Advances product pipeline; new regulatory submissions expected
before year end TORONTO, Aug. 9 /PRNewswire-FirstCall/ --
Predictive medicine company PreMD Inc. (TSX: PMD; Amex: PME) today
announced results for the second quarter of fiscal 2006 ended June
30, 2006 (Q2 2006). Recent Highlights - Exceeded the enrollment
target in the 600-subject PASA study with a total of 650 patients
enrolled. This study is aimed at expanding PREVU(x) Point of Care
(POC) Skin Sterol Test's regulatory claim in the United States to
include risk assessment of heart attack and stroke; - Reported
positive preliminary data on PREVU(x) LT Skin Sterol Test from the
life insurance industry study (PREPARE) that demonstrated
statistically significant relationships and is supportive of the
study's primary objective; - Submitted a Special 510(k) application
to U.S. Food and Drug Administration (FDA) for clearance of an
enhanced color reader for PREVU(x) POC; - Received clearance from
Health Canada's Therapeutic Products Directorate as well as a
Conformite Europeene (CE) Mark for the new color reader, which
validates the viability of the product and allows it to be marketed
in Canada and in the European Union; and - Presented data on a new
LungAlert(TM) test format at the American Association for Clinical
Chemistry Annual Meeting. The consolidated net loss for Q2 2006 was
$2,115,000 or $0.10 per share compared with a loss of $1,455,000 or
$0.07 per share for the quarter ended June 30, 2005 (Q2 2005). For
the six months ended June 30, 2006, the net loss was $4,489,000, or
$0.21 per share, compared with $2,757,000, or $0.13 per share for
the six months ended June 30, 2005, primarily due to increased
research and development expenses related to the acceleration of
clinical trials in 2006 and to interest and imputed interest
expenses on convertible debentures issued on August 30, 2005. The
Company expects research and development expenses to return to
lower than historical levels in the second half of fiscal 2006.
Cash used to fund operating activities during Q2 2006 amounted to
$1,835,000 compared with $1,164,000 in Q2 2005, the increase
resulting from increased expenditures on clinical trials. Total
product related sales to McNeil Consumer Healthcare were $5,000 for
Q2 2006 compared with $333,000 for Q2 2005. McNeil continues to use
inventory purchased in 2005 for sales and marketing proposals to
potential customers and has purchased only a small quantity of new
products so far in 2006. License revenue was $80,000 for Q2 2006,
approximately the same as for Q2 2005. "We are pleased with the
advancements we are making, particularly with the completion of
enrollment in the PREPARE and PASA clinical trials," said Dr. Brent
Norton, President and Chief Executive Officer. "Preliminary results
from PREPARE are positive and we are moving quickly to complete the
analysis while working with McNeil Consumer Healthcare to finalize
the regulatory and marketing strategies for PREVU(x) LT in 2006. We
will also be analyzing the data from PASA in the coming months and
expect to be in a position to make various regulatory submissions
to the FDA and regulatory authorities in Canada and Europe before
the end of the year. Additionally, we have expanded enrollment in
the I-ELCAP trial, which we expect to provide important new data on
LungAlert(TM) later this year." Outlook ------- "We believe that a
number of McNeil's market evaluations for PREVU(x) are gaining
traction, which we expect to see build through the year,
particularly as the new reader becomes available," continued Dr.
Norton. "We are making excellent progress against our objectives
and anticipate revenues and additional milestone payments related
to the successful completion of our strategic objectives. As these
goals are achieved, we expect to move toward breaking even,
possibly by the end of 2006." PreMD's near-term objectives include:
- Achieve regulatory clearance for PREVU(x) LT to enable marketing
launch; - Achieve new regulatory claim for PREVU(x) in the U.S. as
a test to predict risk of heart attack and stroke; - Complete
analysis of new LungAlert(TM) data and expand participation in
I-ELCAP to additional sites; - Complete pivotal study for the
breast cancer test at the University of Louisville and initiate an
additional clinical trial for ColorectAlert(TM); and - Conclude a
strategic partnership for PreMD's cancer products. PREVU(x)
Commercialization Update --------------------------------- McNeil
is advancing initiatives in targeted segments of the risk
assessment market as well as the life insurance industry: - McNeil
will showcase the new handheld PREVU(x) POC spectrometer to
cardiologists and other medical professionals at the World Congress
of Cardiology 2006, an event organized by the European Society of
Cardiology and the World Heart Federation, to be held in Barcelona,
Spain in September. - McNeil's pilot program with Costco, held at
two retail locations in Florida in March, is expected to be rolled
out to additional stores in the southeastern U.S. in the fourth
quarter. Additionally, McNeil is working to significantly extend
its previous retail pilot program with Wal-Mart in Quebec this fall
in response to favorable customer and retailer feedback. - McNeil
has completed a sales broker contract with Medivon, LLC, a
Florida-based healthcare company that provides heart disease risk
assessment programs. Medivon has selective rights in the U.S. to
promote the use of PREVU(x) POC with selected customers. - In the
life insurance market, McNeil's efforts to raise awareness of
PREVU(x) LT with life insurance companies include presentations at
the recent annual meetings of the Canadian Institute of
Underwriters (CIU) and the SouthEastern Home Office Underwriters'
Association (SEHOUA). - McNeil continues to evaluate opportunities
in the occupational health market, which includes employee health
fairs and programs, and has established an industry advisory board.
