- Expanding the potential for PREVU(x) through additional
regulatory claims as the world's first cost-effective, non-invasive
test for cardiovascular risk assessment for future heart attacks
and stroke and entry into new markets - Partnership discussions
advanced for PREVU(x) and underway for oncology products - Direct
sales of PREVU(x) POC to retail pharmacies progressing with
programs on-going at Wal-Mart, Costco, Winn-Dixie and Publix -
Recent financing secures support for growth initiatives - Burn rate
for 2007 to decline significantly; major PREVU(x) clinical trials
completed TORONTO, March 29 /PRNewswire-FirstCall/ -- Predictive
medicine company PreMD Inc. (TSX: PMD; Amex: PME) today announced
audited financial results for the year ended December 31, 2006 and
provided investors with an operating update and outlook for fiscal
2007. "Last year, we made tremendous in-roads with the PREVU(x)
product line of skin cholesterol tests including the expansion into
new retail pharmacy chains; the Canadian and European approval of
our second PREVU(x) test, PREVU(x) LT; and the compilation of data
to support a new regulatory claim for PREVU(x) as a cardiovascular
risk assessment test for future heart attacks and stroke," said Dr.
Brent Norton, President and Chief Executive Officer of PreMD. "The
transition of PREVU(x), since reacquiring the rights at the end of
December, has gone smoothly. We established relationships with
customers, suppliers and other key contacts and have made
considerable progress on the implementation of third party
logistics. Importantly, we are building momentum with our direct
sales, specifically into the retail pharmacy segment. In this
regard, we have further developed the relationship with Wal-Mart
Quebec and advanced the collaboration with Medivon LLC who has been
instrumental in expanding the affiliation with Costco while
bringing PREVU(x) POC into additional retailers Winn-Dixie and
Publix." Dr. Norton continued, "looking ahead, we are in advanced
discussions with potential marketing partners for PREVU(x) and are
focused on increasing the market opportunity for the technology. In
that regard, we plan to work closely with the FDA to provide the
information the agency suggested surrounding our 510(k) submission
for PREVU(x) LT. The life insurance segment of the market provides
us with a tremendous opportunity. In addition, expanding the
regulatory claim for PREVU(x) as a risk assessment test for risk of
a future heart attack and stroke is another catalyst for growth. To
this end, the investigators involved in the PASA study are
analyzing the data and have prepared a manuscript for publication
in a leading medical journal. The PASA data will also form the
basis for a submission to the FDA for the expanded claim. We
anticipate filing this submission during the second quarter."
Fiscal 2007 Objectives ---------------------- PREVU(x) Technology
(1) Expand the market for PREVU(x) - Utilizing the data from the
PASA study, seek a new regulatory claim that would approve PREVU(x)
as a risk assessment tool for risk of future heart attack and
stroke - this would be the first cost-effective, non-invasive test
on the market for such an indication. - Leverage the technology for
utility beyond cardiovascular disease; in conjunction with a
potential partner, a clinical assessment is under evaluation
regarding skin testing for use in the cosmetics market. (2) Achieve
regulatory clearance in the U.S. for PREVU(x) LT - PreMD plans to
work closely with the FDA regarding its 510(k) application for
PREVU(x) LT for use in the life insurance industry. PreMD is
preparing its response to information the FDA suggested. -
Relationships with insurance companies are progressing and both
internal and consultant actuaries are assessing the technology. (3)
Enter into a marketing partnership for PREVU(x) - Discussions are
in advanced stages and continuing with potential partners. - PreMD
likely to manage the life insurance and retail markets directly.
