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Pursuant to the enterprise reorganization completed mid-February, which resulted in the preservation of liquidities and alleviated the need for short-term financing, Mr. Jean-Francois Bureau, DiagnoCure's Chief Financial Officer, has decided to engage in other career opportunities. He will therefore leave his position at the end of March. Mr. Frederic Boivin, Senior Director, Finance and Administration, who has been with the Company for the past nine years, will assume the functions of CFO in the interim.
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Also, as part of the realignment of activities, Mrs. Paule De Blois was appointed Senior Vice President, Operations of DiagnoCure, Inc. Mrs. De Blois has been with the Company for the past five years, most recently as Vice President of Corporate Affairs.
Highlights of the First Quarter 2010
In January 2010, at the Gastrointestinal Cancers Symposium of the American Society of Clinical Oncology (ASCO GI), DiagnoCure presented the results of a new study on the GCC marker used in its Previstage(TM) GCC test. The study analyzed the results of the GCC test on the lymph nodes of 123 patients thought to be cured after their colorectal cancer surgeries based on the current assessment methods (histopathology). It demonstrated that patients who had at least one GCC positive lymph node were two times more likely to experience disease recurrence that patients who had no GCC positive lymph nodes.
On February 15, 2010, the Company announced some changes aimed at optimizing its enterprise structure. From now on, the Company will be managed considering two franchises, that is, the Quebec operations comprised of the head office and R&D activities, and the West Chester, PA, service laboratory operations focused on the commercialization of molecular cancer tests, in particular DiagnoCure's Previstage(TM) GCC Colorectal Cancer Staging Test. The set objective for the U.S. service laboratory will be to quickly become cash flow neutral by, amongst other things, expanding its test menu. With regard to the Quebec operations, the main focus for 2010 is to complete the VITAR study aimed at confirming the clinical utility of the Previstage(TM) GCC test. This study which was initiated in 2009 is already fully funded in the Company's financial model. As a result, DiagnoCure believes that, based on its estimated cash burn rate once the VITAR study is completed, it has all the liquidities necessary to support its operations until the sale of Previstage(TM) GCC ramp up and the PCA3 test is approved for sale in the U.S.
More recently, DiagnoCure's PCA3 prostate cancer marker has been confirmed in two large studies to help guide repeat prostate biopsy decisions and predict risk of aggressive cancer. The two studies, that included over 2,400 men suspected of having prostate cancer, originated from the GlaxoSmithKline's REDUCE trial of their drug dutasteride. The results of the studies were presented in March at the American Society of Clinical Oncology's Genitourinary Cancers Symposium (ASCO GU), and one of them was highlighted in the ASCO's official press program.
Results for the First Quarter 2010
Total revenues for the first quarter of 2010 were $362,401 compared with $400,123 for the first quarter of 2009. In the first quarter of 2010, royalty revenues amounted to $161,421 compared with $155,777 for the corresponding period of 2009. Royalty revenues from Gen-Probe increased by 15% or $20,244, from $132,311 to $152,555 for the first quarter of 2010. This increase is attributable to the sales of PROGENSA(R) PCA3 in Europe and of the PCA3 ASRs in the United States, by Gen-Probe. Also in the first quarter of 2010, DiagnoCure recorded royalties of $8,866 from Scimedx related to ImmunoCyt(TM) / uCyt+(TM), compared with $23,466 for the same period of 2009. Following the August 2008 divestment agreement, Scimedx is now taking the lead on the sale of ImmunoCyt(TM) / uCyt+(TM) and paying royalties to DiagnoCure. For the first quarter of 2009 DiagnoCure had sold clinical samples to Gen-Probe for an amount of $27,695 but none in the first quarter of 2010. The last clinical samples were sold to Gen-Probe in the second quarter of 2009. As part of the amended agreement signed with Gen-Probe on April 29, 2009, DiagnoCure recorded a portion of the contractual annual payment, that is, $146,376 for the first quarter of 2010. Also during the quarter ended January 31, 2010, DiagnoCure received reimbursement for its Previstage(TM) GCC Colorectal Cancer Staging Test for an amount of $3,663.
Interest income decreased by $120,883, to $50,941 for the first quarter of 2010 compared with $171,824 for the first quarter of 2009. The decrease is attributable to DiagnoCure's use of fund to finance its operating activities and the lower interest rates on its investments.
Cost of sales decreased by $11,298 from $12,832 for the first quarter of 2009 to $1,534 for the same quarter of 2010. This decrease is related to the end of sample sales during the second quarter of 2009 as stated above. The cost of sales for this quarter represents the cost related to the Previstage(TM) GCC Colorectal Cancer Staging Test reimbursed.
