Company on track to achieve fiscal 2006 strategic objectives
TORONTO, May 8 /PRNewswire-FirstCall/ -- Predictive medicine
company PreMD Inc. (TSX: PMD; Amex: PME) today announced results
for the first quarter of fiscal 2006 ended March 31, 2006 (Q1
2006). Recent Highlights - Achieved enrollment and testing of 5,000
volunteers in life insurance industry study (PREPARE) with PREVU(x)
LT; - Increased size of the I-ELCAP study (Toronto site) with
LungAlert(TM) by 500 patients; - Completed development of a
standalone color reader for PREVU(x) Point of Care (POC) Skin
Sterol Test, which is expected to enhance PREVU(x)'s market appeal;
- Presented data on the company's cancer detection technologies at
an M.D. Anderson Cancer Center symposium titled 'Tumor Markers for
Personalized Medicine: The New Frontier'; - Presented PREVU(x) data
at the American Heart Association's 7th Annual Arteriosclerosis,
Thrombosis and Vascular Biology Conference; and - Received a new
patent related to the skin sterol technology. The consolidated net
loss for Q1 2006 was $2,374,000 or $0.11 per share compared with a
loss of $1,302,000 or $0.06 per share for the quarter ended March
31, 2005 (Q1 2005), primarily due to increased research and
development expenses related to the acceleration of clinical trials
in Q1 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 Q1 2006 amounted to $755,000
compared with $1,733,000 in Q1 2005, the decrease resulting from a
reduction in accounts receivable. Total product related sales to
McNeil Consumer Healthcare were nil for Q1 2006 compared with
$12,000 for Q1 2005 because McNeil had inventory from their 2005
marketing programs and did not need to place any additional orders
for PREVU(x). License revenue was $77,000 for Q1 2006, equal to
that of Q1 2005. "We are on plan to achieve our stated objectives
for 2006, particularly with the advancement of clinical trials for
our product pipeline," said Dr. Brent Norton, President and Chief
Executive Officer. "We are currently evaluating data from 5,000
volunteers in the PREPARE study, which may enable us to make a
regulatory submission for PREVU(x) LT in the United States, Canada
and Europe in 2006, positioning us to receive milestone payments
from McNeil. This second PREVU(x) product, geared toward the life
insurance industry, provides us with additional revenue
opportunities in important markets. In addition, we have
accelerated other key clinical studies, including PASA, which is
aimed at expanding PREVU(x)'s claim for use in the U.S. to include
risk assessment of heart attack and stroke, and the I-ELCAP trial,
which will give us important new data on LungAlert(TM) later this
year. We are very pleased with the advancements we are making with
all of these studies." Additional highlights of the quarter include
the completed development of a second-generation standalone
spectrophotometer, or color reader, for PREVU(x) POC. This new
reader is portable and operable in any setting, such as a retail
pharmacy, thereby offering users greater flexibility, and is
significantly lower in cost than the reader currently used in the
test. The performance characteristics of the new reader are
currently being documented in preparation for a Special 510(k)
submission to the Food and Drug Administration (FDA). Additionally,
a patent titled Method of Determining Skin Tissue Cholesterol,
which describes an alternative method of using reagents for the
measurement of cholesterol on the skin surface, was granted in
Canada, adding to PreMD's proprietary position in regard to skin
sterol testing. This patent has been granted in the United States
and Japan and is pending in Europe. Fiscal 2006 Outlook
------------------- "A number of McNeil's market evaluations for
PREVU(x) are gaining traction, which we expect to see build through
the year," continued Dr. Norton. "Our focus is on accelerating and
concluding several of our clinical and development initiatives for
our skin sterol technology and cancer portfolio. At the same time,
we expect additional revenues and milestone payments related to the
successful completion of our strategic objectives. As these goals
are achieved, we expect to move towards breaking even, possibly by
the end of 2006." PreMD's fiscal 2006 objectives include: - Achieve
regulatory clearance for PREVU(x) LT to enable marketing launch; -
Achieve new regulatory claim for PREVU(x) in 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. - Most recently, McNeil
showcased PREVU(x) POC to cardiologists and other medical
professionals at the American College of Cardiology annual meeting,
and will be attending the annual conferences of the European
Society of Cardiology and Canadian Cardiovascular Society later
this year. McNeil is also continuing to promote PREVU(x) directly
to specific health care programs and providers, including screening
clinics where cardiovascular risk assessment is conducted. - In
March, McNeil initiated a pilot program in the U.S. with a major
North American retail chain at two locations in Florida.
