- FDA appeal progressing - Appointment of new board of director -
PREPARE data selected as a 'highlighted' poster at American Heart
Association Conference on Arteriosclerosis, Thrombosis and Vascular
Biology (ATVB) in Atlanta TORONTO, May 15 /PRNewswire-FirstCall/ --
Predictive medicine company PreMD Inc. (TSX: PMD; Amex: PME) today
announced unaudited financial results for the first quarter fiscal
2008 ended March 31, 2008. "During the first quarter of 2008, we
continued to develop and execute processes that address the
concerns we have faced as an organization recently," said Brent
Norton, president and CEO of PreMD. "To date, we have implemented a
comprehensive strategic plan which includes our FDA appeal options
and further reductions in the Company's cost structure. This will
enable us to reduce our expenses going forward, and extend our cash
reserves. We are focused on the future and all that we can
accomplish with PREVU(x) globally, our cosmeceutical opportunities
and relationship, and in advancing our late stage clinical trials
with our cancer detection platform. We have also maximized our cash
resources and have made significant cutbacks throughout the entire
organization this quarter. With continued discretion in spending,
we anticipate that our existing cash, exclusive of any potential
revenues or additions, will sustain operations towards the end of
the year." "With respect to our appeal of the non-substantially
equivalent (NSE) letter from the US Food and Drug Administration
(FDA) regarding our 510(k) submission, we have been in
communication with the FDA to determine an appropriate means for
resolution of the existing differences in opinion, including
issuing a formal request for the dispute resolution. Our
discussions thus far with the FDA have been productive and we look
forward to continuing our work in an effort to secure regulatory
approval. Communications are ongoing and the Company will provide
further updates as additional information becomes available. In the
interim, we are extremely pleased to continue to receive support
and commitment from our partner, AstraZeneca Pharmaceuticals LP,
and medical colleagues throughout our appeal initiatives." "During
the first quarter, we were pleased to have our PREPARE (PREVU(x)
Predicts Atherosclerosis Risk and Events) data selected as a
highlighted poster at the American Heart Association Conference on
Arteriosclerosis, Thrombosis and Vascular Biology (ATVB) recently.
Subsequently, an article based on the data was published in
HealthDay, which can be viewed on our website at
http://www.premdinc.com/news_mediacov.htm." PreMD is also
appointing Paul Davis as a new member of the board of directors.
Mr. Davis has held senior executive positions in both public and
private companies and in investment banking, and has served on
several boards of directors. Mr. Davis began his career at Davies,
Ward & Beck (predecessor to Davies Ward Phillips & Vineberg
LLP) and was also the Chief Operating Officer and a director of
MedcomSoft Inc. and Executive Vice President and Director,
Investment Banking of Octagon Capital Canada Corporation. Mr. Davis
will be replacing Ron Henriksen, who is not standing for
re-election to PreMD's board of directors at our upcoming annual
meeting. "We look forward to working with Paul Davis as a new
addition to our board of directors," said Dr. Norton. "We also
thank Mr. Henriksen for his valuable contributions during his years
of service to PreMD and wish him success in his future endeavors."
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. PreMD will be holding its annual general meeting
(AGM) on May 21st, 2008 at 4pm. The meeting will take place at The
Design Exchange in the Patty Watt room. The Design Exchange is
located at 234 Bay Street in Toronto, Ontario. Financial Review
(All amounts are in Canadian dollars)
------------------------------------------------------ The
consolidated net loss for the three months ended March 31, 2008 (Q1
2008) was $1,683,000 or $(0.07) per share compared with a loss of
$1,589,000 or $(0.07) per share for the quarter ended March 31,
2007 (Q1 2007). Total product sales were $9,000 for Q1 2008
compared with $18,000 for Q1 2007. License revenue was $27,000 for
Q1 2008, compared to nil for Q1 2007. Product sales reflect direct
sales to customers, following the termination of the license
agreement on December 28, 2006 with McNeil Consumer Healthcare
("McNeil"). The license revenue in 2008 consisted of the upfront
cash payment received in accordance with the licensing agreement
with AstraZeneca Pharmaceuticals LP ("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 $98,000 to $543,000 from $641,000 in Q1 2007.
