News release via Canada NewsWire, Toronto 416-863-9350
Attention Business/Financial Editors:
PreMD Reports Third Quarter 2007 Results
TORONTO, Nov. 14 /CNW/ - Predictive medicine company PreMD Inc. (TSX:
PMD; Amex: PME) announced today results for the third quarter of fiscal 2007,
ending September 30, 2007 ("Q3 2007").
<<
Recent Significant Highlights:
------------------------------
- Responded to FDA's request for additional information regarding the
expanded regulatory claim for our skin cholesterol test
- PREPARE actuarial analysis data supports PREVU(x)LT as valuable
cardiovascular risk assessment tool for the life insurance industry
- Breast cancer data accepted for presentation at San Antonio Breast
Cancer Symposium
- PASA manuscript accepted for publication in the American Journal of
Cardiology
- Granted approval of ColoPath(TM) Neoplasia patent and ColoPath(TM)
Cancer patent in Canada
- Granted approval of the colour and PREVU(x)LT tape stripping patents
in China and the United States
- Registration of PREVU(x)(TM) trademark in India completed
Expectations Going Forward:
---------------------------
- Response from FDA on our 510 (k) submission for an expanded
regulatory claim on our skin cholesterol test
- Partnering our skin cholesterol test outside of the United States
- Commercialization relationship for PREVU(x) LT within the Life
Insurance industry
- Completion of development agreements in the skin care field
- Progress on patent legal action
- Clinical validation of LungAlert and ColorectAlert upon completion of
clinical trials
>>
"We are very pleased with the progress we have made during the third
quarter of fiscal 2007 through the implementation of our strategy and
development initiatives," said Dr. Brent Norton, president and CEO of PreMD
Inc. "We continue to work with AstraZeneca regarding the planned marketing and
distribution of our skin cholesterol product in the United States and are
actively negotiating alliances with other organizations in different markets
for our products. We are currently pursuing commercialization opportunities
for PREVU(x)LT in the life insurance industry, which has garnered interest in
Canada, the United States and Europe. In addition, we have exciting new
prospects in the cosmetics field which expands the potential of our skin
cholesterol franchise. This opportunity is currently in negotiations with a
leading cosmetics company."
Dr. Norton continued "We have also made advancements with the US Food and
Drug Administration (FDA) regarding our expanded regulatory claim on our skin
cholesterol test. We are actively working with the agency to ensure all
processes are precisely met and have submitted detailed answers to the
questions asked. We anticipate hearing a response, which could be in the form
of additional questions, in the coming weeks. On the clinical front, we are
very excited by the recent data from our PASA study, which is included with
our submission to the FDA. The data was recently presented at the AHA
conference and is scheduled for publication in April 2008 in the American
Journal of Cardiology. We also had further clinical validation with our cancer
portfolio, with our breast cancer data being accepted for presentation at the
San Antonio Breast Cancer Symposium."
"Going forward, we anticipate building near-term revenues through these
exciting new partnership opportunities and sales, royalty and milestone
payments from our skin cholesterol product. PreMD remains deeply committed to
the belief that winning the battle against diseases such as cardiovascular and
cancer can be prevented if taken the necessary precautionary steps. Our
operations and research and development program continues to support that
commitment to predictive medicine technology, especially as we explore other
avenues to make our innovative products available."
Financial Review
----------------
The consolidated net loss for the three months ended September 30, 2007
(Q3 2007) was $1,635,000 or $(0.07) per share compared with a loss of
$1,120,000 or $(0.05) per share for the quarter ended Q3 2006.
Total product sales were $7,000 for Q3 2007 compared with $1,000 for Q3
2006. License revenue was $27,000 Q3 2007, compared to $577,000 for Q3 2007.
During Q3 2007, the Company focused on managing the cancer clinical trial
program and on validation of the contract manufacturing for the PREVU(x) system.
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 $104,000 to $737,000 from $841,000 in Q3 2006. The variance for
the period reflects:
<<
- a decrease of $287,000 in spending on clinical trials for skin
cholesterol, following the submission of the U.S. FDA application;
- an increase of $176,000 in compensation expense resulting from
achievement of performance milestones;
- a decrease of $23,000 in spending on the cancer clinical trials;
- an increase of $37,000 on product development in support of
manufacturing validation for the new cordless reader and for general
product improvements;
- an increase of $41,000 in legal fees for international patent
filings; and
- an increase of $57,000 in stock-based compensation, a non-cash
expense, due to the vesting of performance-based options that had
been granted in a prior year.
