Exhibit 99.1
News release via Canada NewsWire, Toronto 416-863-9350
Attention Business/Financial Editors:
PreMD Reports Fiscal 2006 Results and Provides Outlook for 2007
<<
- Expanding the potential for PREVU(x) through additional regulatory
claims as the world's first cost-effective, non-invasive test for
cardiovascular risk assessment for future heart attacks and stroke
and entry into new markets
- Partnership discussions advanced for PREVU(x) and underway for
oncology products
- Direct sales of PREVU(x) POC to retail pharmacies progressing with
programs on-going at Wal-Mart, Costco, Winn-Dixie and Publix
- Recent financing secures support for growth initiatives
- Burn rate for 2007 to decline significantly; major PREVU(x) clinical
trials completed
>>
TORONTO, March 29 /CNW/ - Predictive medicine company PreMD Inc. (TSX:
PMD; Amex: PME) today announced audited financial results for the year ended
December 31, 2006 and provided investors with an operating update and outlook
for fiscal 2007.
"Last year, we made tremendous in-roads with the PREVU(x) product line of
skin cholesterol tests including the expansion into new retail pharmacy
chains; the Canadian and European approval of our second PREVU(x) test, PREVU(x)
LT; and the compilation of data to support a new regulatory claim for PREVU(x)
as a cardiovascular risk assessment test for future heart attacks and stroke,"
said Dr. Brent Norton, President and Chief Executive Officer of PreMD. "The
transition of PREVU(x), since reacquiring the rights at the end of December, has
gone smoothly. We established relationships with customers, suppliers and
other key contacts and have made considerable progress on the implementation
of third party logistics. Importantly, we are building momentum with our
direct sales, specifically into the retail pharmacy segment. In this regard,
we have further developed the relationship with Wal-Mart Quebec and advanced
the collaboration with Medivon LLC who has been instrumental in expanding the
affiliation with Costco while bringing PREVU(x) POC into additional retailers
Winn-Dixie and Publix."
Dr. Norton continued, "looking ahead, we are in advanced discussions with
potential marketing partners for PREVU(x) and are focused on increasing the
market opportunity for the technology. In that regard, we plan to work closely
with the FDA to provide the information the agency suggested surrounding our
510(k) submission for PREVU(x) LT. The life insurance segment of the market
provides us with a tremendous opportunity. In addition, expanding the
regulatory claim for PREVU(x) as a risk assessment test for risk of a future
heart attack and stroke is another catalyst for growth. To this end, the
investigators involved in the PASA study are analyzing the data and have
prepared a manuscript for publication in a leading medical journal. The PASA
data will also form the basis for a submission to the FDA for the expanded
claim. We anticipate filing this submission during the second quarter."
<<
Fiscal 2007 Objectives
----------------------
PREVU(x) Technology
(1) Expand the market for PREVU(x)
- Utilizing the data from the PASA study, seek a new regulatory
claim that would approve PREVU(x) as a risk assessment tool for
risk of future heart attack and stroke - this would be the first
cost-effective, non-invasive test on the market for such an
indication.
- Leverage the technology for utility beyond cardiovascular
disease; in conjunction with a potential partner, a clinical
assessment is under evaluation regarding skin testing for use in
the cosmetics market.
(2) Achieve regulatory clearance in the U.S. for PREVU(x) LT
- PreMD plans to work closely with the FDA regarding its 510(k)
application for PREVU(x) LT for use in the life insurance
industry. PreMD is preparing its response to information the FDA
suggested.
- Relationships with insurance companies are progressing and both
internal and consultant actuaries are assessing the technology.
(3) Enter into a marketing partnership for PREVU(x)
- Discussions are in advanced stages and continuing with potential
partners.
- PreMD likely to manage the life insurance and retail markets
directly.
Oncology Pipeline
(1) Continue to advance cancer clinical program
- The LungAlert(TM) I-ELCAP study has enrolled over 2,500 patients
to date. Interim data is encouraging.
- Enrollment in the ColorectAlert(TM) EDRN study sponsored by the
U.S. National Cancer Institute is progressing well with one-third
of the patients enrolled. A reportable interim analysis is
possible.
- The breast cancer test study at the University of Louisville has
enrolled 42 patients. While the timing is slower than initially
anticipated, the study is expected to be completed by the end of
the second quarter. This study is intended to confirm and extend
earlier published findings that show a positive relationship
between the breast cancer test and stage I breast cancer.
