News release via Canada NewsWire, Toronto 416-863-9350
Attention Business/Financial Editors:
PreMD Reports Second Quarter 2007 Results
TORONTO, Aug. 14 /CNW/ - Predictive medicine company PreMD Inc.
(TSX: PMD; Amex: PME) today announced results for the second quarter of fiscal
2007 ended June 30, 2007 ("Q2 2007").
<<
Recent Significant Highlights
- Completed a U.S. marketing and distribution partnership with
AstraZeneca Pharmaceuticals for PREVU(x).
- Submitted a 510(k) application to U.S. Food and Drug Administration
(FDA) for an expanded regulatory claim for PREVU(x) POC.
- Completed a manufacturing and supply agreement with Fisher
Diagnostics (a subsidiary of ThermoFisher Scientific) for the
manufacturing and assembly of PREVU(x) POC test kits and PREVU(x) LT
reagents.
- The American Stock Exchange accepted continued listing plan.
- Received Notice of Allowance for a United States patent on PREVU(x)
LT from United States Patent and Trademark Office (USPTO).
- Granted approval by the Canadian Intellectual Property Office for two
patents titled: 'Screening Test for Early Detection of Colorectal
Cancer' and 'Screening Test for Early Detection of Colorectal
Neoplasia.'
- Awarded registered trademarks for the name 'PreMD' as well as the
corporate slogan 'Predict to Prevent' by the Canadian Intellectual
Property Office.
- Completed two scientific submissions based on findings from PREPARE
and PASA studies.
- Acceptance of PASA abstract for presentation at the American Heart
Association Scientific Sessions 2007.
>>
"Last Fall we outlined several significant company milestones that we
wanted to achieve during 2007. We are pleased with the progress we have made
to date, especially with the recent announcements regarding our agreement with
AstraZeneca, our submission to the FDA for an expanded regulatory claim for
PREVU(x) POC, and our recent acceptance of our PASA abstract by the American
Heart Association," said Brent Norton, president and chief executive officer
of PreMD. "Signing an agreement with AstraZeneca for the marketing and
distribution of PREVU(x) in the U.S. is an important milestone and we are
confident that they are the right partner for the product. It is anticipated
that PREVU(x) will be partnered for distribution within other territories in
2007 as well. Our business development efforts are also focused on other
products in our pipeline, specifically seeking potential partnerships for our
PREVU(x) LT test to the life-insurance industry and our line of oncology
products. In the interim, we anticipate hearing from the FDA regarding our
510 (k) application for PREVU(x) POC, which will strengthen the value of
PREVU(x)."
"In signing a manufacturing and supply agreement with Fisher Diagnostics,
we believe that their expertise could greatly benefit our strategic product
initiatives. Through extensive industry research, we determined that they were
best suited to address PreMD's impending growing supply chain needs, driven by
our recent partnership with AstraZeneca and anticipated partnerships with
other organizations. Also, Fisher Diagnostics is a leading organization that
currently supplies several of the world's leading medical companies."
Dr. Norton continued, "As we look to continually expand our product
platform, our newly allowed patents provide broad protection to our colorectal
cancer screening portfolio and enhance the value of the company's intellectual
property. We continue to initiate and execute clinical trials in our targeted
areas, thereby building a strong foundation for our future in predictive
medicine. We look forward to reporting the achievement of additional
milestones during the remainder of 2007."
Financial Review
----------------
The consolidated net loss for the three months ended Q2 2007 was
$1,341,000 or $(0.05) per share compared with a loss of $2,115,000 or $(0.10)
per share for the quarter ended Q2 2006, primarily due to a decrease in
clinical trial expenses and unrealized foreign exchange gains on the
revaluation of the convertible debentures.
Total product sales were $8,000 for Q2 2007 compared with $5,000 for Q2
2006. License revenue was nil for Q2 2007, compared to $80,000 for Q2 2006.
During Q2 2007, the Company focused on managing the cancer clinical trial
program and on preparing the submission to the FDA requesting an expanded
claim for PREVU(x) POC. Most of the skin cholesterol clinical trials were
completed at the end of 2006. As a result, research and development
expenditures for the quarter decreased by $739,000 to $731,000 from $1,470,000
in Q2 2006. The variance for the period reflects:
<<
- a decrease of $686,000 in spending on clinical trials for PREVU(x),
following the completion of most of the trials;
- a decrease of $152,000 in spending on the cancer clinical trials;
- an increase of $95,000 on product development in support of
manufacturing validation for the new cordless reader and for general
product improvements; and
- a decrease of $15,000 in legal fees on intellectual property.
