PreMD Inc. Reports Third Quarter Results and Appoints New Chief Financial Officer
"We are working hard to create opportunities for PreMD. We are looking at revenue generation strategies for PREVU* with companies like Medivon, LLC as well as others in Canada, Europe and Asia and we are also pursuing opportunities in the cosmetics field," stated Dr. Brent Norton, President and CEO of PreMD. "We are also looking at strategies to monetize various tangible and intangible assets and raise short-term capital to fund operations. There are no guarantees that we will be able to achieve these plans, but we are working towards improving the future of PreMD."
The Company is also pleased to announce the appointment of Catherine Auld, C.A., as Chief Financial Officer. Ms. Auld will be responsible for PreMD's financial matters as well as assist in strategic and investor relations activities. Ms. Auld brings a breadth of knowledge in both the biotechnology and financial industries and is currently working as a financial consultant within the biotechnology industry. Previously, Ms. Auld was Chief Financial Officer of NeuroMedix Inc. and Interim Chief Financial Officer of ARIUS Research Inc., and prior thereto, Chief Financial Officer of Transition Therapeutics Inc.
Mr. Ron Hosking, who has been with PreMD over 11 years is retiring as Chief Financial Officer, but will continue to act as a consultant to the Company. "Ron has been a significant asset to PreMD and we are very grateful for his years of dedication and contribution," said Dr. Brent Norton. "He will really be missed, so we are pleased that he has agreed to continue as a consultant."
Financial Review (All amounts are in Canadian dollars)
The consolidated net loss for the three months ended September 30, 2008 (Q3 2008) was $1,879,000 or $(0.07) per share compared with a loss of $1,635,000 or $(0.07) per share for the quarter ended September 30, 2007 (Q3 2007).
Total product sales were $7,000 for both Q3 2008 and Q3 2007. Similarly, license revenue was $27,000 for Q3 2008 and Q3 2007. Product sales reflect direct sales to customers. The license revenue consisted of the upfront cash payment received in accordance with the 2007 licensing agreement with AstraZeneca Pharmaceuticals LP ("AstraZeneca") which was deferred and recognized into income on a straight-line basis over five years. This agreement was terminated subsequent to September 30, 2008.
Interest on convertible debentures (issued on August 30, 2005) amounted to $167,000 in both Q3 2008 and Q3 2007. The debentures bear interest at an annual rate of 7%, payable quarterly in either cash or stock. The amount accrued for Q3 2008 was subsequently paid in common shares, whereas the amount for Q3 2007 was paid partly in shares ($135,000) and partly in cash. Imputed interest on convertible debentures of $296,000 and $253,000 in Q3 2008 and 2007, respectively, represents the expense related to the accretion of the liability component at an effective interest rate of approximately 15%.
Interest on senior unsecured debentures, issued on March 12, 2008, amounted to $35,000 for Q3 2008. Imputed interest on the liability component of the 2008 senior unsecured debentures amounted to $103,000 in Q3 2008, at an effective interest rate of 10.9%.
Amortization expenses for capital assets and intangible assets for Q3 2008 amounted to $30,000 compared with $42,000 for Q3 2007.
The loss on foreign exchange was $348,000 for Q3 2008, compared with a gain of $533,000 for Q3 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 Q3 2008 amounted to $49,000 versus $54,000 for Q3 2007.
As at September 30, 2008, PreMD had cash, cash equivalents and short-term investments totaling $35,000 ($1,190,000 as at December 31, 2007). Cash used to fund operating activities during Q3 2008 amounted to $409,000 compared with $1,116,000 in Q3 2007. Subsequent to September 30, 2008, on October 7, 2008, the Company issued secured debentures for gross proceeds of $500,000. To date, the Company has financed its activities through product sales, license revenues, the issuance of shares and debentures and the recovery of provincial ITCs. The Company reported a loss of $1,879,000 for the three months ended September 30, 2008, has a shareholders' deficiency of $7,701,000 as at September 30, 2008 and has experienced significant operating losses and cash outflows from operations since 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 www.sedar.com.
About PreMD Inc.
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 PREVU* POC and PREVU* LT, both non-invasive skin cholesterol tests. 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 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.
During the third quarter, PreMD announced that: - the PREVU* appeal is being reviewed by the FDA Commissioner's Office; - the agreement with AstraZeneca has been terminated; - the Company's shares have been delisted from AMEX; and - the Company has begun trading on the Pink Sheets. Subsequent to quarter end: - the Company completed a secured debenture financing for gross proceeds of $500,000; - the Company's breast cancer clinical data was accepted for presentation at the 4th Annual Academic Surgical Congress; and - a listing review was initiated by the Toronto Stock Exchange.
SOURCE PreMD Inc.
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