- PASA Data published in American Journal of Cardiology - FDA
appeal progressing TORONTO, March 28 /PRNewswire-FirstCall/ --
Predictive medicine company PreMD Inc. (TSX: PMD; Amex: PME) today
announced audited financial results for the year ended December 31,
2007. "During 2007, PreMD faced many significant changes and
challenges," said Brent Norton, president and CEO. We made
tremendous progress on several fronts, including a License,
Development and Supply Agreement with AstraZeneca Pharmaceuticals
LP for the marketing and distribution of our point-of-care (POC)
skin cholesterol test in the United States. We also successfully
penetrated the cosmetics industry as we recently signed an
agreement with one of the world's leading cosmetics company, which
will enable us to further explore the potential our technology
holds in other viable markets. In addition, we continue to achieve
several clinical and scientific validations related to both our
cardiovascular and cancer franchises, including the publication of
our 'Increased Skin Cholesterol Identifies Individuals at Increased
Cardiovascular Risk: The Predictor of Advanced Subclinical
Atherosclerosis (PASA) Study' this week in the American Journal of
Cardiology, April 2008 edition." Dr. Norton continued, "despite
these critical achievements, the company faced difficulties, as we
received a non-substantially equivalent (NSE) letter from the US
Food and Drug Administration (FDA) regarding our 510(k) submission.
We have appealed the FDA decision, including submitting a detailed
brief and meeting with them to present our case. We are pleased to
have the support of AstraZeneca Pharmaceuticals LP, as well as
several leading consultants, through the internal agency review
process and we expect to hear from the FDA with the next steps in
the next 30 days. We also recently completed a financing, which
will enable us to move forward with our business development
initiatives, pending FDA clearance and the subsequent
commercialization of our products. We appreciate the patience and
support of our stakeholders, as we determine the most effective
steps toward enhancing shareholder value while evaluating the
opportunities before us." Financial Review (All amounts are in
Canadian dollars)
------------------------------------------------------ The
consolidated loss for the year ended December 31, 2007 was
$6,316,000 or $(0.26) per share compared with a loss of $5,949,000
or $(0.27) per share for the year ended December 31, 2006, an
increase of $367,000. Total product sales of PREVU(x) Skin
Cholesterol tests amounted to $41,000 in 2007 compared with $7,000
in 2006. License revenue was $53,000 in 2007 compared to $3,329,000
in 2006, a decrease of $3,276,000. License revenue consists
primarily of the upfront cash payments received in accordance with
the respective licensing agreements, which have been deferred and
recognized into income on a straight-line basis over the terms of
the agreements. For 2007, the license revenue represents the
amortization of the $533,000 (US$500,000) received upon signing of
the license agreement with AstraZeneca on July 13, 2007. Research
and development expenses for the year decreased by $1,996,000 to
$2,778,000 from $4,774,000 in 2006. The variance for the year
reflects: - A decrease of $2,224,000 in spending on clinical trials
for skin cholesterol and cancer to $347,000 from $2,571,000 in
2006, following the submission of the US FDA application; - An
decrease of $103,000 in product liability insurance due which is
related to the reduced number of clinical trials undertaken in
2007; - An increase of $175,000 in performance-based compensation
expense resulting from achievement of milestones; - An increase of
$88,000 in product development and subcontract research as related
to the validation of subcontract manufacturers for the skin
cholesterol kits and the second-generation color reader, as well as
for general product improvements; - An increase of $37,000 in
stock-based compensation, a non-cash expense, due to the vesting of
options granted in prior years; and - Minor changes in other
development costs during the period. General and administration
expenses amounted to $3,213,000 compared with $3,025,000 in 2006,
an increase of $188,000. The variance primarily reflects: - An
expense of nil in 2007 compared to $175,000 in 2006 for payments to
amend the ColorectAlert License Agreement; - An increase of $25,000
in distribution expenses (nil in 2006) related to the third-party
warehouse expenses for storage of inventory; - An increase of
$178,000 in performance-based compensation expense resulting from
achievement of milestones; - A loss of $125,000 related to disposal
of obsolete fixed assets related to skin cholesterol clinical
trials; - An increase of $57,000 in professional fees for legal,
audit and consulting fees related to business development
(including negotiation of the AstraZeneca agreement); and - An
increase of $17,000 in stock-based compensation for options and
stock grants for administrative personnel and consultants resulting
in a non-cash expense of $401,000 compared with $384,000 in 2006;
and - Minor changes in other general and administration costs
during the period. Interest on convertible debentures (issued on
August 30, 2005) amounted to $663,000 in 2007 compared to $678,000
in 2006. The debentures bear interest at an annual rate of 7%,
payable quarterly in either cash or stock. In 2007, $543,000 of the
interest expense was paid in stock, rather than cash, compared with
$281,000 in 2006. Imputed interest of $1,002,000 (compared with
$820,000 in 2006) represents the expense related to the accretion
of the liability component at an effective interest rate of 15%.
