Spectral announces second quarter 2013 results

Spectral Diagnostics Inc., (TSX:SDI) (OTCQX: DIAGF), a Phase III company
developing the first theranostic treatment for patients with severe sepsis and
septic shock, today announced its unaudited financial results for the second
quarter ended June 30, 2013.

Second Quarter Highlights:

• Enrolled patients into the Company's Phase III EUPHRATES trial at an
  accelerated rate compared to the prior year. Directed by the Company's Endotoxin
  Activity Assay (EAA?), which is the only FDA-cleared diagnostic for the risk of
  developing sepsis, Spectral's EUPHRATES trial is targeted to enroll 306
  evaluable patients. Contingent on maintaining current enrollment rates and
  timely site start ups, the trial should be fully enrolled in the second half of
  2014. As of August 12, 2013, 159 patients have been
  randomized into Spectral's EUPHRATES trial.
  


• Announced the appointment of Dr. Gualtiero
  Guadagni as the Company's Vice President, Sales and Marketing. Dr.
  Guadagni will primarily be responsible for the development and expansion of
  commercial activities and market preparation plans for Toraymyxin and Spectral's
  Endotoxin Activity Assay (EAA?) in Canada, the United States and Europe.
  


• Closed a private placement for gross proceeds of $5.6
  million.
  


• Concluded the reporting period with approximately $10.6
  million in cash, cash equivalents and short-term
  investments.
  


• Subsequent to quarter end, disclosed that the trial's composite 28-day
  mortality rate was approximately 33 per cent for randomized patients. The
  composite mortality rate continues to suggest that the Company is enrolling
  patients who are most likely to benefit from Spectral's treatment.

"We made excellent progress with the trial's patient enrollment
in the second quarter, which moves us closer to the study's planned, second
interim analysis," stated Dr. Paul Walker,
President and CEO of Spectral. "We are optimistic that the results from the
second interim analysis should support the successful completion of the trial."

At the second interim analysis, the Data and Safety Monitoring
Board will advise the Company on the trial's safety, efficacy or futility, with
stopping rules in place for efficacy and futility. A sample size recalculation
will be done if necessary. Management intends to disclose the results of the
interim analysis after 184 patients have been randomized and followed for 28
days, and the data from the analysis has been thoroughly reviewed.

Spectral remains on track to disclose information from the second interim
analysis in late 2013 or early 2014.

Financial Review

Revenue for the three months ended June
30, 2013 was $572,000 compared to $599,000 for the same period in the preceding year. For
the six months ended June 30, 2013 revenue was $1,280,000 compared to $1,275,000 for the same period in 2012. It is anticipated
that revenue in 2013 will remain consistent with levels achieved in 2012.

Total expenses for the three months ended June 30, 2013 were $3,642,000
compared to $2,798,000 in the second quarter of
2012. For the six months ended June 30, 2013, total
expenses were $6,449,000 compared to $5,774,000 for the same period in 2012. The increase of
$675,000 for the six months ended June 30, 2013 is primarily attributable to higher
EUPHRATES trial costs ($1,261,000) due to the
accelerated patient enrollment rate, offset by a $475,000 reduction in management service fees.

The Company continues to maintain a low cost operating
structure for its base business and expects no material increase in non clinical
operating costs in 2013.

The Company concluded the second quarter of 2013 with cash,
cash equivalents and short-term investment of $10,600,000 compared to $10,562,000 as at December 31,
2012.

About Spectral Diagnostics

Spectral is a Phase III company seeking U.S. FDA approval for
its lead theranostics product for the treatment of severe sepsis with 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 Japan and Europe, and
has been used safely and effectively on more than 100,000 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 350,000
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, and on the OTCQX
under the symbol DIAGF. 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 forward-looking 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, the ability to manufacture products and supply the market, 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.

