GeneNews announces 2007 year end results

TORONTO, March 26 /CNW/ - 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 fourth quarter and year ended December 31, 2007.

"This was a transformative year for GeneNews because of the advancements made for the laboratory-developed test (LDT) version of ColonSentry(TM) and the strengthening of our internal processes and systems," said Dr. K. Wayne Marshall, MD, PhD, President and CEO of GeneNews. "We are now positioned for the initial commercial launch of ColonSentry in the third quarter of 2008 through our in-house clinical reference lab located in the Toronto-area."

    
    Product Highlights

    -   Completed collection of 10,000 patient samples for internal
        validation studies of ColonSentry.
    -   Initiated the collection of patient samples for additional clinical
        trials for the development of an In Vitro Diagnostic (IVD) version of
        ColonSentry in December.
    -   Subsequent to year-end in January 2008, published a paper entitled
        "Novel Blood-Based, Five-Gene Biomarker Set for the Detection of
        Colorectal Cancer" in the Clinical Cancer Research journal.
    -   Subsequent to year-end on March 14, 2008, received notification that
        an abstract entitled "Stratification of colorectal cancer probability
        using six genes from whole blood" was selected for presentation on
        April 15, 2008 at the annual meeting of the American Association of
        Cancer Research to be held in San Diego, California.

    Corporate Highlights

    -   Implemented a Quality Management System to conform to ISO 13485:2003
        requirements and, subsequent to year end, received formal
        certification on March 6, 2008 for the design and development of
        in-vitro diagnostic test kits for use in the management of colorectal
        disease in a laboratory setting.
    -   Received grant from the National Research Council's Industrial
        Research Assistance Program (IRAP) in December.
    -   Renovated and relocated to expanded state-of-the-art facilities to
        house the Company's corporate headquarters, offices, research and
        development facilities and clinical reference laboratory in
        September.
    -   Secured $2 million for development of prostate disease biomarkers
        from an Asian biomedical consortium in August.
    -   Established laboratory facilities and infrastructure for patient
        sample collection across multiple diseases in Penang, Malaysia.
    -   Established a Clinical Advisory Board of colorectal cancer screening
        leaders in July.
    

Financial results (CDN dollars) for the fourth quarter:

Total revenue for the quarter ended December 31, 2007 was $0.3 million compared to $0.7 million for the same period last year. Revenue in 2007 resulted from an agreement entered into by the Company 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 revenues in 2006, resulted from a collaboration agreement with Pfizer completed in the first fiscal quarter of 2007.

Interest earned during the three months ended December 31, 2007 was $123,780, compared with $51,225 for the corresponding quarter in the prior year.

Total operating expenditures for the quarter ended December 31, 2007 were $3.1 million compared with $3.4 million for the same period last year. Research and development expenses for the quarter were $2.1 million compared with $2.7 million for the same period last year. General and administrative expenses for the fourth quarter were $0.7 million compared with $0.4 million for the corresponding quarter in the previous year.

The net loss for the quarter ended December 31, 2007 was $2.6 million or ($0.05) per common share compared with a net loss of $2.7 million or ($0.05) per common share for the same period last year. The net loss is reflective of the Company's continuing focus on research and development and the process leading to commercialization of its first product ColonSentry(TM), a convenient and patient-friendly blood-based test that can assess a patient's current risk for colon cancer, and the advancement of related products in the Company's pipeline.

Financial results (CDN dollars) for the year-ended December 31, 2007:

Total revenue for the year-ended December 31, 2007 was $2.2 million compared with $3.3 million for the same period last year. Of the revenues in 2007, $0.2 resulted from the prostate disease biomarker development agreement and $1.7 representing the final revenue from a collaboration agreement with Pfizer. In 2006, revenues resulted entirely from the Pfizer agreement.

Interest earned during the year-end ended December 31, 2007 was $822,000, compared to $448,000 for the corresponding period during the prior year.

Total operating expenditures for the year-ended December 31, 2007 were $12.6 million compared with $12.7 million for the same period last year. Research and development expenses for the quarter were $8.9 million compared with $9.5 million for the same period last year. General and administrative expenses for the year-ended December 31, 2007 were $2.7 million compared with $1.9 million for the corresponding period in 2006.

The net loss for the year-ended December 31, 2007 was $9.6 million or ($0.17) per common share compared to a net loss of $8.9 million or ($0.18) per common share for the same period last year. The Company's continuing focus is on research and development leading to commercialization of its first product and the development of related products in the Company's pipeline.

As at December 31, 2007, the Company's cash and cash equivalents amounted to $11,279,030.

As at December 31, 2007 the Company had 55,518,769 common shares, and 625,000 broker warrants were outstanding.