Amortization expenses for equipment and acquired technology for
2007 amounted to $166,000 compared with $180,000 in 2006. The
reduction in 2007 reflects the reduced amortization on the disposal
of equipment related to skin cholesterol clinical trials.
Amortization of deferred financing fees amounted to $139,000 in
2006. The gain on foreign exchange was $1,313,000 for 2007 compared
to a loss of $98,000 in 2006. The major reason for the increase was
the impact of foreign exchange rates on the convertible debentures
which are repayable in US dollars. This resulted in an unrealized
gain of $1,355,000 on the convertible debenture. Recoveries of
provincial scientific investment tax credits ("ITCs") amounted to
$140,000 for 2007 compared with $200,000 in 2006. The lower accrual
is based on the reduced spending on clinical trials in 2007. As at
December 31, 2007, PreMD had cash, cash equivalents and short-term
investments totaling $1,190,000 ($3,276,000 as at December 31,
2006). 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 $6,316,000 for the year ended December 31, 2007,
has a shareholders' deficiency of $4,420,000 as at December 31,
2007 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. 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 one common share at a price
of $0.2759 per share. Financial statements are attached to this
press release. PreMD's complete fiscal 2007 annual report is
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 (Tables Follow) PreMD Inc. Incorporated
under the laws of Canada CONSOLIDATED BALANCE SHEETS (In Canadian
dollars) As at December 31 2007 2006 $ $
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ASSETS Current Cash and cash equivalents 282,200 112,577 Short-term
investments 907,768 3,163,482 Accounts receivable 8,292 11,221
Inventory 61,177 179,219 Prepaid expenses and other receivables
758,715 570,773 Investment tax credits receivable 340,000 200,000
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Total current assets 2,358,152 4,237,272
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Deferred financing fees, net of accumulated amortization of
$174,863 in 2006 - 347,589 Capital assets, net 93,867 312,410
Intangible assets, net of accumulated amortization of $991,473
(2006 - $915,027) 305,783 382,229
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2,757,802 5,279,500
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LIABILITIES AND SHAREHOLDERS' DEFICIENCY Current Accounts payable
305,333 963,990 Accrued liabilities 765,312 932,372 Current portion
of deferred revenue 106,680 -
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Total current liabilities 1,177,325 1,896,362
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Convertible debentures 5,626,987 6,350,680 Deferred revenue 373,380
-
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Total liabilities 7,177,692 8,247,042
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Commitments Shareholders' deficiency Capital stock 29,120,655
25,263,480 Contributed surplus 3,098,928 2,521,915 Equity component
of convertible debentures 2,239,385 2,239,385 Warrants 1,557,296
1,170,020 Deficit (40,436,154) (34,162,342)
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Total shareholders' deficiency (4,419,890) (2,967,542)
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2,757,802 5,279,500
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PreMD Inc. CONSOLIDATED STATEMENTS OF LOSS, COMPREHENSIVE LOSS AND
DEFICIT (In Canadian dollars) Years ended December 31 2007 2006
2005 $ $ $
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REVENUE Product sales 41,184 6,513 425,730 License revenue 53,340
3,328,827 1,153,308
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94,524 3,335,340 1,579,038 Cost of product sales, including
amortization of nil (2006 - nil; 2005 - $3,456) 140,261 36,824
428,650
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(45,737) 3,298,516 1,150,388
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EXPENSES Research and development 2,777,651 4,773,762 3,120,276
