


(1,838)


(14,819)


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


4,442


26,807


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

$

2,604

$

11,988


 

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SOURCE Check-Cap Ltd.

Check-Cap Ltd.

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