QUEBEC CITY, June 13 /PRNewswire-FirstCall/ -- DiagnoCure Inc. (TSX: CUR), a life sciences company commercializing high-value cancer diagnostic tests and delivering lab services, announced a net loss of $3,372,374 or $0.08 per share for the second quarter ending April 30, 2008. These results are substantially in line with Management expectations. They reflect the significant progress towards the commercialization of DiagnoCure's new Previstage(TM) GCC Colorectal Cancer Staging Test, and royalties of the sales of the PCA3 test progressing over last year second quarter. At the end of the quarter, cash, short-term investments and long-term investments stood at $26,691,514.
DiagnoCure also announces that, effective June 13, 2008, Mr. Alain Rheaume will succeed to Mr. Paul Gobeil as Chairman of the Board of directors of the Company. Mr. Rheaume is Founder and Managing Partner of Trio Capital Inc. He cumulates over 30 years of experience in management in both the public and private sectors. He has been Director of DiagnoCure's Board and a member of the Audit Committee since 2005.
Mr. Gobeil asked to be relieved of his duties as Chairman of the Board. The Company will continue to enjoy his broad experience as he pursues his 10-year tenure as a DiagnoCure Board member. Under Mr. Gobeil's remarkable Chairmanship since 2005, the Board has implemented a rigorous corporate governance program, ensured the hiring and transition of a new Chief Executive Officer, and completed an extensive review of the strategic foundation of the Company which translated into a new financing of $25 million, the acquisition of five promising markers and products, and the upcoming launch of a new test for colorectal cancer through the Company's new clinical laboratory in the United States.
Highlights of the Quarter Previstage(TM) GCC
The Company successfully completed the development of its GCC colorectal cancer staging test in its R&D facilities in Quebec City. The prototype test was transferred to DiagnoCure's U.S. clinical laboratories for final development and validation. The Company expects to meet the necessary regulatory requirements in time to commercially launch Previstage(TM) GCC this summer.
To bolster its commercialization activities in the U.S., DiagnoCure has hired experienced sales professionals in the United States, and finalized the development of its government and insurance reimbursement plan, which is being implemented through Premier Source, a leading provider of reimbursement services to pharmaceutical and diagnostic companies.
At the recent American Society of Clinical Oncology (ASCO) annual meeting in Chicago, attended by 30,000 health practitioners concerned with cancer, DiagnoCure introduced Previstage(TM) GCC, a molecular diagnostic solution for the need to more accurate staging of colorectal cancer. This major milestone allowed the Company to educate the oncology community about the potential of Previstage(TM) GCC. ASCO also featured a number of important studies about colorectal cancer, including one from Dr. Scott Waldman on his discovery and clinical implications of the GCC marker. Key opinion leaders from the colorectal cancer treatment community expressed great interest in the Company's Previstage(TM) GCC test and Dr. Waldman's presentation.
PCA3 testing
At the end of March, DiagnoCure and Gen-Probe, the Company's PCA3 development and commercialization partner, participated in the European Association of Urology (EAU) annual meeting. Two posters discussing the clinical utility of the PCA3 test for prostate cancer risk were presented and very well received by the attending health practitioners.
In May, the PCA3 test was a subject of several key presentations and three exhibits at the meeting of the American Urological Association (AUA) in Orlando, Florida, attended by urologists from around the world. Gen-Probe featured the test in its exhibition booth, and Dianon (LabCorp) and AmeriPath (Quest) had their versions of the test prominently featured as well. Dr. Yves Fradet, Founder and Chief Medical Officer of DiagnoCure, presented the latest clinical information on PCA3 to an audience of an estimated 10,000 attendees.
In April and May, the value and performance of the PCA3 test were featured in two important articles published in the Journal of Urology. The first one established that PCA3 is an accurate marker for prostate cancer that may reduce the number of unnecessary biopsies. The second article concluded that PCA3 scores correlate with both tumor volumes and prostatectomy Gleason scores, both of which are measures of prostate cancer aggressiveness. As a result, researchers suggested that PCA3 may have clinical applicability in identifying men who have low-volume or low-grade prostate cancer and who could be followed with active surveillance instead of requiring immediate treatment. This latter article received significant high visibility press coverage in the United States and in Europe, and the study could further increase both the utility and market potential of PCA3.
The publication of these results coincided with the announcement that the Broomfield Hospital in Chelmsford, U.K., would now have the PCA3 test reimbursed by the National Health Service through their local trust.