Additionally, McNeil plans to significantly extend its previous
retail pilot program in Quebec this fall in response to favorable
customer and retailer feedback. - McNeil is currently evaluating
opportunities in the occupational health market, which includes
employee health fairs and programs, and has recently established an
industry advisory board. - In the life insurance testing market,
McNeil continues to meet with life insurance companies to prepare
for the launch of PREVU(x) LT. Additionally, McNeil plans to
initiate a pilot program in Ireland with a tele-underwriting firm
that conducts interviews by phone with candidates for life
insurance. When required, candidates are referred to a pharmacy to
undergo select tests, including PREVU(x) POC. Financial Review
---------------- During Q1 2006, the Company focused on
accelerating clinical trials to obtain additional claims for
PREVU(x) POC and to obtain regulatory clearance for PREVU(x) LT. As
a result, research and development expenditures for the quarter
increased by $874,000 to $1,516,000 from $642,000 in Q1 2005. The
variance for the period reflects: - an increase of $725,000 in
spending on clinical trials for skin cholesterol, particularly
related to the insurance trial, as well as the trials for the lung
and breast cancer technologies; and - an increase of $62,000 in
legal fees on intellectual property, primarily related to the two
U.S. patents for skin cholesterol that had been deemed abandoned in
2004. General and administration expenses amounted to $640,000 for
Q1 2006 compared with $764,000 in Q1 2005, a decrease of $124,000.
The decrease for the quarter reflects: - a decrease in stock-based
compensation, a non-cash expense, of $29,000 to $70,000 for Q1 2006
compared with $99,000 for Q1 2005; - an increase of $29,000 in
professional fees for legal, audit and human resources; and - a
decrease of $51,000 in consulting expenses related to investor
communications. Interest on convertible debentures (issued on
August 30, 2005) amounted to $166,000 in Q1 2006 compared with nil
in Q1 2005. The debentures bear interest at an annual rate of 7%,
payable quarterly in either cash or stock. Imputed interest of
$199,000 in Q1 2006 (compared with nil in Q1 2005) represents the
amortization of the fair value of the warrants and equity component
of the debentures. Amortization expenses for equipment and acquired
technology for Q1 2006 amounted to $40,000 compared with $52,000
for Q1 2005. Purchases of capital assets, primarily in support of
the Company's clinical trial program, amounted to $18,000 during Q1
2006 compared with $82,000 in Q1 2005. Amortization of deferred
financing fees related to the convertible debentures amounted to
$33,000 in Q1 2006 compared with nil in Q1 2005. The financing fees
are being amortized over the life of the convertible debentures.
Interest income amounted to $87,000 for Q1 2006 compared with
$29,000 for Q1 2005 as a result of higher cash balances. Refundable
scientific investment tax credits ("ITCs") accrued for Q1 2006
amounted to $60,000 versus $50,000 for Q1 2005. Accounts receivable
at March 31, 2006 amounted to $125 compared $882,000 at December
31, 2005. The large decrease resulted from the receipt of sales and
license revenue that had been invoiced to McNeil in Q4 2005. As at
March 31, 2006 PreMD had cash, cash equivalents and short-term
investments totaling $7,885,000 ($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 Q1 2006 amounted to $755,000 compared with
$1,730,000 in Q1 2005, the decrease resulting from the reduction in
accounts receivable. 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, 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 $260,000 will be sufficient to meet its
current operating and capital requirements through at least 2008.
-------------------------------------------------------------------------
Conference Call and Webcast PreMD will hold a conference call and
webcast tomorrow, May 9, 2006, at 10 a.m. ET. To access the
conference call, please dial 416-644-3415 or 1-800-814-3911. 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 May 16, 2006,
please dial (416) 640-1917 or (877) 289-8525 and enter the passcode
21187820 followed by the pound key.