(2) Conclude a strategic partnership for the complete line of PreMD's
oncology products
- Partnership discussions are underway.
>>
"The data collected so far from the various on-going cancer studies is
promising. These studies will define the performance characteristics of the
technology in the early detection of lung, colorectal and breast cancer, three
of the most common causes of cancer," said Dr. Norton. "Our portfolio of
cancer screening products is attracting attention from potential partners and
we believe there is an opportunity to capture great value from the work we
have done in this area."
"In addition to the progress we have made with our technology and
products, we have also engaged in discussions with the law firm that was
previously responsible for managing our patent portfolio. Our discussions
center around the U.S. Patent and Trademark Office's findings that two patents
surrounding the skin tissue cholesterol technology lapsed as a result of the
law firm's failure to use its established docketing procedures regarding
payment of the maintenance fees. We have entered into talks and look forward
to a resolution resulting in receiving a monetary settlement."
Financial Review (All amounts are in Canadian dollars)
------------------------------------------------------
For the year ended December 31, 2006, PreMD reported total revenue of
$3,335,000, consisting of $7,000 in product sales to McNeil, the Company's
licensee through December 28, 2006, and $3,329,000 in license revenue. Upon
termination of the agreements on December 28, 2006, the balance of the
deferred revenues, representing the unamortized portion of the up-front
payments received from the licensee, was recognized as license revenue. The
revenue for the full year ended December 31, 2005 was $1,579,000, which
consisted of $426,000 in product sales to McNeil and $1,153,000 in license
revenue.
The consolidated loss for the year was $5,949,000 or $(0.27) per share
compared with a loss of $4,990,000 or $(0.23) for the year ended December 31,
2005.
Research and development expenditures for the year increased by
$1,654,000 to $4,774,000 from $3,120,000 in 2005. The increase is related to:
<<
- an increase of $1,673,000 in spending on clinical trials,
particularly related to the completion of several large trials for
skin cholesterol in support of additional regulatory submissions, as
well as advancement of the lung cancer trial (the "I-ELCAP" study);
- an increase of $77,000 in product liability insurance;
- a decrease of $173,000 in subcontract research due to the completion
of the development of the second-generation color reader for PREVU(x)
POC
- a decrease in compensation of $41,000.
>>
General and administration expenses amounted to $3,025,000 in 2006,
compared with $2,691,000 in 2005, an increase of $334,000. The variance
primarily reflects:
<<
- a payment of $175,000 upon settlement of litigation and completion of
an amendment to the ColorectAlert License Agreement on January 5,
2007; and related legal expenses of approximately $330,000;
- an increase in market research expenses of $46,000;
- a reduction of $44,000 in expenses (from $44,000 to nil) relating to
a prior year's unsolicited offer to acquire the shares of another
company;
- a reduction in compensation of $105,000 and lower investor relations
and annual report costs;
- a reduction of $38,000 in stock-based compensation for options for
administrative personnel and consultants resulting in a non-cash
expense of $384,000 compared with $422,000 in 2005.
>>
Interest on convertible debentures (issued on August 30, 2005) amounted
to $678,000 in 2006 compared to $228,000 in 2005. The debentures bear interest
at an annual rate of 7%, payable quarterly in either cash or stock. In 2006,
$281,000 of the interest expense was paid in stock, rather than cash, compared
with nil in 2005. Imputed interest of $820,000 (compared with $256,000 in
2005) represents the expense related to the accretion of the liability
component at an effective interest rate of 12.75%.
Amortization expenses for equipment and acquired technology for 2006
amounted to $180,000 compared with $210,000 in 2005. Leasehold improvements in
the research facilities and purchases of equipment to support administration,
clinical trials and manufacturing amounted to $25,000 in 2006 and $130,000 in
2005. In addition, the PREVU(x) trademark was purchased from the former licensee
of the skin cholesterol technology for $150,000. Amortization of deferred
financing fees amounted to $139,000 for 2006 compared to $43,000 in 2005. The
financing fees are amortized over the four-year life of the convertible
debentures.
Recoveries of provincial scientific investment tax credits (ITCs)
amounted to $200,000 compared with $198,923 in 2005. Interest income amounted
to $265,369 compared with $173,130 for 2005.
At December 31, 2006, PreMD had cash, cash equivalents and short-term
investments totaling $3,276,000. On March 28, 2007, PreMD announced that it
had raised $3.9 million in a private placement with existing institutional
investors. The Company believes that its current financial resources will be
sufficient to meet the Company's current operating and capital requirement
through 2008.