Oncology Pipeline (1) Continue to advance cancer clinical program -
The LungAlert(TM) I-ELCAP study has enrolled over 2,500 patients to
date. Interim data is encouraging. - Enrollment in the
ColorectAlert(TM) EDRN study sponsored by the U.S. National Cancer
Institute is progressing well with one-third of the patients
enrolled. A reportable interim analysis is possible. - The breast
cancer test study at the University of Louisville has enrolled 42
patients. While the timing is slower than initially anticipated,
the study is expected to be completed by the end of the second
quarter. This study is intended to confirm and extend earlier
published findings that show a positive relationship between the
breast cancer test and stage I breast cancer. (2) Conclude a
strategic partnership for the complete line of PreMD's oncology
products - Partnership discussions are underway. "The data
collected so far from the various on-going cancer studies is
promising. These studies will define the performance
characteristics of the technology in the early detection of lung,
colorectal and breast cancer, three of the most common causes of
cancer," said Dr. Norton. "Our portfolio of cancer screening
products is attracting attention from potential partners and we
believe there is an opportunity to capture great value from the
work we have done in this area." "In addition to the progress we
have made with our technology and products, we have also engaged in
discussions with the law firm that was previously responsible for
managing our patent portfolio. Our discussions center around the
U.S. Patent and Trademark Office's findings that two patents
surrounding the skin tissue cholesterol technology lapsed as a
result of the law firm's failure to use its established docketing
procedures regarding payment of the maintenance fees. We have
entered into talks and look forward to a resolution resulting in
receiving a monetary settlement." Financial Review (All amounts are
in Canadian dollars)
------------------------------------------------------ For the year
ended December 31, 2006, PreMD reported total revenue of
$3,335,000, consisting of $7,000 in product sales to McNeil, the
Company's licensee through December 28, 2006, and $3,329,000 in
license revenue. Upon termination of the agreements on December 28,
2006, the balance of the deferred revenues, representing the
unamortized portion of the up-front payments received from the
licensee, was recognized as license revenue. The revenue for the
full year ended December 31, 2005 was $1,579,000, which consisted
of $426,000 in product sales to McNeil and $1,153,000 in license
revenue. The consolidated loss for the year was $5,949,000 or
$(0.27) per share compared with a loss of $4,990,000 or $(0.23) for
the year ended December 31, 2005. Research and development
expenditures for the year increased by $1,654,000 to $4,774,000
from $3,120,000 in 2005. The increase is related to: - an increase
of $1,673,000 in spending on clinical trials, particularly related
to the completion of several large trials for skin cholesterol in
support of additional regulatory submissions, as well as
advancement of the lung cancer trial (the "I-ELCAP" study); - an
increase of $77,000 in product liability insurance; - a decrease of
$173,000 in subcontract research due to the completion of the
development of the second-generation color reader for PREVU(x) POC
- a decrease in compensation of $41,000. General and administration
expenses amounted to $3,025,000 in 2006, compared with $2,691,000
in 2005, an increase of $334,000. The variance primarily reflects:
- a payment of $175,000 upon settlement of litigation and
completion of an amendment to the ColorectAlert License Agreement
on January 5, 2007; and related legal expenses of approximately
$330,000; - an increase in market research expenses of $46,000; - a
reduction of $44,000 in expenses (from $44,000 to nil) relating to
a prior year's unsolicited offer to acquire the shares of another
company; - a reduction in compensation of $105,000 and lower
investor relations and annual report costs; - a reduction of
$38,000 in stock-based compensation for options for administrative
personnel and consultants resulting in a non-cash expense of
$384,000 compared with $422,000 in 2005. Interest on convertible
debentures (issued on August 30, 2005) amounted to $678,000 in 2006
compared to $228,000 in 2005. The debentures bear interest at an
annual rate of 7%, payable quarterly in either cash or stock. In
2006, $281,000 of the interest expense was paid in stock, rather
than cash, compared with nil in 2005. Imputed interest of $820,000
(compared with $256,000 in 2005) represents the expense related to
the accretion of the liability component at an effective interest
rate of 12.75%. Amortization expenses for equipment and acquired
technology for 2006 amounted to $180,000 compared with $210,000 in
2005. Leasehold improvements in the research facilities and
purchases of equipment to support administration, clinical trials
and manufacturing amounted to $25,000 in 2006 and $130,000 in 2005.
In addition, the PREVU(x) trademark was purchased from the former
licensee of the skin cholesterol technology for $150,000.
Amortization of deferred financing fees amounted to $139,000 for
2006 compared to $43,000 in 2005. The financing fees are amortized
over the four-year life of the convertible debentures. Recoveries
of provincial scientific investment tax credits (ITCs) amounted to
$200,000 compared with $198,923 in 2005. Interest income amounted
to $265,369 compared with $173,130 for 2005. At December 31, 2006,
PreMD had cash, cash equivalents and short-term investments
totaling $3,276,000. On March 28, 2007, PreMD announced that it had
raised $3.9 million in a private placement with existing
institutional investors. The Company believes that its current
financial resources will be sufficient to meet the Company's
current operating and capital requirement through 2008. Financial
statements are attached to this press release. PreMD's complete
fiscal 2006 annual report is available at http://www.sedar.com/.
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Conference Call and Webcast PreMD will hold a conference call and
webcast today, March 29, 2007, at 10:30 a.m. ET. To access the
conference call, please dial 416-915-5651 or 1-800-588-4942. 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 April 5, 2007,
please dial 416-640-1917 or 1-877-289-8525 and enter the passcode
21225267 followed by the number sign.