This advisory board met in May at the American College of
Occupational and Environmental Medicine conference to discuss
PREVU(x) POC and establish contacts with industry thought leaders.
Financial Review ---------------- During Q2 2006, the Company
focused on accelerating key clinical trials to obtain additional
claims for PREVU(x) POC and to obtain regulatory clearance for
PREVU(x) LT, the company's skin sterol test for the life insurance
industry. As a result, research and development expenditures
increased by $665,000 to $1,470,000 from $805,000 in Q2 2005. The
variance for the quarter reflects: - an increase of $851,000 in
spending on clinical trials for the company's family of skin sterol
tests, particularly related to the PREPARE and PASA trials, as well
as clinical trials for the lung, colorectal and breast cancer
technologies; - a decrease of $85,000 in legal fees on intellectual
property; and - a decrease of $96,000 in subcontract research due
to the completion of the development of the second-generation
spectrometer. Total research and development expenditures for the
six months ended June 30, 2006 and 2005 amounted to $2,986,000 and
$1,448,000, respectively. As a result of the completion of
enrolment in the above-noted trials, clinical trial costs are
expected to decline significantly for the balance of 2006. General
and administration expenses amounted to $689,000 for Q2 2006
compared with $770,000 in Q2 2005, a decrease of $81,000. The
decrease for the quarter reflects a decrease of $74,000 in expenses
related to investor communications. For the six months ended June
30, 2006, general and administration expenses amounted to
$1,266,000, a decrease of $269,000 from the corresponding period in
2005. Interest on convertible debentures (issued on August 30,
2005) amounted to $173,000 in Q2 2006 compared with nil in Q2 2005.
For the six months ended June 30, 2006, interest amounted to
$338,000 compared with nil for the corresponding period in 2005.
The debentures bear interest at an annual rate of 7%, payable
quarterly in either cash or common shares. The expense for Q2 2006
was paid in common shares, of which 40,561 were issued during the
quarter and 31,065 were issued subsequent to the quarter, on July
5, 2006. Imputed interest for the three and six months ended June
30, 2006 amounted to $205,000 and $404,000, respectively, compared
with nil for the corresponding periods in 2005. It is a non-cash
expense and represents the amortization of the fair value of the
warrants and equity component of the debentures over the life of
the debentures. Amortization expenses for equipment and acquired
technology for Q2 2006 amounted to $46,000 compared with $54,000
for Q2 2005. For the six months ended June 30, 2006 and 2005,
amortization amounted to $89,000 and $106,000, respectively.
Purchases of capital assets amounted to $3,000 during Q2 2006
compared with $81,000 in Q2 2005. Amortization of deferred
financing fees related to the convertible debentures amounted to
$32,000 in Q2 2006 ($65,000 for the six months ended June 30, 2006)
compared with nil in Q2 2005. The financing fees are being
amortized over the life of the convertible debentures. The gain on
foreign exchange for Q2 2006 amounted to $278,000 compared with
$12,000 for the corresponding period in 2005. Included in the gain
for 2006 is $425,000 resulting from the effects of foreign exchange
on the convertible debentures which are repayable in U.S. dollars.
It is partially offset during the quarter by a loss on the
revaluation of investments held in U.S. dollars, amounting to
$163,000. For the six months ended June 30, 2006 and 2005, the gain
on foreign exchange amounted to $215,000 and $13,000, respectively.