Financial statements are attached to this press release. PreMD's complete
fiscal 2006 annual report is available at www.sedar.com.
-------------------------------------------------------------------------
Conference Call and Webcast
PreMD will hold a conference call and webcast today, March 29, 2007, at
10:30 a.m. ET. To access the conference call, please dial 416-915-5651 or
1-800-588-4942. A live audio webcast will be available at
www.premdinc.com, and will be subsequently archived for three months. To
access the replay via telephone, which will be available until April 5,
2007, please dial 416-640-1917 or 1-877-289-8525 and enter the passcode
21225267 followed by the number sign.
-------------------------------------------------------------------------
About PreMD
PreMD Inc. is a leader in predictive medicine, dedicated to developing
rapid, non-invasive tests for the early detection of life-threatening
diseases. PreMD's cardiovascular products are branded as PREVU(x) Skin
Cholesterol Test. The company's cancer tests include ColorectAlert(TM),
LungAlert(TM) and a breast cancer test. PreMD's head office is located in
Toronto, Ontario and its research and product development facility is at
McMaster University in Hamilton, Ontario. For further information, please
visit www.premdinc.com.
This press release contains forward-looking statements. These statements
involve known and unknown risks and uncertainties, which could cause the
Company's actual results to differ materially from those in the
forward-looking statements. Such risks and uncertainties include, among
others, the successful development or marketing of the Company's products, the
competitiveness of the Company's products if successfully commercialized, the
lack of operating profit and availability of funds and resources to pursue R&D
projects, the successful and timely completion of clinical studies, product
liability, reliance on third-party manufacturers, the ability of the Company
to take advantage of business opportunities, uncertainties related to the
regulatory process, and general changes in economic conditions.
In addition, while the Company routinely obtains patents for its products
and technology, the protection offered by the Company's patents and patent
applications may be challenged, invalidated or circumvented by our competitors
and there can be no guarantee of our ability to obtain or maintain patent
protection for our products or product candidates.
Investors should consult the Company's quarterly and annual filings with
the Canadian and U.S. securities commissions for additional information on
risks and uncertainties relating to the forward-looking statements. Investors
are cautioned not to rely on these forward-looking statements. PreMD is
providing this information as of the date of this press release and does not
undertake any obligation to update any forward-looking statements contained in
this press release as a result of new information, future events or otherwise.
(x)Trademark
<<
(Tables Follow)
PreMD Inc.
Incorporated under the laws of Canada
CONSOLIDATED BALANCE SHEETS
(In Canadian dollars)
As at December 31
2006 2005
$ $
-------------------------------------------------------------------------
ASSETS
Current
Cash and cash equivalents 112,577 773,199
Short-term investments 3,163,482 7,905,883
Accounts receivable 11,221 881,891
Inventory 179,219 36,306
Prepaid expenses and other receivables 570,773 317,264
Investment tax credits receivable 200,000 200,000
-------------------------------------------------------------------------
Total current assets 4,237,272 10,114,543
-------------------------------------------------------------------------
Deferred financing fees, net of accumulated
amortization of $174,863 (2005 - $43,059) 347,589 477,725
Capital assets, net 312,410 410,636
Intangible assets, net of accumulated
amortization of $915,027 (2005 - $856,970) 382,229 290,286
-------------------------------------------------------------------------
5,279,500 11,293,190
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current
Accounts payable 963,990 291,125
Accrued liabilities 932,372 655,113
Current portion of deferred revenue - 311,915
-------------------------------------------------------------------------
Total current liabilities 1,896,362 1,258,153
-------------------------------------------------------------------------
Convertible debentures 6,350,680 5,893,340
Deferred revenue - 2,297,400
-------------------------------------------------------------------------
Total liabilities 8,247,042 9,448,893
-------------------------------------------------------------------------
Shareholders' equity (deficiency)
Capital stock 25,263,480 24,449,826
Contributed surplus 2,521,915 1,840,979
Equity component of convertible debentures 2,239,385 2,393,145
Warrants 1,170,020 1,373,718
Deficit (34,162,342) (28,213,371)
-------------------------------------------------------------------------
Total shareholders' equity (deficiency) (2,967,542) 1,844,297
-------------------------------------------------------------------------
5,279,500 11,293,190