General and administration expenses amounted to $995,000 for Q3 2007
compared with $499,000 in Q3 2006, an increase of $496,000. The increase for
the quarter includes:
- an increase of $190,000 in professional fees for legal, audit and
consulting related to business development;
- an increase of $167,000 in compensation expense resulting from
increased headcount and from the achievement of performance-based
milestones;
- an increase in stock-based compensation, a non-cash expense, of
$111,000 to $155,000 for Q3 2007 compared with $44,000 for Q3 2006.
This resulted from the vesting of performance-based options.
>>
Interest on convertible debentures (issued on August 30, 2005) amounted
to $167,000 in Q3 2007 compared with $172,000 in Q3 2006. The debentures bear
interest at an annual rate of 7%, payable quarterly in either cash or stock.
Imputed interest of $253,000 and $204,000 in Q3 2007 and 2006 respectively,
represent the expense related to the accretion of the liability component, at
an effective interest rate of 14.8%. 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 Q3 2007 amounted to $42,000 compared with
$78,000 for Q3 2006.
The gain on foreign exchange was $533,000 for Q3 2007, compared with a
loss of $5,000 for Q3 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 $32,000 for Q3 2007 compared with $56,000 for
Q3 2006 as a result of lower cash balances. Refundable scientific investment
tax credits ("ITCs") accrued for Q3 2007 amounted to $54,000 versus $45,000
for Q3 2006. This increase was due to increased salaries related to product
development in 2007.
Accounts payable at September 30, 2007 amounted to $366,000 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 September 30, 2007, PreMD had cash, cash equivalents and short-term
investments totaling $2,342,000 ($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 Q3 2007 amounted to
$1,116,000 compared with $1,608,000 in Q3 2006.
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 include a line of non-invasive skin
cholesterol tests, planned to be marketed and distributed by AstraZeneca
Pharmaceuticals. PreMD's other skin cholesterol products include PREVU(x)LT, a
skin cholesterol test designed for use in the life insurance industry. 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 more information about PreMD, 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 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
<<
PreMD Inc.
Incorporated under the laws of Canada
CONSOLIDATED BALANCE SHEETS
(In Canadian dollars)
Unaudited
As at As at
September 30, December 31,
2007 2006
$ $
-------------------------------------------------------------------------
ASSETS
Current
Cash and cash equivalents 1,340,610 112,577
Short-term investments 1,001,171 3,163,482
Accounts receivable 8,299 11,221
Inventory 280,054 179,219
Prepaid expenses and other receivables 447,627 570,773
Investment tax credits receivable 302,000 200,000
-------------------------------------------------------------------------
Total current assets 3,379,761 4,237,272
-------------------------------------------------------------------------
Deferred financing fees, net of accumulated
amortization of $174,863 in 2006 - 347,589
Capital assets, net of accumulated
amortization of $906,632 (2006 - $841,611) 253,500 312,410
Intangible assets, net of accumulated
amortization of $972,361 (2006 - $915,027) 324,895 382,229
-------------------------------------------------------------------------
3,958,156 5,279,500
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
Current
Accounts payable 365,781 963,990
Accrued liabilities 633,163 932,372
Current portion of deferred revenue 106,680 -
-------------------------------------------------------------------------
Total current liabilities 1,105,624 1,896,362
-------------------------------------------------------------------------
Convertible debentures 5,408,490 6,350,680
-------------------------------------------------------------------------
Deferred revenue 400,050 -
-------------------------------------------------------------------------
Total liabilities 6,914,164 8,247,042
-------------------------------------------------------------------------
Shareholders' deficiency
Capital stock 28,983,711 25,263,480
Contributed surplus 2,991,633 2,521,915
Equity component of convertible debentures 2,239,385 2,239,385
Warrants 1,557,296 1,170,020
Deficit (38,728,033) (34,162,342)
-------------------------------------------------------------------------
Total shareholders' deficiency (2,956,008) (2,967,542)
-------------------------------------------------------------------------
3,958,156 5,279,500
-------------------------------------------------------------------------
-------------------------------------------------------------------------
PreMD Inc.