Significant causes of the variance include: - a decrease of $23,000
in spending on clinical trials for skin cholesterol; - a decrease
of $40,000 on product development related to manufacturing
validation for the new cordless reader, as this project nears
completion; - an increase of $49,000 in legal fees on intellectual
property; - a decrease of $38,000 in salaries and benefits for
research personnel due to reduction in staff; and - 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. General and
administration expenses amounted to $444,000 for Q1 2008 compared
with $641,000 in Q1 2007, a decrease of $197,000. Significant
causes of the variance include: - an increase in stock-based
compensation, a non-cash expense, of $18,000 resulting from payment
of directors fees in stock options in lieu of cash. This is offset
by a reduction in directors fees of $33,000; - a decrease of
$91,000 in professional fees for legal, audit and human resources;
the 2007 amount includes expenses of a business development
consultant; - a decrease of $22,000 in salaries and benefits for
administrative personnel due to reductions in staff; and - a
reduction in annual report costs of $30,000 due to a significant
reduction in the number of copies printed. Interest on long term
debt amounted to $172,000 in Q1 2008 compared with $164,000 in Q1
2007. The 2008 amount includes $7,000 for interest on the senior
unsecured debentures, issued on March 12, 2008. Interest on
convertible debentures (issued on August 30, 2005) amounted to
$165,000 in Q1 2008 compared with $164,000 in Q1 2007. The
debentures bear interest at an annual rate of 7%, payable quarterly
in either cash or stock. The amount accrued for Q1 2008 was
subsequently paid in common shares, whereas the amount for Q1 2007
was paid partly in shares ($134,000) and partly in cash. Imputed
interest of $275,000 and $248,000 in Q1 2008 and 2007 respectively,
represents the expense related to the accretion of the liability
component at an effective interest rate of approximately 15%. The
loss on foreign exchange was $281,000 for Q1 2008, compared with a
gain of $84,000 for Q1 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. Investment tax
credits receivable ("ITCs") reduced by $175,000 during Q1 2008 as a
result of receiving $200,000 for the year ended December 31, 2006
as well as accruing $25,000 ITCs for Q1 2008. As at March 31, 2008,
PreMD had cash, cash equivalents and short-term investments
totaling $1,391,000 ($1,190,000 as at December 31, 2007). To date,
we have financed our activities through product sales, license
revenues, the issuance of shares and convertible debentures and the
recovery of provincial ITCs. The Company reported a loss of
$1,683,000 for the three months ended March 31, 2008, has a
shareholders' deficiency of $5,055,000 as at March 31, 2008. On
March 12, 2008, the Company issued, by way of private placement,
$1,435,294 senior unsecured debentures maturing on September 12,
2009 and 5,072,395 common share purchase warrants for gross
proceeds of approximately $1,220,000. Each common share purchase
warrant expires in March 2013 and entitles the holder to acquire on
common share at a price of $0.2759 per share. Financial statements
are attached to this press release and are available at
http://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
http://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 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 March 31, December 31, 2008 2007 $ $
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ASSETS Current Cash and cash equivalents 928,824 282,200 Short-term
investments 462,396 907,768 Accounts receivable 43,958 8,292
Inventory 50,606 61,177 Prepaid expenses and other receivables
975,702 758,715 Investment tax credits receivable 165,000 340,000
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Total current assets 2,626,486 2,358,152
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Capital assets, net of accumulated amortization of $274,531 (2007 -
$267,458) 95,954 93,867 Intangible assets, net of accumulated
amortization of $1,006,762 (2007 - $991,473) 290,494 305,783
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3,012,934 2,757,802
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LIABILITIES AND SHAREHOLDERS' DEFICIENCY Current Accounts payable
368,718 305,333 Accrued liabilities 662,250 765,312 Current portion
of deferred revenue 106,680 106,680
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Total current liabilities 1,137,648 1,177,325
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Long-term debt Debentures 408,190 - Convertible debentures
6,175,511 5,626,987
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6,583,701 5,626,987 Deferred revenue 346,710 373,380
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Total liabilities 8,068,059 7,177,692
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Shareholders' deficiency Capital stock 29,287,873 29,120,655
Contributed surplus 3,211,718 3,098,928 Equity component of
