News release via Canada NewsWire, Toronto 416-863-9350
Attention Business/Financial Editors:
PreMD Reports Second Quarter Results
<<
- FDA update expected imminently
- Successfully completed initial project for Cosmetics company
- AMEX appeal continuing
>>
TORONTO, Aug. 13 /CNW/ - Predictive medicine company PreMD Inc.
(TSX: PMD; Amex: PME) today announced unaudited financial results for the
second quarter fiscal 2008 ended June 30, 2008 ("Q2 2008").
"The second quarter of 2008 continued to be one of tremendous focus and
dedication in resolving some of the challenges that we have faced," said Brent
Norton, president and CEO of PreMD. "We believe that we have made significant
progress with the US Food and Drug Administration (FDA) regarding our appeal
of the non-substantially equivalent (NSE) letter for our 510(k) submission. We
are encouraged by the FDA's request for additional analysis of the data and
believe that this is a positive step towards regulatory approval in the U.S.
The request follows several constructive discussions over the past three
months. We maintain that our clinical data warrants the approval of our
non-invasive skin cholesterol test and that we are on a path towards resolving
the outstanding matters and achieving our objectives. We are also pleased to
continue working with our partner, AstraZeneca Pharmaceuticals LP, and our
medical colleagues throughout the appeal process." PreMD has complied with all
the FDA's requests and it is anticipated that PreMD will be hearing from the
FDA imminently and will continue to release any news as it becomes available.
Dr. Norton continued, "Despite the setbacks faced, management has also
focused on business development activities during this quarter. We are driven
and will continue to expand on our leading position in the skin cholesterol
testing field through our diverse pipeline of products and capabilities. As
previously announced in June, we also successfully completed a project for one
of the leading health and beauty organizations in the world and expect to
enter into additional agreements with the company for further product
development and other skin testing initiatives. As part of this achievement,
we continued with our efforts to establish partnerships and alliances in order
to extend our capabilities in the marketplace. Going forward, we believe that
we have the technology, vision and business strategy to drive us back to
growth and increased value."
PreMD also continues to appeal the recent decision made by the American
Stock Exchange (the "AMEX") to delist its stock.
As previously noted in PreMD's 2007 annual report and, pursuant to the
AMEX Rule 610 for the year ended December 31, 2007, the Company has received a
going concern opinion from its independent auditors as a result of recurring
operating losses and negative cash flows from operations.
Financial Review (All amounts are in Canadian dollars)
------------------------------------------------------
The consolidated net loss for the three months ended June 30, 2008 (Q2
2008) was $1,318,000 or $(0.05) per share compared with a loss of $1,341,000
or $(0.05) per share for the quarter ended June 30, 2007 (Q2 2007).
Total product sales were $6,000 for Q2 2008 compared with $8,000 for Q2
2007. License revenue was $27,000 for Q2 2008, compared to nil for Q2 2007.
Product sales reflect direct sales to customers. The license revenue in 2008
consisted of the upfront cash payment received in accordance with the 2007
licensing agreement with AstraZeneca, which was deferred and recognized into
income on a straight-line basis over five years.
Research and development expenditures for the quarter decreased by
$418,000 to $313,000 from $731,000 in Q2 2007. Significant causes of the
variance include:
<<
- a decrease of $94,000 in spending on clinical trials for skin
cholesterol;
- a decrease of $124,000 in spending on clinical trials for cancer;
- a decrease of $110,000 on product development related to
manufacturing validation for the new cordless reader, as this
project nears completion;
- an increase of $42,000 in legal fees on intellectual property;
- a decrease of $104,000 in salaries and benefits for research
personnel due to reduction in staff;
- an increase in recovery of research costs of $33,000 related to a
special contract to develop a test for use in the cosmetics
industry; and
General and administration expenses amounted to $503,000 for Q2 2008
compared with $911,000 in Q2 2007, a decrease of $408,000. Significant causes
of the variance include:
- a decrease of $230,000 in professional fees for legal, audit and
human resources; the 2007 amount included expenses of a business
development consultant;
- a decrease of $81,000 in salaries and benefits due to reductions in
administrative staff;
- a reduction in annual meeting and annual report costs of $61,000 due
to cost containment activities; and
>>
Interest on convertible debentures (issued on August 30, 2005) amounted
to $165,000 in Q2 2008 compared with $164,000 in Q2 2007. These debentures
bear interest at an annual rate of 7%, payable quarterly in either cash or
stock. The amount accrued for Q2 2008 was subsequently paid in common shares,
whereas the amount for Q2 2007 was paid partly in shares ($134,000) and partly
in cash. Imputed interest on convertible debentures of $370,000 and $231,000
in Q2 2008 and 2007, respectively, represents the expense related to the
accretion of the liability component at an effective interest rate of
approximately 15%.
