TORONTO, Nov. 14 /PRNewswire-FirstCall/ -- GeneNews Limited (TSX: GEN), a company focused on developing blood-based biomarker tests for the early detection of diseases and personalized health management, today reported operational and financial results for the third quarter and year to date, ended September 30, 2008. The Company's lead product is ColonSentry(TM), the world's first blood-based test to determine a person's current risk for colorectal cancer.
"Our recent restructuring has allowed us to leverage our strengths in Asia and should substantially reduce our overall use of capital in the near-term, while focusing our North American resources completely on the commercialization of ColonSentry(TM)," said Dr. Heiner Dreismann, Lead Director and Interim CEO of GeneNews. "The next few months will be critical in the development and initial implementation of our U.S. marketing and reimbursement strategy as we plan to launch our ColonSentry(TM) test in the U.S. in the second half of 2009."
Subsequent to quarter-end the company restructured its operations. The Company's operations in Canada are now entirely focused on the Canadian and U.S. commercialization of its lead product, ColonSentry(TM). As a result, the Company's monthly cash expenditures in Canada will be significantly reduced on an ongoing basis commencing in 2009. Research and development of the Company's pipeline have been moved to GeneNews' Asian operations, which will also focus on the commercialization of ColonSentry(TM) in that region.
In support of the North American commercialization of ColonSentry(TM), in August GeneNews partnered with Scienta Health, a Toronto-based executive health clinic, to offer the ColonSentry(TM) test to its patients. GeneNews plans to partner with additional executive health clinics and expand the availability of ColonSentry beyond Ontario throughout 2009. The Company also appointed Patrick Terry as its lead strategic advisor for the U.S. commercial launch of ColonSentry(TM). Mr. Terry is one of the co-founders of Genomic Health and is a pioneer in the field of personalized medicine.
Financial results (CDN dollars) for the three-month and nine-month periods ended September 30, 2008:
Total revenue for the first quarter was $0.3 million (year-to-date: $0.9 million) compared to $0.2 million (year-to-date: $1.9 million) for the same period last year. Revenue in the third quarter resulted from a collaboration agreement entered into with an Asian biomedical consortium to identify and validate a set of biomarkers in the field of prostate diseases, for a total fee of $2 million (USD), while revenue in 2007 resulted from a collaboration agreement with Pfizer completed in the first fiscal quarter of 2007.
Total operating expenditures for the third quarter were $4.3 million (year-to-date: $11.6 million) compared with $3.4 million (year-to-date: $9.6 million) for the same periods last year. Research and development expenses in the third quarter were $2.6 million (year-to-date: $7.9 million) compared with $2.4 million (year-to-date: $6.8 million) for the same periods last year. General and administrative expenses for the third quarter were $0.7 million (year-to-date: $2.0 million) compared with $0.7 million (year-to-date: $2.0 million) for the corresponding periods in the previous year.
The net loss for the third quarter was $3.9 million or a loss of $0.07 per common share compared with a net loss of $3.0 million or a loss of $0.05 per common share for the same period last year. Year to date, the net loss was $10.5 million (2007: $7.0 million) or a loss of $0.19 (2007: $0.13) per common share. The net loss is reflective of the Company's continuing focus on research and development and product development which led, on July 21, 2008, to the launch of its first product, ColonSentry(TM), and the advancement of related products in the Company's pipeline.
As at September 30, 2008, the Company's cash and cash equivalents amounted to $3.2 million compared to $11.3 million as at December 31, 2007. As of November 6, 2008, approximately $1,668,000 in cash and cash equivalents was segregated as cash collateral, primarily resulting from the breach of a debt covenant. The Company is not in default on its payments of interest and principal and the bank has agreed to waive the covenant as the Company pursues additional funding opportunities. As at September 30, 2008 the Company had 56,207,176 common shares and 6,802,632 stock options outstanding.
Management's Discussion and Analysis of the financial statements for the three-month and nine-month periods ended September 30, 2008 is available on SEDAR at http://www.sedar.com/.
About GeneNews --------------
GeneNews is focused on the application of functional genomics to enable early diagnosis and personalized therapeutic intervention based on disease-specific biomarkers. The Company has developed a novel approach, the Sentinel Principle(TM), to detect and stage virtually any disease or medical condition from a simple blood sample. GeneNews is currently applying the Sentinel Principle(TM) in major areas with unmet clinical needs such as cancer, arthritis, cardiovascular disease and neurological disorders. GeneNews' first product in development, ColonSentry(TM), is a convenient and patient-friendly blood-based test that can assess an individual's current risk for colorectal cancer. For more information on GeneNews, visit http://www.genenews.com/.
This press release contains forward-looking statements, which reflect the Company's current expectations regarding future events. The forward-looking statements involve risks and uncertainties. Actual events could differ materially from those projected herein. Investors should consult the Company's ongoing quarterly filings and annual reports for additional information on risks and uncertainties relating to these forward-looking statements. The reader is cautioned not to rely on these forward-looking statements. The Company disclaims any obligation to update these forward-looking statements.