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
(In Canadian dollars)
Years ended December 31
2006 2005 2004
$ $ $
-------------------------------------------------------------------------
REVENUE
Product sales 6,513 425,730 183,258
License revenue 3,328,827 1,153,308 302,080
-------------------------------------------------------------------------
3,335,340 1,579,038 485,338
Cost of product sales, including
amortization of nil (2005 -
$3,456; 2004 - $6,600) 36,824 428,650 190,214
-------------------------------------------------------------------------
Gross profit 3,298,516 1,150,388 295,124
-------------------------------------------------------------------------
EXPENSES
Research and development 4,773,762 3,120,276 2,612,770
General and administration 3,024,811 2,690,790 3,346,720
Interest on convertible debentures 677,723 228,481 -
Imputed interest on convertible
debentures 819,609 255,529 -
Amortization 319,205 252,804 224,428
Loss (gain) on foreign exchange 97,746 (35,734) 8,731
-------------------------------------------------------------------------
9,712,856 6,512,146 6,192,649
-------------------------------------------------------------------------
RECOVERIES AND OTHER INCOME
Investment tax credits 200,000 198,923 205,000
Interest 265,369 173,130 123,626
-------------------------------------------------------------------------
465,369 372,053 328,626
-------------------------------------------------------------------------
Net loss for the year (5,948,971) (4,989,705) (5,568,899)
Deficit, beginning of year (28,213,371) (23,223,666) (17,654,767)
-------------------------------------------------------------------------
Deficit, end of year (34,162,342) (28,213,371) (23,223,666)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic and diluted loss per share $ (0.27) $ (0.23) $ (0.26)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Weighted average number of
common shares outstanding 21,663,698 21,487,008 21,276,497
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Canadian dollars)
Years ended December 31
2006 2005 2004
$ $ $
-------------------------------------------------------------------------
OPERATING ACTIVITIES
Net loss for the year (5,948,971) (4,989,705) (5,568,899)
Add (deduct) items not
involving cash
Amortization 319,205 256,260 231,028
Stock-based compensation
costs included in
Research and development
expense 156,920 147,085 123,925
General and administration
expense 383,767 421,812 476,164
Loss (gain) on sale of
capital asset (1,743) - 6,098
Imputed interest on
convertible debenture 819,609 255,529 -
Interest on convertible debenture
paid in common shares 281,462 - -
Loss (gain) on foreign exchange 97,748 (35,734) 8,731
Net change in non-cash working
capital balances related to
operations 1,422,730 (1,061,397) 535,284
Increase (decrease) in deferred
revenue (2,609,315) (301,885) 2,818,100
-------------------------------------------------------------------------
Cash used in operating activities (5,078,588) (5,308,035) (1,369,569)
-------------------------------------------------------------------------
INVESTING ACTIVITIES
Short-term investments 4,589,356 (3,065,568) 1,678,190
Purchase of trademark (150,000) - -
Purchase of capital assets (24,965) (130,310) (164,789)
Sale of capital assets 3,000 - 628
-------------------------------------------------------------------------
Cash provided by (used in)
investing activities 4,417,391 (3,195,878) 1,514,029
-------------------------------------------------------------------------
FINANCING ACTIVITIES
Issuance of convertible debentures - 9,827,616 -
Financing fees (51,399) (861,328) -
Issuance of capital stock, net of
issue costs - 198,400 33,373
-------------------------------------------------------------------------
Cash provided by (used in)
financing activities (51,399) 9,164,688 33,373
-------------------------------------------------------------------------
Effect of exchange rate changes
on cash and cash equivalents 51,974 (127,034) -
-------------------------------------------------------------------------
Net increase (decrease) in cash and
cash equivalents during the year (660,622) 533,741 177,833
Cash and cash equivalents,
beginning of year 773,199 239,458 61,625
-------------------------------------------------------------------------
Cash and cash equivalents,
end of year 112,577 773,199 239,458
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Represented by
Cash 112,577 773,199 173,302
Cash equivalents - - 66,156
-------------------------------------------------------------------------
112,577 773,199 239,458
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Supplemental cash flow information
Cash paid during the year for
interest 396,261 228,481 -
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>
%SEDAR: 00007927E %CIK: 0001179083
/For further information: Brent Norton, President and CEO, Tel: (416)
222-3449 ext. 22, Email: bnorton(at)premdinc.com; Ron Hosking, Vice President
Finance and CFO, Tel: (416) 222-3449 ext. 24, Email: rhosking(at)premdinc.com/
(PMD. PME)
CO: PreMD Inc.
CNW 08:27e 29-MAR-07