Spectral Diagnostics Inc. Condensed Interim Statement of Financial Position
(in thousands of Canadian dollars)
		June 30 2013		December 31 2012
		$		$
		Unaudited		Audited
Assets
Current assets
Cash and cash equivalents		5,459		5,425
Short-term investment		5,189		5,137
Trade and other receivables		563		590
Inventories		418		277
Prepayments		311		226
		11,940		11,655
Non-current assets
Property, plant and equipment		631		497
Intangible assets		422		434
		1,053		931
Total assets		12,993		12,586
Liabilities
Current liabilities
Trade and other payables		1,925		1,913
Deferred revenue		50		99
Total liabilities		1,975		2,012
Equity
Share capital		32,556		27,101
Contributed surplus		3,864		3,864
Other equity reserves		8,366		8,260
Deficit		(33,768)		(28,651)
Total equity		11,018		10,574
Total liabilities and equity		12,993		12,586

Spectral Diagnostics Inc. Condensed Interim Statement of Loss and Comprehensive Loss For the six months ended June, 2013 and 2012 (Unaudited)
(in thousands of Canadian dollars, except for share and per share data)
			Three months ended			Six months ended
				June 30			June 30
			2013	2012		2013	2012
			$	$		$	$
Revenue			572	599		1,280	1,275
Other income			14	30		19	66
Expenses
Changes in inventories of finished goods and
	work- in-process		38	52		121	151
Raw materials and consumables used			170	103		281	202
Employee benefits			714	641		1,454	1,406
Consulting and professional fees			1,874	1,056		3,178	2,246
Management services			175	375		275	750
Regulatory and investor relations			58	99		106	222
Travel and entertainment			451	313		670	459
Depreciation and amortization			59	55		114	106
Foreign exchange (gain)loss			(9)	(7)		-	4
Other expenses			112	111		250	228
			3,642	2,798		6,449	5,774
Operating loss			(3,056)	(2,169)		(5,150)	(4,433)
Finance  income			16	18		33	34
Loss and comprehensive loss for the period			(3,040)	(2,151)		(5,117)	(4,399)
Basic and diluted loss per common share			(0.02)	(0.02)		(0.04)	(0.04)
Weighted average number of common shares
	outstanding		132,139,805	113,883,394		123,062,031	113,883,394

Spectral Diagnostics Inc. Condensed Interim Statement of Changes in Equity (Unaudited)
(in thousands of Canadian dollars, except number of shares)
			Issued capital			Contributed surplus	Share-based compensation	Warrants		Deficit	Total  equity
			Number	$		$	$	$		$	$
Balance, January 1, 2012			113,883,394		27,101	3,864	2,939	5,143		(20,108)	18,939
Loss and comprehensive loss for
	the period		-		-	-	-	-		(4,399)	(4,399)
Share-based compensation			-		-	-	123	-		-	123
Balance, June 30, 2012			113,883,394		27,101	3,864	3,062	5,143		(24,507)	14,663
Balance, January 1, 2013			113,883,394		27,101	3,864	3,117	5,143		(28,651)	10,574
Loss and comprehensive loss for
	the period		-		-	-	-	-		(5,117)	(5,117)
Private placement			18,666,667		5,455	-	-	-		-	5,455
Share-based compensation			-		-	-	106	-		-	106
Balance, June 30, 2013			132,550,061		32,556	3,864	3,223	5,143		(33,768)	11,018

Spectral Diagnostics Inc. Condensed Interim Statement of Cash Flows For the six months ended June  30, 2013 and 2012 (Unaudited)
			Six months ended
			June 30		June 30
			2013		2012
			$		$
Cash flow provided by (used in)
Operating activities
Loss and comprehensive loss for the period			(5,117)		(4,399)
Adjustments for:
	Depreciation on property, plant, and equipment		102		94
	Amortization of intangible assets		12		12
	Share-based compensation		106		123
Changes in items of working capital :
	Trade and other  receivables		27		(125)
	Inventories		(141)		50
	Prepayments		(85)		133
	Trade and other payables		12		35
	Deferred revenue		(49)		(11)
Net cash used in operating activities			(5,133)		(4,088)
Investing activities
Property, plant and equipment expenditures			(236)		(140)
Redemption of short-term investment			5,137		5,086
Purchase of short-term investment			(5,189)		(5,102)
Net cash used in investing activities			(288)		(156)
Financing activities
Private placement			5,455		-
Net cash provided by financing activities			5,455		-
Increase(decrease) in cash and cash equivalents			34		(4,244)
Cash and cash equivalents, beginning of period			5,425		13,470
Cash and cash equivalents, end of period			5,459		9,226

  

 

SOURCE Spectral Diagnostics Inc.

For further information: 

Anthony Businskas
Executive Vice President and CFO
416-626-3233 ext.
2200

Adam Peeler
Investor Relations
TMX Equicom
416-815-0700 ext.
225
[e-mail]