convertible debentures 2,239,385 2,239,385 Warrants 2,324,782
1,557,296 Deficit (42,118,883) (40,436,154)
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Total shareholders' deficiency (5,055,125) (4,419,890)
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3,012,934 2,757,802
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See accompanying note PreMD Inc. CONSOLIDATED STATEMENTS OF LOSS,
COMPREHENSIVE LOSS AND DEFICIT (In Canadian dollars) Unaudited
Three months ended March 31 ---------------------------- 2008 2007
$ $
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REVENUE Product sales 8,700 18,084 License revenue 26,670 -
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35,370 18,084 Cost of product sales 941 4,846
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Gross Profit 34,429 13,238
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EXPENSES Research and development 542,875 640,837 General and
administration 444,011 640,964 Interest on long-term debt 171,728
163,583 Imputed interest on long-term debt 290,279 248,346
Amortization 22,363 41,380 Loss (gain) on foreign exchange 281,222
(83,553)
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1,752,478 1,651,557
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RECOVERIES AND OTHER INCOME Investment tax credits 25,000 22,000
Interest 10,320 27,124
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35,320 49,124
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Net loss and comprehensive loss for the period (1,682,729)
(1,589,195) Deficit, beginning of period (40,436,154) (34,162,342)
Adjustment to opening deficit - 42,000
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Deficit, end of period (42,118,883) (35,709,537)
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Basic and diluted loss per share $ (0.07) $ (0.07)
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Weighted average number of common shares outstanding 25,320,049
22,044,772
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See accompanying note
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PreMD Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (In Canadian
dollars) Unaudited Three months ended March 31,
---------------------------- 2008 2007 $ $
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OPERATING ACTIVITIES Net loss and comprehensive loss for the period
(1,682,729) (1,589,195) Add items not involving cash Amortization
22,363 41,380 Stock-based compensation costs included in: Research
and development expense 37,775 32,097 General and administration
expense 75,015 57,293 Imputed interest on long-term debt 290,279
248,346 Accrued interest on debenture 6,779 - Interest on
convertible debentures paid in common shares 167,218 136,944 Loss
(gain) on foreign exchange 281,222 (83,553) Net change in non-cash
working capital balances related to operations (111,451)
(1,021,467) Decrease in deferred revenue (26,670) -
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Cash used in operating activities (940,199) (2,178,155)
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INVESTING ACTIVITIES Short-term investments 445,372 1,817,691
Proceeds from sale of capital assets - 873 Purchase of capital
assets (9,161) (1,749)
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Cash provided by investing activities 436,211 1,816,815
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FINANCING ACTIVITIES Issuance of debentures, net of issue costs
1,153,512 - Issuance of capital stock, net of issue costs -
3,779,721
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Cash provided by financing activities 1,153,512 3,779,721
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Effect of exchange rate changes on cash and cash equivalents
(2,900) 2,776
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Net increase in cash and cash equivalents during the period 646,624
3,421,157 Cash and cash equivalents, beginning of period 282,200
112,577
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Cash and cash equivalents, end of period 928,824 3,533,734
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Represented by: Cash 80,248 133,732 Cash equivalents 848,576
3,400,002
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928,824 3,533,734
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Supplemental cash flow information Cash paid during the period for
interest 1,503 29,615
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See accompanying note NOTE TO CONSOLIDATED FINANCIAL STATEMENTS (In
Canadian dollars unless otherwise noted) March 31, 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 $1,682,729 for the three months ended
March 31, 2008, has a shareholders' deficiency of $5,055,125 as at
March 31, 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. DATASOURCE: PreMD Inc.
CONTACT: Michelle Rabba, Manager, Corporate Communications, Tel:
(416) 222-3449 ext. 25, Email: ; Ron Hosking, Vice President
Finance and CFO, Tel: (416) 222-3449 ext. 24, Email:
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