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 detect colon cancer. For more information on GeneNews, visit 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
                       (Expressed in Canadian dollars)


    As at December 31

                                                          2007          2006
                                                             $             $
    -------------------------------------------------------------------------
    ASSETS
    Current
    Cash and cash equivalents                       11,279,030    20,593,568
    Short-term investment                              400,000             -
    Accounts receivable                              1,582,242       135,315
    Investment tax credits recoverable               1,038,199       796,900
    Prepaid expenses and deposits                      512,914       685,819
    -------------------------------------------------------------------------
    Total current assets                            14,812,385    22,211,602
    -------------------------------------------------------------------------
    Property, plant and equipment, net               3,635,245     1,645,488
    Intellectual property, net                         400,380       842,528
    -------------------------------------------------------------------------
                                                    18,848,010    24,699,618
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Accounts payable and accrued liabilities         1,699,153     1,821,355
    Deferred revenue                                 1,204,305             -
    Current portion of long-term debt                  585,903       102,549
    -------------------------------------------------------------------------
    Total current liabilities                        3,489,361     1,923,904
    -------------------------------------------------------------------------
    Long-term debt                                   1,280,916             -
    Long-term portion of deferred revenue              401,371             -
    -------------------------------------------------------------------------
    Total liabilities                                5,171,648     1,923,904
    -------------------------------------------------------------------------
    Commitments and contingencies

    Shareholders' equity
    Capital stock                                   44,290,930    44,234,409
    Contributed surplus                              2,733,562     2,255,390
    Deficit                                        (33,348,130)  (23,714,085)
    -------------------------------------------------------------------------
    Total shareholders' equity                      13,676,362    22,775,714
    -------------------------------------------------------------------------
                                                    18,848,010    24,699,618
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Note: The full financial statements with notes and auditors' report are
    found on SEDAR



    GeneNews Limited

                         CONSOLIDATED STATEMENTS OF
                           OPERATIONS AND DEFICIT
                       (Expressed in Canadian dollars)


    Years ended December 31

                                                          2007          2006
                                                             $             $
    -------------------------------------------------------------------------

    REVENUE
    Milestone revenue                                1,666,236       567,850
    Upfront payment revenue                            501,476     2,112,323
    Fees for services                                        -       603,095
    -------------------------------------------------------------------------
                                                     2,167,712     3,283,268
    -------------------------------------------------------------------------

    EXPENSES
    Research and development                         8,902,433     9,518,383
    General and administrative                       2,655,651     1,889,675
    Stock-based compensation                           478,172       728,383
    Amortization of intellectual property              442,148       442,147
    Foreign exchange loss                              114,149        68,797
    Interest on long-term debt                          31,490        19,758
    -------------------------------------------------------------------------
                                                    12,624,043    12,667,143
    -------------------------------------------------------------------------
    Interest income                                    822,286       448,202
    -------------------------------------------------------------------------
    Net and comprehensive loss for the year         (9,634,045)   (8,935,673)

    Deficit, beginning of year                     (23,714,085)  (14,778,412)
    -------------------------------------------------------------------------
    Deficit, end of year                           (33,348,130)  (23,714,085)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net and comprehensive loss per common share
    Basic and fully diluted                             $(0.17)       $(0.18)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted average number of common
     shares outstanding
    Basic and fully diluted                         55,453,018    49,045,966
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Note: The full financial statements with notes and auditors' report are
    found on SEDAR



    GeneNews Limited

                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                       (Expressed in Canadian dollars)


    Years ended December 31

                                                          2007          2006
                                                             $             $
    -------------------------------------------------------------------------

    OPERATING ACTIVITIES
    Net and comprehensive loss for the year         (9,634,045)   (8,935,673)
    Add items not involving cash
      Stock-based compensation                         478,172       728,383
      Loss on disposal of property, plant
       and equipment                                    15,587             -
      Amortization of property, plant and equipment    504,762       389,639
      Amortization of intellectual property            442,148       442,147
    -------------------------------------------------------------------------
                                                    (8,193,376)   (7,375,504)
    Changes in non-cash working capital balances
     related to operations
      Accounts receivable                           (1,446,927)    1,221,077
      Investment tax credits recoverable              (241,299)      458,022
      Prepaid expenses and deposits                    172,905      (320,104)
      Accounts payable and accrued liabilities        (122,202)      891,518
      Deferred revenue                               1,605,676    (2,134,361)
    -------------------------------------------------------------------------
      Cash used in operating activities             (8,225,223)   (7,259,352)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Net proceeds from share issue                       56,521    23,896,716
    Net proceeds from disposal of property,
     plant and equipment                                   364             -
    Proceeds from exercise of employee stock options         -       165,410
    Net proceeds from exercise of 2004 broker
     warrants                                                -        33,452
    Proceeds of long-term debt                       1,899,990             -
    Repayment of long-term debt                       (268,316)     (139,427)
    -------------------------------------------------------------------------
    Cash provided by financing activities            1,688,559    23,956,151
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Short-term investment                             (400,000)            -
    Additions to property, plant and equipment      (2,377,874)     (784,113)
    -------------------------------------------------------------------------
    Cash used in investing activities               (2,777,874)     (784,113)
    -------------------------------------------------------------------------

    Net increase (decrease) in cash and cash
     equivalents during the year                    (9,314,538)   15,912,686
    Cash and cash equivalents, beginning of year    20,593,568     4,680,882
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of year          11,279,030    20,593,568
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Cash and cash equivalents are comprised
     of the following
    Cash                                             6,152,694       294,578
    Investment in money market fund                  5,126,336    20,298,990
    -------------------------------------------------------------------------
                                                    11,279,030    20,593,568
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental cash flow information
    Additions to property, plant and equipment
     not involving cash                                132,596             -
    Interest received                                  763,353       360,368
    Interest paid                                       35,490        19,758
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Note: The full financial statements with notes and auditors' report are
    found on SEDAR
    

SOURCE GeneNews Limited

For further information: For further information: Dr. K. Wayne Marshall, President & CEO, (416) 650-0060 x 234, wmarshall@genenews.com; James Smith, (416) 815-0700 x 229, jsmith@equicomgroup.com


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