General and administration 3,213,276 3,024,811 2,690,790 Interest
on convertible debentures 663,418 677,723 228,481 Imputed interest
on convertible debentures 1,002,394 819,609 255,529 Mark-to-market
adjustment on derivative 18,000 - - Amortization 165,753 319,205
252,804 Loss (gain) on foreign exchange (1,313,292) 97,746 (35,734)
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6,527,200 9,712,856 6,512,146
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RECOVERIES AND OTHER INCOME Investment tax credits 140,000 200,000
198,923 Interest 117,125 265,369 173,130
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257,125 465,369 372,053
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Net loss and comprehensive loss for the year (6,315,812)
(5,948,971) (4,989,705) Deficit, beginning of year (34,162,342)
(28,213,371) (23,223,666) Adjustment to opening deficit 42,000 - -
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Deficit, end of year (40,436,154) (34,162,342) (28,213,371)
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Basic and diluted loss per share $(0.26) $(0.27) $(0.23)
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Weighted average number of common shares outstanding 24,326,078
21,663,698 21,487,008
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PreMD Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (In Canadian
dollars) Years ended December 31 2007 2006 2005 $ $ $
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OPERATING ACTIVITIES Net loss and comprehensive loss for the year
(6,315,812) (5,948,971) (4,989,705) Add (deduct) items not
involving cash Amortization 165,753 319,205 256,260 Stock-based
compensation costs included in Research and development expense
193,527 156,920 147,085 General and administration expense 400,821
383,767 421,812 Loss (gain) on sale of capital assets 139,669
(1,743) - Imputed interest on convertible debentures 1,002,394
819,609 255,529 Mark-to-market adjustment on derivative 18,000 - -
Interest on convertible debentures paid in common shares 543,312
281,462 - Loss (gain) on foreign exchange (1,288,160) 97,748
(35,734) Net change in non-cash working capital balances related to
operations (1,011,237) 1,422,730 (1,061,397) Increase (decrease) in
deferred revenue 480,060 (2,609,315) (301,885)
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Cash used in operating activities (5,671,673) (5,078,588)
(5,308,035)
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INVESTING ACTIVITIES Short-term investments 2,218,115 4,589,356
(3,065,568) Purchase of trademark - (150,000) - Purchase of capital
assets (11,868) (24,965) (130,310) Proceeds from sale of capital
assets 1,435 3,000 -
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Cash provided by (used in) investing activities 2,207,682 4,417,391
(3,195,878)
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FINANCING ACTIVITIES Issuance of convertible debentures - -
9,827,616 Financing fees - (51,399) (861,328) Issuance of capital
stock, net of issue costs 3,683,804 - 198,400
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Cash provided by (used in) financing activities 3,683,804 (51,399)
9,164,688
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Effect of exchange rate changes on cash and cash equivalents
(50,190) 51,974 (127,034)
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Net increase (decrease) in cash and cash equivalents during the
year 169,623 (660,622) 533,741 Cash and cash equivalents, beginning
of year 112,577 773,199 239,458
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Cash and cash equivalents, end of year 282,200 112,577 773,199
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Represented by Cash 164,776 112,577 773,199 Cash equivalents
117,424 - -
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282,200 112,577 773,199
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Supplemental cash flow information Cash paid during the year for
interest 120,106 396,261 228,481
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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:
Copyright