General and administration expenses amounted to $911,000 for Q2 2007
compared with $689,000 in Q2 2006, an increase of $222,000. The increase for
the quarter includes:
- a decrease in stock-based compensation, a non-cash expense, of
$51,000 to $123,000 for Q2 2007 compared with $174,000 for Q2 2006;
- an increase of $239,000 in professional fees for legal, audit and
consulting related to business development; and
- an increase of $46,000 in expenses related to investor
communications.
>>
Interest on convertible debentures (issued on August 30, 2005) amounted
to $165,000 in Q2 2007 compared with $173,000 in Q2 2006. The debentures bear
interest at an annual rate of 7%, payable quarterly in either cash or stock.
Imputed interest of $255,000 and $173,000 in Q2 2007 and 2006 respectively,
represents the expense related to the accretion of the liability component, at
an effective interest rate of 14.8% (12.75% in 2006), effective January 1,
2007. Amortization of the deferred financing fees is included in imputed
interest whereas it was included in amortization expenses in 2006.
Amortization expenses for capital assets and intangible assets for Q2
2007 amounted to $41,000 compared with $110,000 for Q2 2006.
The gain on foreign exchange was $671,000 for Q2 2007, compared with a
gain of $278,000 for Q2 2006. The major contributing factor for the increase
was the impact of foreign exchange rates on the convertible debentures which
are repayable in U.S. dollars.
Interest income amounted to $37,000 for Q2 2007 compared with $70,000 for
Q2 2006 as a result of lower cash balances. Refundable scientific investment
tax credits ("ITCs") accrued for Q2 2007 amounted to $26,000 versus $70,000
for Q2 2006. This decrease was due to the reduced spending on clinical trials
in 2007.
Accounts payable at June 30, 2007 amounted to $352,000 compared with
$964,000 at December 31, 2006. The large decrease resulted from the payment of
expenses related to clinical trials that were completed near the end of 2006.
As at June 30, 2007, PreMD had cash, cash equivalents and short-term
investments totaling $3,539,000 ($3,276,000 as at December 31, 2006). The
Company invests its funds in short-term financial instruments and marketable
securities. Cash used to fund operating activities during Q2 2007 amounted to
$1,264,000 compared with $1,835,000 in Q2 2006.
To date, the Company has financed its activities through product sales,
license revenues, the issuance of shares and convertible debentures and the
recovery of investment tax credits (ITCs). Management believes that, based on
our reduced cash expenditures and the current expectation of further revenues
from product sales, royalties and license revenues, its existing cash
resources together with the proceeds of the private placement on March 27,
2007 and the ITC receivable of $248,000 will be sufficient to meet its current
operating and capital requirements.
About PreMD Inc.
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, to be marketed and distributed by AstraZeneca. 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. For more information
about PREVU(x), please visit www.prevu.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 success of a plan for regaining compliance with certain continued
listing standards of the American Stock Exchange, 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)
Unaudited
As at As at
June 30, December 31,
2007 2006
$ $
-------------------------------------------------------------------------
ASSETS
Current
Cash and cash equivalents 2,515,438 112,577
Short-term investments 1,023,987 3,163,482
Accounts receivable 8,443 11,221
Inventory 178,004 179,219
Prepaid expenses and other receivables 537,650 570,773
Investment tax credits receivable 248,000 200,000
-------------------------------------------------------------------------
Total current assets 4,511,522 4,237,272
-------------------------------------------------------------------------
Deferred financing fees, net of accumulated
amortization of $174,863 in 2006 - 347,589
Capital assets, net of accumulated amortization
of $883,699 (2006 - $841,611) 268,589 312,410
Intangible assets, net of accumulated
amortization of $953,250 (2006 - $915,027) 344,007 382,229
-------------------------------------------------------------------------
5,124,118 5,279,500
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
Current
Accounts payable 352,106 963,990
Accrued liabilities 716,590 932,372
-------------------------------------------------------------------------
Total current liabilities 1,068,696 1,896,362
-------------------------------------------------------------------------
Convertible debentures 5,704,665 6,350,680
-------------------------------------------------------------------------
Total liabilities 6,773,361 8,247,042
-------------------------------------------------------------------------
Shareholders' deficiency
Capital stock 28,883,949 25,263,480
Contributed surplus 2,758,169 2,521,915
Equity component of convertible debentures 2,239,385 2,239,385
Warrants 1,562,154 1,170,020
Deficit (37,092,900) (34,162,342)
-------------------------------------------------------------------------
Total shareholders' deficiency (1,649,243) (2,967,542)
-------------------------------------------------------------------------
5,124,118 5,279,500
-------------------------------------------------------------------------
-------------------------------------------------------------------------
PreMD Inc.