Refundable scientific investment tax credits (ITCs) accrued for Q2
2006 amounted to $70,000 versus $48,000 for Q2 2005. For the six
months ended June 30, 2006 and 2005, the ITC revenue amounted to
$130,000 and $98,000, respectively. Interest income amounted to
$70,000 for Q2 2006 compared with $22,000 for Q2 2005 as a result
of higher cash balances. For the six months ended June 30, 2006 and
2005, interest income amounted to $157,000 and $51,000,
respectively. As at June 30, 2006, PreMD had cash, cash equivalents
and short-term investments totaling $5,888,000 ($8,679,000 as at
December 31, 2005). The Company invests its funds in short-term
financial instruments and marketable securities. Cash used to fund
operating activities during Q2 2006 amounted to $1,835,000 compared
with $1,164,000 in Q2 2005, the increase resulting from the
increased expenditures on clinical trials. To date, the Company has
financed its activities through product sales, license revenues,
the issuance of shares and convertible debentures and the recovery
of ITCs. Management believes that clinical trial expenses will be
reduced dramatically for the balance of 2006 and for 2007 and that,
based on historic cash expenditures and the current expectation of
further revenues from product sales, royalties and license fees,
its existing cash resources together with the ITC receivable of
$330,000 will be sufficient to meet its current operating and
capital requirements through at least 2008.
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Conference Call and Webcast PreMD will hold a conference call and
webcast tomorrow, Thursday, August 10, 2006, at 10 a.m. ET. To
access the conference call, please dial 1-800-866-5043. A live
audio webcast will be available at http://www.premdinc.com/, and
will be subsequently archived for three months. To access the
replay via telephone, which will be available until Thursday,
August 17, 2006, please dial (416) 640-1917 or (877) 289-8525 and
enter the passcode 21199051 followed by the number sign.
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About PreMD Inc. PreMD Inc. is a world leader in predictive
medicine, dedicated to developing rapid, non-invasive tests for the
early detection of life-threatening diseases. PreMD's
cardiovascular products, which are branded as PREVU(x) Skin Sterol
Test, are licensed worldwide to McNeil Consumer Healthcare. The
company's cancer tests include ColorectAlert(TM), LungAlert(TM) and
a breast cancer test. PreMD's head office is located in Toronto,
and its research and product development facility is at McMaster
University in Hamilton, Ontario. For further information, please
visit http://www.premdinc.com/. For more information about
PREVU(x), please visit http://www.prevu.com/ or call 1-866-283-8328
(North America) or 00-800-8283-8328 (Europe), or email . This news
release contains forward-looking statements, including the
Company's expectations related to future performance. Known and
unknown risks and uncertainties that could cause the Company's
actual results to differ materially from those in the
forward-looking statements include, among others: the successful
and timely completion of clinical studies; the successful
development or marketing of the Company's products and the
competitiveness of the Company's products if successfully
commercialized; whether reimbursement for the Company's products
will be available and the potential impact of reimbursement
policies imposed by third-party payers on the development, usage
and pricing of the Company's products; the lack of operating profit
and availability of funds and resources to pursue R&D projects
and clinical trials; product liability; the Company's reliance on
third-party manufacturers; the ability of the Company to take
advantage of business opportunities; uncertainties related to the
Company's presentation of data to regulatory authorities and the
approval of marketing applications by regulatory authorities; 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 its
competitors and there can be no guarantee of the Company's ability
to obtain or maintain patent protection for its products or product
candidates. Investors should consult the Company's quarterly and
annual filings with the Canadian and U.S. securities commissions,
available at http://www.sedar.com/ and http://www.sec.gov/, for
additional information on risks and uncertainties relating to the
forward-looking statements. Investors are cautioned not to rely on
these forward-looking statements. The Company is providing this
information as of the date of this news release and does not
undertake any obligation to update any forward-looking statements
contained in this news 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) As at June 30, 2006 and December 31, 2005 Unaudited June
30, December 31, 2006 2005 $ $
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ASSETS Current Cash and cash equivalents 90,801 773,199 Short-term
investments 5,797,510 7,905,883 Accounts receivable - 881,891
Inventory 35,638 36,306 Prepaid expenses and other receivables
225,603 317,264 Investment tax credits receivable 330,000 200,000
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Total current assets 6,479,552 10,114,543
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Deferred financing fees, net of accumulated amortization of
$108,157 (2005 - $43,059) 412,627 477,725 Capital assets, net of
accumulated amortization of $782,589 (2005 - $721,784) 370,746
410,636 Acquired technology, net of accumulated amortization of
$885,999 (2005 - $856,970) 261,257 290,286
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7,524,182 11,293,190