GeneNews Limited CONSOLIDATED BALANCE SHEETS (Unaudited) (Expressed in Canadian dollars) As at September 30 December 31 2008 2007 $ $ ------------------------------------------------------------------------- ASSETS Current Cash and cash equivalents 3,222,848 11,279,030 Short-term investment 400,000 400,000 Accounts receivable 665,247 1,582,242 Investment tax credits recoverable 220,265 1,038,199 Prepaid expenses and deposits 274,186 512,914 ------------------------------------------------------------------------- Total current assets 4,782,536 14,812,385 ------------------------------------------------------------------------- Property, plant and equipment, net 3,590,472 3,635,245 Intellectual property, net 71,473 400,380 ------------------------------------------------------------------------- 8,444,481 18,848,010 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable and accrued liabilities 1,619,301 1,699,153 Deferred revenue 723,124 1,204,305 Current portion of long-term debt 1,191,784 585,903 ------------------------------------------------------------------------- Total current liabilities 3,534,209 3,489,361 ------------------------------------------------------------------------- Long-term debt 565,134 1,280,916 Long-term portion of deferred revenue - 401,371 ------------------------------------------------------------------------- Total liabilities 4,099,343 5,171,648 ------------------------------------------------------------------------- Shareholders' equity Capital stock 44,542,029 44,290,930 Contributed surplus 3,648,476 2,733,562 Deficit (43,845,367) (33,348,130) ------------------------------------------------------------------------- Total shareholders' equity 4,345,138 13,676,362 ------------------------------------------------------------------------- 8,444,481 18,848,010 ------------------------------------------------------------------------- ------------------------------------------------------------------------- GeneNews Limited CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT (Unaudited) (Expressed in Canadian dollars) Three months Three months Nine months Nine months ended ended ended ended September 30 September 30 September 30 September 30 2008 2007 2008 2007 ------------------------------------------------------------------------- Revenue Milestones $ 299,828 $ 189,162 $ 882,552 $ 1,855,398 ------------------------------------------------------------------------- Laboratory service sales 6,000 0 6,000 0 Cost of laboratory service sales 3,288 0 3,288 0 ----------------------------------------------------------------------- Gross margin on sales 2,712 0 2,712 0 ----------------------------------------------------------------------- Total net revenue 302,540 189,162 885,264 1,855,398 Expenses Research and development 2,647,640 2,362,671 7,877,621 6,802,402 Marketing and selling 319,329 0 319,329 0 General and administrative 725,969 746,572 2,045,204 1,983,582 Stock-based compensation 420,376 123,917 914,914 402,103 Amortization of intellectual property 110,537 110,537 331,611 331,611 Interest on long term debt 29,554 7,145 88,254 11,335 ----------------------------------------------------------------------- 4,253,405 3,350,842 11,576,933 9,531,033 Interest income 34,738 149,451 194,432 690,637 ------------------------------------------------------------------------- Net/comprehensive loss for the period (3,916,127) (3,012,229) (10,497,237) (6,984,998) Deficit, beginning of period (39,929,240) (27,686,855) (33,348,130) (23,714,086) ------------------------------------------------------------------------- Deficit, end of period $(43,845,367) $(30,699,084) $(43,845,367) $(30,699,084) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net/comprehensive loss per common share Basic and fully diluted $ (0.07) $ (0.05) $ (0.19) $ (0.13) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average number of common shares outstanding Basic and fully diluted 56,207,176 55,450,571 56,213,363 55,444,238 ------------------------------------------------------------------------- ------------------------------------------------------------------------- GeneNews Limited CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Expressed in Canadian dollars) Three months Three months Nine months Nine months ended ended ended ended September 30 September 30 September 30 September 30 2008 2007 2008 2007 ------------------------------------------------------------------------- Cash flows provided by (used in): Operations: Net and comprehensive loss for the period $ (3,916,127) $ (3,012,229) $(10,497,237) $ (6,984,998) Items therein not requiring cash Stock based compensation 420,376 123,917 914,914 402,103 Amortization of capital assets 229,962 (279,277) 588,326 (104,415) Amortization of intellectual property 110,537 110,537 331,611 331,611 --------------------------------------------------------------------- (3,155,252) (3,057,052) (8,662,386) (6,355,699) Changes in non-cash working capital: Accounts receivable 55,512 (1,823,774) 916,995 (2,135,480) Investment tax credit recoverable (49,778) - 817,944 - Prepaid expenses and deposits 181,144 207,770 238,728 449,440 Accounts payable and accrued liabilities (62,834) 139,370 (79,852) 260,088 Deferred revenue (299,829) 1,265,338 (882,552) 1,797,038 --------------------------------------------------------------------- (3,331,037) (3,268,348) (7,651,123) (5,984,613) Financing: Proceeds from exercise of employee stock options - - 251,100 25,459 Payments on long term debt 178,255 356,357 (109,901) 280,956 ----------------------------------------------------------------------- 178,255 356,357 141,199 306,415 Investments: Additions to capital assets (313,097) (608,014) (546,258) (1,885,045) ----------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents (3,465,879) (3,520,005) (8,056,182) (7,563,243) Cash and cash equivalents, beginning of period 6,688,727 16,550,330 11,279,030 20,593,568 ------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 3,222,848 $ 13,030,325 $ 3,222,848 $ 13,030,325 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Supplemental cash flow information: Interest received 40,905 137,450 164,862 457,883 Interest paid 29,544 7,145 88,254 11,335