CONSOLIDATED STATEMENTS OF LOSS, COMPREHENSIVE LOSS AND DEFICIT
(In Canadian dollars)
Unaudited
Three months ended Six Months Ended
June 30 June 30
------------------------- -------------------------
2007 2006 2007 2006
$ $ $ $
REVENUE
Product sales 8,250 5,015 26,334 5,132
License revenue - 79,624 - 156,675
-------------------------------------------------------------------------
8,250 84,639 26,334 161,807
Cost of product sales 3,720 4,255 8,566 4,383
-------------------------------------------------------------------------
Gross Profit 4,530 80,384 17,768 157,424
-------------------------------------------------------------------------
EXPENSES
Research and development 730,799 1,469,815 1,371,636 2,985,524
General and
administration 911,141 688,617 1,552,105 1,265,865
Interest on convertible
debentures 165,400 172,623 328,983 338,137
Imputed interest on
convertible debentures 231,228 172,720 479,574 404,132
Amortization 41,318 110,110 82,698 154,932
Gain on foreign exchange (670,888) (227,675) (754,441) (215,043)
-------------------------------------------------------------------------
1,408,998 2,336,210 3,060,555 4,933,547
-------------------------------------------------------------------------
RECOVERIES AND OTHER
INCOME
Investment tax credits 26,000 70,000 48,000 130,000
Interest 37,105 70,394 64,229 156,929
-------------------------------------------------------------------------
63,105 140,394 112,229 286,929
-------------------------------------------------------------------------
Net loss for
the period (1,341,363) (2,115,432) (2,930,558) (4,489,194)
Deficit, beginning
of period (35,751,537) (30,587,133) (34,162,342) (28,213,371)
-------------------------------------------------------------------------
Deficit, end
of period (37,092,900) (32,702,565) (37,092,900) (32,702,565)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic and diluted
loss per share $(0.05) $(0.10) $(0.12) $(0.21)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Weighted average
number of common
shares outstanding 24,950,579 21,566,994 23,505,688 21,559,121
-------------------------------------------------------------------------
-------------------------------------------------------------------------
PreMD Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Canadian dollars)
Unaudited
Three months ended Six Months Ended
June 30 June 30
------------------------- -------------------------
2007 2006 2007 2006
$ $ $ $
-------------------------------------------------------------------------
OPERATING ACTIVITIES
Net loss for
the period (1,341,363) (2,115,432) (2,930,558) (4,489,194)
Add items not
involving cash
Amortization 41,318 110,110 82,698 154,932
Stock compensation
costs included in:
Research and
development expense 35,286 58,904 67,383 94,719
General and
administration
expense 123,312 173,741 180,605 243,212
Gain on sale of
capital asset 143 - 143 -
Imputed interest
on convertible
debentures 231,228 172,720 479,574 404,132
Interest on
convertible
debentures paid
in common shares 133,967 79,702 270,911 79,702
Deduct gain on
foreign exchange (670,888) (277,675) (754,441) (215,043)
Net change in non-cash
working capital
Balances related
to operations 182,749 44,745 (838,718) 1,296,533
Decrease in deferred
revenue - (81,867) - (158,592)
-------------------------------------------------------------------------
Cash used in operating
activities (1,264,248) (1,835,052) (3,442,403) (2,589,599)
-------------------------------------------------------------------------
INVESTING ACTIVITIES
Short-term investments 291,768 1,695,094 2,109,459 1,881,904
Sale of capital assets 562 - 1,435 -
Purchase of capital assets (484) (2,817) (2,233) (20,915)
-------------------------------------------------------------------------
Cash provided by
investing activities 291,846 1,692,277 2,108,661 1,860,989
-------------------------------------------------------------------------
FINANCING ACTIVITIES
Issuance of capital
stock, net of issue
costs (49,764) - 3,729,957 -
-------------------------------------------------------------------------
Cash provided by
financing activities (49,764) - 3,729,957 -
-------------------------------------------------------------------------
Effect of exchange rate
changes on cash and
cash equivalents 3,870 4,145 6,646 46,212
-------------------------------------------------------------------------
Net increase (decrease)
in cash and cash
equivalents during
the period (1,018,296) (138,630) 2,402,861 (682,398)
Cash and cash
equivalents
- Beginning of period 3,533,734 229,431 112,577 773,199
-------------------------------------------------------------------------
- End of period 2,515,438 90,801 2,515,438 90,801
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Represented by
Cash 105,372 90,801 105,372 90,801
Cash equivalents 2,410,066 - 2,410,066 -
-------------------------------------------------------------------------
2,515,438 90,801 2,515,438 90,801
-------------------------------------------------------------------------
>>
%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;
Michelle Rabba, Manager, Corporate Communications, Tel: (416) 222-3449 ext.
25, Email: mrabba(at)premdinc.com/
(PMD. PME)
CO: PreMD Inc.
CNW 18:01e 14-AUG-07