The gain on foreign exchange was $54,000 for Q2 2008, compared with a
gain of $671,000 for Q2 2007. The major contributing factor for the change was
the impact of foreign exchange rates on the convertible debentures which are
repayable in US dollars.
Refundable scientific investment tax credits ("ITCs") accrued for Q2 2008
amounted to $20,000 versus $26,000 for Q2 2007. For the six months ended
June 30, 2008 and 2007, ITC's amounted to $45,000 and $48,000, respectively.
As at June 30, 2008, PreMD had cash, cash equivalents and short-term
investments totaling $443,000 ($1,190,000 as at December 31, 2007). Cash used
to fund operating activities during Q2 2008 amounted to $926,000 compared with
$1,264,000 in Q2 2007. To date, we have financed our activities through
product sales, license revenues, the issuance of shares and debentures and the
recovery of provincial ITCs. The Company reported a loss of $1,318,000 for the
three months ended June 30, 2008, has a shareholders' deficiency of $6,047,000
as at June 30, 2008 and has experienced significant operating losses and cash
outflows from operations since its inception. The Company has operating and
liquidity concerns due to its significant net losses and negative cash flows
from operations.
Financial statements are attached to this press release and are available
at www.sedar.com.
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 include a line of non-invasive skin
cholesterol tests. 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 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)
(See note 1 - Nature of Operations and Going Concern Uncertainty)
Unaudited
As at As at
June 30, December 31,
2008 2007
$ $
-------------------------------------------------------------------------
ASSETS
Current
Cash and cash equivalents 26,469 282,200
Short-term investments 416,616 907,768
Accounts receivable 79,215 8,292
Inventory 24,888 61,177
Prepaid expenses and other receivables 947,268 758,715
Investment tax credits receivable 185,000 340,000
-------------------------------------------------------------------------
Total current assets 1,679,456 2,358,152
-------------------------------------------------------------------------
Capital assets, net of accumulated
amortization of $281,242 (2007 - $267,458) 89,244 93,867
Intangible assets, net of accumulated
amortization of $676,075 (2007 - $991,473) 275,204 305,783
-------------------------------------------------------------------------
2,043,904 2,757,802
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
Current
Accounts payable 239,025 305,333
Accrued liabilities 495,599 765,312
Current portion of deferred revenue 106,680 106,680
-------------------------------------------------------------------------
Total current liabilities 841,304 1,177,325
-------------------------------------------------------------------------
Long-term debt
Debentures 521,410 -
Convertible debentures 6,407,657 5,626,987
-------------------------------------------------------------------------
6,929,067 5,626,987
Deferred revenue 320,040 373,380
-------------------------------------------------------------------------
Total liabilities 8,090,411 7,177,692
-------------------------------------------------------------------------
Shareholders' deficiency
Capital stock 29,452,822 29,120,655
Contributed surplus 3,383,816 3,098,928
Equity component of convertible debentures 2,239,385 2,239,385
Warrants 2,314,356 1,557,296
Deficit (43,436,886) (40,436,154)
-------------------------------------------------------------------------
Total shareholders' deficiency (6,046,507) (4,419,890)
-------------------------------------------------------------------------
2,043,904 2,757,802
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying note PreMD Inc.
CONSOLIDATED STATEMENTS OF LOSS, COMPREHENSIVE LOSS AND DEFICIT
(In Canadian dollars)
Unaudited
(note 1)
Three months ended Six months ended
June 30 June 30
------------------------- -------------------------
2008 2007 2008 2007
$ $ $ $
-------------------------------------------------------------------------
REVENUE
Product sales 6,050 8,250 14,750 26,334
License revenue 26,670 - 53,340 -
-------------------------------------------------------------------------
32,720 8,250 68,090 26,334
Cost of product sales 25,738 3,720 26,679 8,566
-------------------------------------------------------------------------
Gross profit 6,982 4,530 (41,411) 17,768
-------------------------------------------------------------------------
EXPENSES
Research and
development 312,859 730,799 855,734 1,371,636
General and
administration 503,067 911,141 947,078 1,552,105
Interest on long-term
debt 198,618 165,400 370,346 328,983
Imputed interest on
long-term debt 369,923 231,228 660,202 479,574
Amortization 22,000 41,318 44,363 82,698
Loss (gain) on foreign
exchange (54,239) (670,888) 226,983 (754,441)
-------------------------------------------------------------------------
1,352,228 1,408,998 3,104,706 3,060,555
-------------------------------------------------------------------------
RECOVERIES AND OTHER
INCOME
Investment tax credits 20,000 26,000 45,000 48,000
Interest 7,243 37,105 17,563 64,229
-------------------------------------------------------------------------
27,243 63,105 62,563 112,229
-------------------------------------------------------------------------
Net loss and