-------------------------------------------------------------------------
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 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. PreMD Inc. Incorporated under the laws of Canada
CONSOLIDATED BALANCE SHEETS (In Canadian dollars) As at March 31,
2006 and December 31, 2005 Unaudited March 31, December 31, 2006
2005 $ $
-------------------------------------------------------------------------
ASSETS Current Cash and cash equivalents 229,431 773,199 Short-term
investments 7,655,425 7,905,883 Accounts receivable 125 881,891
Inventory 37,245 36,306 Prepaid expenses and other receivables
250,887 317,264 Investment tax credits receivable 260,000 200,000
-------------------------------------------------------------------------
Total current assets 8,433,113 10,114,543
-------------------------------------------------------------------------
Deferred financing fees, net of accumulated amortization of $75,608
(2005 - $43,059) 445,176 477,725 Capital assets, net of accumulated
amortization of $752,092 (2005 - $721,784) 398,426 410,636 Acquired
technology, net of accumulated amortization of $871,484 (2005 -
$856,970) 275,772 290,286
-------------------------------------------------------------------------
9,552,487 11,293,190
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY) Current Accounts
payable 559,181 291,125 Accrued liabilities 751,641 655,113 Current
portion of deferred revenue 311,915 311,915
-------------------------------------------------------------------------
Total current liabilities 1,622,737 1,258,153
-------------------------------------------------------------------------
Convertible debentures 6,133,254 5,893,340 Deferred revenue
2,220,675 2,297,400
-------------------------------------------------------------------------
Total liabilities 9,976,666 9,448,893
-------------------------------------------------------------------------
Shareholders' equity (deficiency) Capital stock 24,458,057
24,449,826 Contributed surplus 1,938,034 1,840,979 Equity component
of convertible debentures 2,393,145 2,393,145 Warrants 1,373,718
1,373,718 Deficit (30,587,133) (28,213,371)
-------------------------------------------------------------------------
Total shareholders' equity (deficiency) (424,179) 1,844,297
-------------------------------------------------------------------------
9,552,487 11,293,190
-------------------------------------------------------------------------
-------------------------------------------------------------------------
PreMD Inc. CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT (In Canadian
dollars) Unaudited Three months ended March 31, 2006 2005 $ $
-------------------------------------------------------------------------
REVENUE Product sales 117 12,359 License revenue 77,051 76,725
-------------------------------------------------------------------------
77,168 89,084 Cost of product sales 128 11,229
-------------------------------------------------------------------------
Gross profit 77,040 77,855
-------------------------------------------------------------------------
EXPENSES Research and development 1,515,709 642,486 General and
administration 639,880 763,865 Interest on convertible debentures
165,514 - Imputed interest on convertible debentures 198,863 -
Amortization 77,371 52,306
-------------------------------------------------------------------------
2,597,337 1,458,657
-------------------------------------------------------------------------
RECOVERIES AND OTHER INCOME Investment tax credits 60,000 50,000
Interest 86,535 28,890
-------------------------------------------------------------------------
146,535 78,890
-------------------------------------------------------------------------
Net loss for the period (2,373,762) (1,301,912) Deficit, beginning
of period (28,213,371) (23,223,666)
-------------------------------------------------------------------------
Deficit, end of period (30,587,133) (24,525,578)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic and diluted loss per share $(0.11) $(0.06)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Weighted average number of common shares outstanding 21,551,160
21,336,977
-------------------------------------------------------------------------
-------------------------------------------------------------------------
PreMD Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (In Canadian
dollars) Unaudited Three months ended March 31, 2006 2005 $ $
-------------------------------------------------------------------------
OPERATING ACTIVITIES Net loss for the period (2,373,762)
(1,301,912) Add items not involving cash Amortization 77,371 52,306
Stock-based compensation costs included in: Research and
development expense 35,815 30,321 General and administration
expense 69,471 98,550 Imputed interest on convertible debentures
198,863 - Add loss on foreign exchange 62,632 - Net change in
non-cash working capital balances related to operations 1,251,788
(532,221) Decrease in deferred revenue (76,725) (76,725)
-------------------------------------------------------------------------
Cash used in operating activities (754,547) (1,729,681)
-------------------------------------------------------------------------
INVESTING ACTIVITIES Short-term investments 186,810 1,635,730
Purchase of capital assets (18,098) (35,265)
-------------------------------------------------------------------------
Cash provided by investing activities 168,712 1,600,465
-------------------------------------------------------------------------
FINANCING ACTIVITIES Issuance of capital stock, net of issue costs
- 198,400
-------------------------------------------------------------------------
Cash provided by financing activities - 198,400
-------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash equivalents 42,067
-
-------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents during the
period (543,768) 69,184 Cash and cash equivalents, beginning of
period 773,199 239,458
-------------------------------------------------------------------------
Cash and cash equivalents, end of period 229,431 308,642
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Represented by: Cash 229,431 308,642
-------------------------------------------------------------------------
229,431 308,642
-------------------------------------------------------------------------
-------------------------------------------------------------------------
DATASOURCE: PreMD Inc. CONTACT: Sarah Borg-Olivier, Director,
Communications, T: (416) 222-3449, ; Ron Hosking, Chief Financial
Officer, T : (416) 222-3449,
Copyright