Results for the second quarter ended April 30, 2008
Total revenues for the second quarter of 2008 were $516,109 compared with $1,232,559 for the second quarter of 2007. In the second quarter of 2008, DiagnoCure had no revenue recognition of the continued calendar payments and research agreement from Gen-Probe compared with $772,667 received from the prior year second quarter. This decrease reflects the end of the revenue recognition from the continued calendar payments received from Gen-Probe which had been amortized over a 42-month period from the signing of the original license agreement. Royalty revenues from Gen-Probe were $46,591 for the second quarter of 2008, compared with $27,873 for the second quarter of 2007. Sales of DiagnoCure's non-invasive bladder cancer test, ImmunoCyt(TM) / uCyt+(TM), were $86,906 for the second quarter of 2008 versus $127,059 for the same period a year ago. Income from research and development contracts, predominantly with Gen-Probe, decreased in 2008 by $72,918 as specific PCA3-related contracted R&D projects are completed. Also in this quarter, DiagnoCure sold clinical samples to Gen-Probe, in support of their prostate cancer testing R&D, for an amount of $47,644 compared with $25,035 in the second quarter of 2007.
Interest income increased $127,961, to $334,968 for the second quarter of 2008 compared with $207,007 for the second quarter of 2007. The increase is attributable to the interest generated on the net proceeds of $23,353,098 received from the April 2007 financing.
Cost of sales increased $22,226 from $64,524 for the second quarter of 2007 to $86,750 for the second quarter of 2008. This increase is related to higher samples sales. Research and development expenses, net of investment tax credits, increased by $812,090, from $663,222 for the second quarter of 2007 to $1,475,312 for the same quarter in 2008. The increase in research and development expenses is attributable to the development and transfer, to our U.S. clinical laboratory, of the GCC colorectal cancer staging test. DiagnoCure intends to launch the Previstage(TM) GCC Colorectal Cancer Staging Test this summer.
Based on the above, for the second quarter of 2008, DiagnoCure recorded a net loss, before stock-based compensation, of $3,052,970 compared with $762,817 for the same period of 2007. The net loss including stock based compensation was $3,372,374 or $0.08 per share for the second quarter of 2008, compared with $1,190,092, or $0.03 per share, for the second quarter of 2007. These results are substantially in line with Management expectations and reflect activities undertaken during the quarter in line with the Company's plans and on-going commitment to develop high value tests for the detection and management of cancer. Further, the second quarter 2008 loss also reflects the Company's U.S. sales and marketing and clinical laboratory activities. Management is satisfied that it has adequate cash resources and will continue to monitor its cash level, as sales and marketing activities accelerate.
Financial data ------------------------------------------------------------------------- Three months ended Six months ended For the periods of April 30 April 30 ------------------------------------------------ 2008 2007 2008 2007 ------------------------------------------------------------------------- Sales 134,550 152,093 249,788 272,042 ------------------------------------------------------------------------- Revenue under research and license agreement 46,591 873,459 87,378 1,733,792 ------------------------------------------------------------------------- Interest 334,968 207,007 670,398 403,302 ------------------------------------------------------------------------- Total revenues 516,109 1,232,559 1,007,564 2,409,136 ------------------------------------------------------------------------- Cost of sales 86,750 64,524 156,540 148,986 ------------------------------------------------------------------------- Gross margin 429,359 1,168,035 851,024 2,260,150 ------------------------------------------------------------------------- Operating expenses (before stock-based compensation and restructuring charges) 3,482,329 1,930,852 6,300,009 4,112,537 ------------------------------------------------------------------------- Net loss (before stock-based compensation and restructuring charges) (3,052,970) (762,817) (5,448,985) (1,852,387) ------------------------------------------------------------------------- Restructuring charges - - - 912,685 ------------------------------------------------------------------------- Stock-based compensation 319,404 427,275 608,698 882,500 ------------------------------------------------------------------------- Net loss (3,372,374) (1,190,092) (6,057,683) (3,647,572) ------------------------------------------------------------------------- Diluted net loss per share (0.08) (0.03) (0.14) (0.10) ------------------------------------------------------------------------- Weighted average number of common shares outstanding 41,771,308 36,493,714 41,745,438 35,461,293 ------------------------------------------------------------------------- Balance Sheet (Unaudited) As of April 30 ------------------------------------------------------------------------- 2008 2007 ------------------------------------------------------------------------- Cash, cash equivalents, temporary and long-term investments ------------------------------------------------------------------------- 26,691,514 39,190,161 ------------------------------------------------------------------------- Total assets 40,255,392 45,583,883 ------------------------------------------------------------------------- Shareholders' equity 34,897,252 40,422,159 ------------------------------------------------------------------------- Number of common shares outstanding 41,831,297 40,382,878 ------------------------------------------------------------------------- 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 is currently preparing to launch the Previstage(TM) GCC Colorectal Cancer Staging Test, the first GCC-based molecular test for the management of colorectal cancer. In 2003, the Company entered into a strategic alliance with Gen-Probe for the development and commercialization of a second- generation test for PCA3, DiagnoCure's proprietary molecular marker highly specific to prostate cancer. The test is now available through laboratories in the U.S. using PCA3 analyte specific reagents (ASR) from Gen-Probe, in Europe as the CE-marked PROGENSA(TM) PCA3 in vitro assay, and in Canada. In addition to its own research, the Company intends to acquire or in-license additional promising cancer biomarkers from both academic and commercial institutions. For more information, visit http://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.