comprehensive loss
for the period (1,318,003) (1,341,363) (3,000,732) (2,930,558)
Deficit, beginning of
period (42,118,883) (35,709,537) (40,436,154) (34,162,342)
Adjustment to opening
deficit - - - 42,000
-------------------------------------------------------------------------
Deficit, end of
period (43,436,886) (37,050,900) (43,436,886) (37,050,900)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic and diluted
loss per share $(0.05) $(0.05) $(0.12) $(0.12)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Weighted average
number of common
shares outstanding 25,875,114 24,950,579 25,716,541 23,505,688
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying note
PreMD Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Canadian dollars)
Unaudited
(note 1)
Three months ended Six months ended
June 30 June 30
------------------------- -------------------------
2008 2007 2008 2007
$ $ $ $
-------------------------------------------------------------------------
OPERATING ACTIVITIES
Net loss and
comprehensive loss for
the period (1,318,003) (1,341,363) (3,000,732) (2,930,558)
Add (deduct) items not
involving cash
Amortization 22,000 41,318 44,363 82,698
Stock compensation
costs included in:
Research and
development
expense 39,500 35,286 77,275 67,383
General and
administration
expense 132,599 123,312 207,614 180,605
Gain on sale of
capital assets - 143 - 143
Imputed interest on
convertible
debentures 369,923 231,228 660,202 479,574
Capitalized interest
on debenture 33,671 - 40,450 -
Interest on
convertible
debentures paid in
common shares 164,948 133,967 332,166 270,911
Add loss (deduct
gain) on foreign
exchange (54,239) (670,888) 226,983 (754,441)
Net change in non-cash
working capital
balances related to
operations (289,885) (182,749) (401,336) 838,718
Decrease in deferred
revenue 26,670 - (53,340) -
-------------------------------------------------------------------------
Cash used in operating
activities (926,156) (1,264,248) (1,866,355) (3,442,403)
-------------------------------------------------------------------------
INVESTING ACTIVITIES
Short-term investments 45,780 291,768 491,152 2,109,459
Proceeds from sale of
capital assets - 562 - 1,435
Purchase of capital
assets - (484) (9,161) (2,233)
-------------------------------------------------------------------------
Cash provided by
investing activities 45,780 291,846 481,991 2,108,861
-------------------------------------------------------------------------
FINANCING ACTIVITIES
Issuance of debentures,
net of issue costs (15,978) - 1,137,534 -
Issuance of capital
stock, net of issue
costs - (49,764) - 3,729,957
-------------------------------------------------------------------------
Cash provided by (used
in) financing
activities (15,978) (49,764) 1,137,534 3,729,957
-------------------------------------------------------------------------
Effect of exchange
rate changes on cash
and cash equivalents (6,001) 3,870 8,901 6,646
-------------------------------------------------------------------------
Net increase (decrease)
in cash and cash
equivalents during
the period (902,355) (1,018,296) (255,731) 2,402,861
Cash and cash
equivalents
Beginning of period 928,824 3,533,734 282,200 112,577
-------------------------------------------------------------------------
End of period 26,469 2,515,438 26,469 2,515,438
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Represented by
Cash 26,469 105,372 26,469 105,372
Cash equivalents - 2,410,066 - 2,410,066
-------------------------------------------------------------------------
26,469 2,515,438 26,469 2,515,438
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying note
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
(In Canadian dollars unless otherwise noted)
June 30, 2008
Unaudited
1. GOING CONCERN UNCERTAINTY
The Company's consolidated financial statements have been prepared on
a going-concern basis which presumes the realization of assets and
discharge of liabilities in the normal course of business for the
foreseeable future. The Company reported a loss of $1,318,003 for the
three months ended June 30, 2008, has a shareholders' deficiency of
$6,046,507 as at June 30, 2008 and has experienced significant
operating losses and cash outflows from operations since its
inception. The Company has operating and liquidity concerns due to
its significant net losses and negative cash flows from operations.
The Company's ability to continue as a going-concern is uncertain and
is dependent upon its ability to raise additional capital to
successfully complete its research and development programs,
commercialize its technologies, obtain regulatory approvals for its
products and ultimately, generate profitable operations and positive
operating cash flows. It is not possible at this time to predict the
outcome of these matters. It will be necessary for the Company to
raise additional funds for the continuing development and marketing
of its technologies. These consolidated financial statements do not
include any adjustments and classifications to the carrying values of
assets and liabilities that may be required should the Company be
unable to continue as a going concern.
>>
%SEDAR: 00007927E %CIK: 0001179083
/For further information: Michelle Rabba, Manager, Corporate
Communications, Tel: (416) 272-7007, Email: mrabba(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 16:00e 13-AUG-08