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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 are branded as PREVU(x) Skin Cholesterol Test. 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 further information,
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 2006 2005 $ $
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ASSETS Current Cash and cash equivalents 112,577 773,199 Short-term
investments 3,163,482 7,905,883 Accounts receivable 11,221 881,891
Inventory 179,219 36,306 Prepaid expenses and other receivables
570,773 317,264 Investment tax credits receivable 200,000 200,000
-------------------------------------------------------------------------
Total current assets 4,237,272 10,114,543
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Deferred financing fees, net of accumulated amortization of
$174,863 (2005 - $43,059) 347,589 477,725 Capital assets, net
312,410 410,636 Intangible assets, net of accumulated amortization
of $915,027 (2005 - $856,970) 382,229 290,286
-------------------------------------------------------------------------
5,279,500 11,293,190
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-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY) Current Accounts
payable 963,990 291,125 Accrued liabilities 932,372 655,113 Current
portion of deferred revenue - 311,915
-------------------------------------------------------------------------
Total current liabilities 1,896,362 1,258,153
-------------------------------------------------------------------------
Convertible debentures 6,350,680 5,893,340 Deferred revenue -
2,297,400
-------------------------------------------------------------------------
Total liabilities 8,247,042 9,448,893
-------------------------------------------------------------------------
Shareholders' equity (deficiency) Capital stock 25,263,480
24,449,826 Contributed surplus 2,521,915 1,840,979 Equity component
of convertible debentures 2,239,385 2,393,145 Warrants 1,170,020
1,373,718 Deficit (34,162,342) (28,213,371)
-------------------------------------------------------------------------
Total shareholders' equity (deficiency) (2,967,542) 1,844,297
-------------------------------------------------------------------------
5,279,500 11,293,190
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT (In Canadian dollars)
Years ended December 31 2006 2005 2004 $ $ $
-------------------------------------------------------------------------
REVENUE Product sales 6,513 425,730 183,258 License revenue
3,328,827 1,153,308 302,080
-------------------------------------------------------------------------
3,335,340 1,579,038 485,338 Cost of product sales, including
amortization of nil (2005 - $3,456; 2004 - $6,600) 36,824 428,650
190,214
-------------------------------------------------------------------------
Gross profit 3,298,516 1,150,388 295,124
-------------------------------------------------------------------------
EXPENSES Research and development 4,773,762 3,120,276 2,612,770
General and administration 3,024,811 2,690,790 3,346,720 Interest
on convertible debentures 677,723 228,481 - Imputed interest on
convertible debentures 819,609 255,529 - Amortization 319,205
252,804 224,428 Loss (gain) on foreign exchange 97,746 (35,734)
8,731
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9,712,856 6,512,146 6,192,649
-------------------------------------------------------------------------
RECOVERIES AND OTHER INCOME Investment tax credits 200,000 198,923
205,000 Interest 265,369 173,130 123,626
-------------------------------------------------------------------------
465,369 372,053 328,626
-------------------------------------------------------------------------
Net loss for the year (5,948,971) (4,989,705) (5,568,899) Deficit,
beginning of year (28,213,371) (23,223,666) (17,654,767)
-------------------------------------------------------------------------
Deficit, end of year (34,162,342) (28,213,371) (23,223,666)
-------------------------------------------------------------------------
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Basic and diluted loss per share $ (0.27) $ (0.23) $ (0.26)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Weighted average number of common shares outstanding 21,663,698
21,487,008 21,276,497
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (In Canadian dollars) Years
ended December 31 2006 2005 2004 $ $ $
-------------------------------------------------------------------------
OPERATING ACTIVITIES Net loss for the year (5,948,971) (4,989,705)
(5,568,899) Add (deduct) items not involving cash Amortization
319,205 256,260 231,028 Stock-based compensation costs included in
Research and development expense 156,920 147,085 123,925 General
and administration expense 383,767 421,812 476,164 Loss (gain) on
sale of capital asset (1,743) - 6,098 Imputed interest on
convertible debenture 819,609 255,529 - Interest on convertible
debenture paid in common shares 281,462 - - Loss (gain) on foreign
exchange 97,748 (35,734) 8,731 Net change in non-cash working
capital balances related to operations 1,422,730 (1,061,397)
535,284 Increase (decrease) in deferred revenue (2,609,315)
(301,885) 2,818,100
-------------------------------------------------------------------------
Cash used in operating activities (5,078,588) (5,308,035)
(1,369,569)
-------------------------------------------------------------------------
INVESTING ACTIVITIES Short-term investments 4,589,356 (3,065,568)
1,678,190 Purchase of trademark (150,000) - - Purchase of capital
assets (24,965) (130,310) (164,789) Sale of capital assets 3,000 -
628
-------------------------------------------------------------------------
Cash provided by (used in) investing activities 4,417,391
(3,195,878) 1,514,029
-------------------------------------------------------------------------
FINANCING ACTIVITIES Issuance of convertible debentures - 9,827,616
- Financing fees (51,399) (861,328) - Issuance of capital stock,
net of issue costs - 198,400 33,373
-------------------------------------------------------------------------
Cash provided by (used in) financing activities (51,399) 9,164,688
33,373
-------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash equivalents 51,974
(127,034) -
-------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents during the
year (660,622) 533,741 177,833 Cash and cash equivalents, beginning
of year 773,199 239,458 61,625
-------------------------------------------------------------------------
Cash and cash equivalents, end of year 112,577 773,199 239,458
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Represented by Cash 112,577 773,199 173,302 Cash equivalents - -
66,156
-------------------------------------------------------------------------
112,577 773,199 239,458
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Supplemental cash flow information Cash paid during the year for
interest 396,261 228,481 -
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DATASOURCE: PreMD Inc. CONTACT: Brent Norton, President and CEO,
Tel: (416) 222-3449 ext. 22, Email: ; Ron Hosking, Vice President
Finance and CFO, Tel: (416) 222-3449 ext. 24, Email:
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