TORONTO, March 28 /PRNewswire-FirstCall/ - Predictive medicine companyPreMD Inc. (TSX: PMD; Amex: PME) today announced audited financial results forthe year ended December 31, 2007.
"During 2007, PreMD faced many significant changes and challenges," saidBrent Norton, president and CEO. We made tremendous progress on severalfronts, including a License, Development and Supply Agreement with AstraZenecaPharmaceuticals LP for the marketing and distribution of our point-of-care(POC) skin cholesterol test in the United States. We also successfullypenetrated the cosmetics industry as we recently signed an agreement with oneof the world's leading cosmetics company, which will enable us to furtherexplore the potential our technology holds in other viable markets. Inaddition, we continue to achieve several clinical and scientific validationsrelated to both our cardiovascular and cancer franchises, including thepublication of our 'Increased Skin Cholesterol Identifies Individuals atIncreased Cardiovascular Risk: The Predictor of Advanced SubclinicalAtherosclerosis (PASA) Study' this week in the American Journal of Cardiology,April 2008 edition."
Dr. Norton continued, "despite these critical achievements, the companyfaced difficulties, as we received a non-substantially equivalent (NSE) letterfrom the US Food and Drug Administration (FDA) regarding our 510(k)submission. We have appealed the FDA decision, including submitting a detailedbrief and meeting with them to present our case. We are pleased to have thesupport of AstraZeneca Pharmaceuticals LP, as well as several leadingconsultants, through the internal agency review process and we expect to hearfrom the FDA with the next steps in the next 30 days. We also recentlycompleted a financing, which will enable us to move forward with our businessdevelopment initiatives, pending FDA clearance and the subsequentcommercialization of our products. We appreciate the patience and support ofour stakeholders, as we determine the most effective steps toward enhancingshareholder 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 $6,316,000or $(0.26) per share compared with a loss of $5,949,000 or $(0.27) per sharefor the year ended December 31, 2006, an increase of $367,000.
Total product sales of PREVU(x) Skin Cholesterol tests amounted to $41,000in 2007 compared with $7,000 in 2006. License revenue was $53,000 in 2007compared to $3,329,000 in 2006, a decrease of $3,276,000. License revenueconsists primarily of the upfront cash payments received in accordance withthe respective licensing agreements, which have been deferred and recognizedinto income on a straight-line basis over the terms of the agreements. For2007, the license revenue represents the amortization of the $533,000(US$500,000) received upon signing of the license agreement with AstraZenecaon 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:
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:
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 atan 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, comparedwith $281,000 in 2006. Imputed interest of $1,002,000 (compared with $820,000in 2006) represents the expense related to the accretion of the liabilitycomponent at an effective interest rate of 15%.
Amortization expenses for equipme