- FDA update expected imminently - Successfully completed initial
project for Cosmetics company - AMEX appeal continuing TORONTO,
Aug. 13 /PRNewswire-FirstCall/ -- 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
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* 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. *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
$ $
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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
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Total current assets 1,679,456 2,358,152
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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
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2,043,904 2,757,802
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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
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Total current liabilities 841,304 1,177,325
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Long-term debt Debentures 521,410 - Convertible debentures
6,407,657 5,626,987
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6,929,067 5,626,987 Deferred revenue 320,040 373,380
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Total liabilities 8,090,411 7,177,692
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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)
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Total shareholders' deficiency (6,046,507) (4,419,890)
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2,043,904 2,757,802
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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 $ $ $ $
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REVENUE Product sales 6,050 8,250 14,750 26,334 License revenue
26,670 - 53,340 -
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32,720 8,250 68,090 26,334 Cost of product sales 25,738 3,720
26,679 8,566
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Gross profit 6,982 4,530 (41,411) 17,768
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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)
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1,352,228 1,408,998 3,104,706 3,060,555
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RECOVERIES AND OTHER INCOME Investment tax credits 20,000 26,000
45,000 48,000 Interest 7,243 37,105 17,563 64,229
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27,243 63,105 62,563 112,229
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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
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Deficit, end of period (43,436,886) (37,050,900) (43,436,886)
(37,050,900)
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Basic and diluted loss per share $(0.05) $(0.05) $(0.12) $(0.12)
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Weighted average number of common shares outstanding 25,875,114
24,950,579 25,716,541 23,505,688
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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 $ $ $ $
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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) -
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Cash used in operating activities (926,156) (1,264,248) (1,866,355)
(3,442,403)
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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)
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Cash provided by investing activities 45,780 291,846 481,991
2,108,861
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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
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Cash provided by (used in) financing activities (15,978) (49,764)
1,137,534 3,729,957
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Effect of exchange rate changes on cash and cash equivalents
(6,001) 3,870 8,901 6,646
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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
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End of period 26,469 2,515,438 26,469 2,515,438
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Represented by Cash 26,469 105,372 26,469 105,372 Cash equivalents
- 2,410,066 - 2,410,066
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26,469 2,515,438 26,469 2,515,438
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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. DATASOURCE: PreMD Inc.
CONTACT: Michelle Rabba, Manager, Corporate Communications, Tel:
(416) 272-7007, Email: ; Ron Hosking, Vice President Finance and
CFO, Tel: (416) 222-3449 ext. 24, Email:
Copyright