Operating expenses increased by $322,247 from $3,858,709 for the first quarter of 2009 to $4,180,956 for the first quarter of 2010. This increase reflects nonrecurring charges of $716,028 related to the reorganization announced on February 15, 2010. Without these charges, the operating expense would have decreased by $393,781 to $3,464,928.
Based on the above, for the first quarter of 2010, DiagnoCure recorded a net loss of $3,820,089 or $0.09 per share, compared with $3,440,655 or $0.08 per share, for the same period of 2009.
Financial Data
About DiagnoCure
DiagnoCure (TSX: CUR) is a life sciences company commercializing high-value cancer diagnostic tests and delivering laboratory services that increase clinician and patient confidence in making critical treatment decisions. DiagnoCure Oncology Laboratories, a subsidiary of DiagnoCure, Inc., launched in 2008 the Previstage(TM) GCC Colorectal Cancer Staging Test, the first GCC-based molecular test for the management of colorectal cancer. A major study published in the February 18, 2009, edition of the Journal of the American Medical Association demonstrated that GCC, to which DiagnoCure owns exclusive worldwide diagnostic rights, is the strongest independent predictor of colorectal cancer recurrence. More clinical studies are underway to confirm the clinical utility of the Previstage(TM) GCC test. The Company has a strategic alliance with Gen-Probe (NASDAQ: GPRO) for the development and commercialization of a second-generation prostate cancer test using PCA3, DiagnoCure's proprietary molecular marker. This test is available through laboratories in the U.S. using PCA3 analyte specific reagents (ASR) from Gen-Probe, in Europe as the CE-marked PROGENSA(R) PCA3 in vitro assay, and in Canada. A clinical study aimed at securing FDA approval for the commercialization of the PROGENSA(R) PCA3 test in the U.S. is underway. For more information, visit www.diagnocure.com.
Forward-looking statements
This release contains forward-looking statements that involve known and unknown risks, uncertainties and assumptions that may cause actual results to differ materially from those expected. By their very nature, forward-looking statements are based on expectations and hypotheses and also involve risks and uncertainties, known and unknown, many of which are beyond DiagnoCure's control. As a result, investors are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements regarding the outcome of research and development projects, clinical studies and future revenues are based on management expectations. In addition, the reader is referred to the applicable general risks and uncertainties described in DiagnoCure's most recent Annual Information Form under the heading "Risk Factors". DiagnoCure undertakes no obligation to publicly update or revise any forward-looking statements contained herein unless required by the applicable securities laws and regulations.------------------------------------------------------------------------- For the first quarter ended January 31 ------------------------- 2010 2009 ------------------------------------------------------------------------- Sales 3,663 72,522 ------------------------------------------------------------------------- Revenue under research and license agreement 307,797 155,777 ------------------------------------------------------------------------- Interest 50,941 171,824 ------------------------------------------------------------------------- Total revenues 362,401 400,123 ------------------------------------------------------------------------- Cost of sales 1,534 12,832 ------------------------------------------------------------------------- Gross margin 360,867 387,291 ------------------------------------------------------------------------- Operating expenses (before stock-based compensation and restructuring charges) 3,365,934 3,668,667 ------------------------------------------------------------------------- Net loss before stock-based compensation and restructuring charges (3,005,067) (3,281,376) ------------------------------------------------------------------------- Restructuring charges 716,028 - ------------------------------------------------------------------------- Stock-based compensation 98,994 190,042 ------------------------------------------------------------------------- Net loss before income taxes (3,820,089) (3,471,418) ------------------------------------------------------------------------- Future income taxes - 30,763 ------------------------------------------------------------------------- Net loss (3,820,089) (3,440,655) ------------------------------------------------------------------------- Basic and diluted net loss per share (0.09) (0.08) ------------------------------------------------------------------------- Weighted average number of common shares outstanding 42,957,475 42,796,160 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Consolidated Balance Sheets ------------------------------------------------------------------------- As at January 31 ------------------------- 2010 2009 ------------------------------------------------------------------------- Cash, cash equivalents, temporary and long-term investments 12,703,474 16,593,947 ------------------------------------------------------------------------- Total assets 23,592,696 29,353,762 ------------------------------------------------------------------------- Shareholders' equity 19,503,150 26,392,935 ------------------------------------------------------------------------- -------------------------------------------------------------------------
SOURCE DiagnoCure Inc.