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LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY) Current Accounts
payable 721,748 291,125 Accrued liabilities 665,719 655,113 Current
portion of deferred revenue 306,900 311,915
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Total current liabilities 1,694,367 1,258,153
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Convertible debentures 5,913,256 5,893,340 Deferred revenue
2,143,823 2,297,400
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Total liabilities 9,751,446 9,448,893
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Shareholders' equity (deficiency) Capital stock 24,546,459
24,449,826 Contributed surplus 2,161,979 1,840,979 Equity component
of convertible debentures 2,393,145 2,393,145 Warrants 1,373,718
1,373,718 Deficit (32,702,565) (28,213,371)
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Total shareholders' equity (deficiency) (2,227,264) 1,844,297
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7,524,182 11,293,190
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PreMD Inc. CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT (In Canadian
dollars) Unaudited Three months ended Six months ended June 30 June
30 ------------------------ ------------------------ 2006 2005 2006
2005 $ $ $ $
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REVENUE Product sales 5,015 332,701 5,132 345,060 License revenue
79,624 78,081 156,675 154,806
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84,639 410,782 161,807 499,866 Cost of product sales 4,255 319,322
4,383 330,551
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Gross Profit 80,384 91,460 157,424 169,315
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EXPENSES Research and development 1,469,815 805,088 2,985,524
1,447,574 General and administration 688,617 769,537 1,265,865
1,534,912 Interest on convertible debentures 172,623 - 338,137 -
Imputed interest on convertible debentures 205,269 - 404,132 -
Amortization 77,561 53,705 154,932 106,011 Gain on foreign exchange
(277,675) (11,537) (215,043) (13,047)
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2,336,210 1,616,793 4,933,547 3,075,450
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RECOVERIES AND OTHER INCOME Investment tax credits 70,000 47,923
130,000 97,923 Interest 70,394 22,383 156,929 51,273
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140,394 70,306 286,929 149,196
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Net loss for the period (2,115,432) (1,455,027) (4,489,194)
(2,756,939) Deficit, beginning of period (30,587,133) (24,525,578)
(28,213,371) (23,223,666)
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Deficit, end of period (32,702,565) (25,980,605) (32,702,565)
(25,980,605)
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Basic and diluted loss per share $(0.10) $(0.07) $(0.21) $(0.13)
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Weighted average number of common shares outstanding 21,566,994
21,529,262 21,559,121 21,434,065
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PreMD Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (In Canadian
dollars) Unaudited Three months ended Six months ended June 30 June
30 ------------------------ ------------------------ 2006 2005 2006
2005 $ $ $ $
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OPERATING ACTIVITIES Net loss for the period (2,115,432)
(1,455,027) (4,489,194) (2,756,939) Add items not involving cash
Amortization 77,561 53,705 154,932 106,011 Stock-based compensation
costs included in: Research and development expense 58,904 58,122
94,719 88,443 General and administration expense 173,741 183,477
243,212 282,027 Imputed interest on convertible debentures 205,269
- 404,132 - Interest on convertible debentures paid in stock 79,702
- 79,702 - Deduct gain on foreign exchange (277,675) (11,537)
(215,043) (13,047) Net change in non-cash working capital balances
related to operations 44,745 83,858 1,296,533 (444,739) Decrease in
deferred revenue (81,867) (76,725) (158,592) (153,450)
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Cash used in operating activities (1,835,052) (1,164,127)
(2,589,599) (2,891,694)
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INVESTING ACTIVITIES Short-term investments 1,695,094 1,009,887
1,881,904 2,645,617 Purchase of capital assets (2,817) (80,511)
(20,915) (115,776)
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Cash provided by investing activities 1,692,277 929,376 1,860,989
2,529,841
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FINANCING ACTIVITIES Issuance of capital stock, net of issue costs
- - - 198,400
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Cash provided by financing activities - - - 198,400
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Effect of exchange rate changes on cash and cash equivalents 4,145
1,270 46,212 (844)
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Net decrease in cash and cash equivalents during the period
(138,630) (233,481) (682,398) (164,297) Cash and cash equivalents -
Beginning of period 229,431 308,642 773,199 239,458
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- End of period 90,801 75,161 90,801 75,161
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Represented by: Cash 90,801 75,161 90,801 75,161
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90,801 75,161 90,801 75,161
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DATASOURCE: PreMD Inc. CONTACT: Sarah Borg-Olivier, Director,
Communications, T: (416) 222-3449, ; Ron Hosking, Chief Financial
Officer, T : (416) 222-3449,
Copyright