CONSOLIDATED STATEMENTS OF LOSS, COMPREHENSIVE LOSS AND DEFICIT
(In Canadian dollars)
Unaudited
Three months ended Nine Months Ended
September 30 September 30
-------------------------- --------------------------
2007 2006 2007 2006
$ $ $ $
-------------------------------------------------------------------------
REVENUE
Product sales 7,150 1,381 33,484 6,513
License revenue 26,670 576,995 26,670 733,670
-------------------------------------------------------------------------
33,820 578,376 60,154 740,183
Cost of product
sales 93,057 1,140 101,623 5,523
-------------------------------------------------------------------------
Gross Profit (59,237) 577,236 (41,469) 734,660
-------------------------------------------------------------------------
EXPENSES
Research and
development 736,855 840,505 2,108,491 3,826,029
General and
administration 995,433 499,098 2,547,538 1,764,963
Interest on
convertible
debentures 167,217 172,243 496,200 510,380
Imputed interest
on convertible
debentures 253,093 204,445 732,667 608,577
Amortization 42,046 77,662 124,744 232,594
Loss (gain) on
foreign exchange (533,217) 4,505 (1,287,658) (210,538)
-------------------------------------------------------------------------
1,661,427 1,798,458 4,721,982 6,732,005
-------------------------------------------------------------------------
RECOVERIES AND OTHER INCOME
Investment tax
credits 54,000 45,000 102,000 175,000
Interest 31,531 56,047 95,760 212,976
-------------------------------------------------------------------------
85,531 101,047 197,760 387,976
-------------------------------------------------------------------------
Net loss and
comprehensive
loss for the
period (1,635,133) (1,120,175) (4,565,691) (5,609,369)
Deficit, beginning
of period (37,092,900) (32,702,565) (34,162,342) (28,213,371)
-------------------------------------------------------------------------
Deficit, end of
period (38,728,033) (33,822,740) (38,728,033) (33,822,740)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic and diluted
loss per share $(0.07) $(0.05) $(0.19) $(0.26)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Weighted average
number of common
shares
outstanding 25,080,610 21,685,656 24,036,431 21,601,763
-------------------------------------------------------------------------
-------------------------------------------------------------------------
PreMD Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Canadian dollars)
Unaudited
Three months ended Nine Months Ended
September 30 September 30
------------------------ -------------------------
2007 2006 2007 2006
$ $ $ $
-------------------------------------------------------------------------
OPERATING ACTIVITIES
Net loss for the
period (1,635,133) (1,120,175) (4,565,691) (5,609,369)
Add (deduct)
items not
involving cash
Amortization 42,046 77,662 124,744 232,594
Stock compensation
costs included in:
Research and
development
expense 84,261 27,510 151,644 122,229
General and
administration
expense 154,803 43,881 335,408 287,093
Gain on sale of
capital asset - - 143 -
Imputed interest on
convertible
debentures 253,093 204,445 732,667 608,577
Interest on
convertible
debentures paid in
common shares 135,457 64,815 406,368 144,517
Loss (deduct gain)
on foreign
exchange (533,217) 4,505 (1,287,658) (210,538)
Net change in non-
cash working capital
balances related to
operations (123,726) (834,448) (962,444) 462,085
Increase (decrease)
in deferred revenue (506,730) (76,598) (506,730) (235,190)
-------------------------------------------------------------------------
Cash used in operating
activities (1,115,686) (1,608,403) (4,558,098) (4,198,002)
-------------------------------------------------------------------------
INVESTING ACTIVITIES
Short-term
investments 15,521 1,582,645 2,124,980 3,464,549
Sale of capital
assets - - 1,435 -
Purchase of capital
assets (7,845) (1,743) (10,078) (22,658)
-------------------------------------------------------------------------
Cash provided by
investing activities 7,676 1,580,902 2,116,337 3,441,891
-------------------------------------------------------------------------
FINANCING ACTIVITIES
Issuance of capital
stock, net of issue
costs (46,153) - 3,683,804 -
-------------------------------------------------------------------------
Cash provided by
(used in) financing
activities (46,153) - 3,683,804 -
-------------------------------------------------------------------------
Effect of exchange
rate changes on
cash and cash
equivalents (20,665) 5,341 (14,019) 51,553
-------------------------------------------------------------------------
Net increase
(decrease) in cash
and cash equivalents
during the period (1,174,828) (22,160) 1,228,033 (704,558)
Cash and cash
equivalents
- Beginning of
period 2,515,438 90,801 112,577 773,199
-------------------------------------------------------------------------
- End of period 1,340,610 68,641 1,340,610 68,641
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Represented by
Cash 294,138 68,641 294,138 68,641
Cash equivalents 1,046,472 - 1,046,472 -
-------------------------------------------------------------------------
1,340,610 68,641 1,340,610 68,641
-------------------------------------------------------------------------
>>
%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 16:00e 14-NOV-07
