GeneNews Announces Second Quarter Results

TORONTO, Aug. 7 /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 second quarter and year to date ended June 30, 2008.

"The launch of our first commercial product, ColonSentry(TM), a blood test to assess a patient's current risk of having colorectal cancer, marks the completion of our Company's transition into a fully commercial enterprise. ColonSentry is the world's first blood test for colorectal cancer screening and we believe this unique product will facilitate earlier detection and treatment of the disease, resulting in improved outcomes for patients with colorectal cancer," said Dr. Heiner Dreismann, Lead Director and Interim CEO of GeneNews. "Over the coming quarters, our focus will be on driving adoption of ColonSentry in Canada, subsequent launches of the test in Asia, the United States and Europe, and further development of our pipeline of innovative molecular diagnostic tests for a range of disease indications."

    
    Highlights in the second quarter:

    -   Subsequent to quarter-end in July, launched the world's first blood
        test for colorectal cancer screening in the Greater Toronto Area.

    -   Presented positive results in a Late Breaking Abstract at the
        American Association of Cancer Research (AACR) annual meeting from a
        validation study of a panel of six colorectal cancer biomarkers,
        confirming (p less than 0.05) that the panel was able to stratify a
        population with average risk for colorectal cancer into three defined
        risk groups (Increased, Average, and Decreased Probability).

    -   Elected two additional independent members to the Board of Directors,
        Mr. Harry A. Glorikian and Ms. Fran Tuttle.
    

Financial results (CDN dollars) for the three-month and six month periods ended June 30, 2008:

Total revenue for the first quarter was $0.3 million (year-to-date - $0.6) compared to $nil (year-to-date - $1.7 million) for the same periods last year. Revenue in the second 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 second quarter were $4.3 million (year-to-date - $7.3 million) compared with $2.7 million (year-to-date - $6.2 million) for the same periods last year. Research and development expenses in the second quarter were $3.0 million (year-to-date - $5.2 million) compared with $1.8 million (year-to-date - $4.4 million) for the same periods last year. General and administrative expenses for the second quarter were $0.8 million (year-to-date - $1.3 million) compared with $0.6 million (year-to-date - $1.3) for the corresponding periods in the previous year.

The net loss for the second quarter was $4.0 million or a loss of $0.07 per common share compared with a net loss of $2.3 million or a loss of $0.04 per common share for the same period last year. Year to date, the net loss was $6.6 (2007 - $4.0) million or a loss of $0.12 (2007 - $0.07) per common share. The net loss is reflective of the Company's continuing focus on research and development and product development which has 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 June 30, 2008, the Company's cash and cash equivalents amounted to $6.7 million compared to $11.3 million as at December 31, 2007. The Company believes it has adequate resources to continue through the first quarter of 2009 based on its current cash and cash equivalent position.

As at June 30, 2008 the Company had 55,883,437 common shares and 6,483,738 stock options outstanding.

Management's Discussion and Analysis of the financial statements for the three-month and six-month periods ended June 30, 2008 is available on SEDAR at 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 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.

    
                         CONSOLIDATED BALANCE SHEETS
                                 (Unaudited)
                       (Expressed in Canadian dollars)

    As at

                                                       June 30    December 31
                                                         2008        2007
                                                          $           $
    -------------------------------------------------------------------------

    ASSETS
    Current
    Cash and cash equivalents                         6,688,727   11,279,030
    Short-term investment                               400,000      400,000
    Accounts receivable                                 720,759    1,582,242
    Investment tax credits recoverable                  170,477    1,038,199
    Prepaid expenses and deposits                       455,330      512,914
    -------------------------------------------------------------------------
    Total current assets                              8,435,293   14,812,385
    -------------------------------------------------------------------------
    Property, plant and equipment, net                3,507,339    3,635,245
    Intellectual property, net                          182,010      400,380
    -------------------------------------------------------------------------
                                                     12,124,642   18,848,010
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Accounts payable and accrued liabilities          1,682,135    1,699,153
    Deferred revenue                                  1,022,953    1,204,305
    Current portion of long-term debt                   595,582      585,903
    -------------------------------------------------------------------------
    Total current liabilities                         3,300,670    3,489,361
    -------------------------------------------------------------------------
    Long-term debt                                      983,081    1,280,916
    Long-term portion of deferred revenue                     -      401,371
    -------------------------------------------------------------------------
    Total liabilities                                 4,283,751    5,171,648
    -------------------------------------------------------------------------

    Shareholders' equity
    Capital stock                                    44,542,030   44,290,930
    Contributed surplus                               3,228,101    2,733,562
    Deficit                                         (39,929,240) (33,348,130)
    -------------------------------------------------------------------------
    Total shareholders' equity                        7,840,891   13,676,362
    -------------------------------------------------------------------------
                                                     12,124,642   18,848,010
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

                      Three months  Three months    Six months    Six months
                             ended         ended         ended         ended
                           June 30       June 30       June 30       June 30
                              2008          2007          2008          2007
    -------------------------------------------------------------------------

    Revenue
      Milestones      $    288,438  $          -  $    582,724  $  1,666,236
    -------------------------------------------------------------------------
                           288,438             -       582,724     1,666,236

    Expenses
      Research and
       development       3,044,225     1,772,371     5,229,981     4,361,474
      General and
       administrative      806,675       643,191     1,319,236     1,315,266
      Stock
       compensation        352,264       131,747       494,538       278,186
      Amortization of
       intellectual
       property            110,537       110,537       221,074       221,074
      Interest on long
       term debt            28,172         1,538        58,700         4,191
    -------------------------------------------------------------------------
                         4,341,872     2,659,384     7,323,528     6,180,191

    Interest income         58,634       357,865       159,694       541,186
    -------------------------------------------------------------------------

    Net and
     comprehensive
     loss for the
     period           $ (3,994,800) $ (2,301,519) $ (6,581,110) $ (3,972,769)

    Deficit, beginning
     of period         (35,934,440)  (25,385,336)  (33,348,130)  (23,714,086)

    -------------------------------------------------------------------------
    Deficit, end
     of period        $(39,929,240) $(27,686,855) $(39,929,240) $(27,686,855)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net and
     comprehensive
     loss per common
     share
      Basic and fully
       diluted        $      (0.07) $      (0.04) $      (0.12) $      (0.07)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted average
     number of common
     shares outstanding
      Basic and fully
       diluted          55,623,367    55,441,019    55,571,069    55,441,019
    -------------------------------------------------------------------------



                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (Unaudited)
                       (Expressed in Canadian dollars)

                      Three months  Three months    Six months    Six months
                             ended         ended         ended         ended
                              June          June          June          June
                              2008          2007          2008          2007
    -------------------------------------------------------------------------

    Cash flows provided
     by (used in):

    Operations:
      Net and
       comprehensive
       loss for
       the period     $ (3,994,800) $ (2,301,519) $ (6,581,110) $ (3,972,769)
      Items therein
       not requiring
       cash
        Stock based
         compensation      352,264       131,747       494,538       278,186
        Amortization
         of capital
         assets            213,183        89,917       358,365       174,862
        Amortization of
         intellectual
         property          110,537       110,537       221,074       221,074
    -------------------------------------------------------------------------
                        (3,318,816)   (1,969,318)   (5,507,133)   (3,298,647)

      Changes in
       non-cash working
       capital:
        Accounts
         receivable        397,391      (245,835)      861,483      (311,706)
        Investment
         tax credit
         recoverable       403,141             -       867,722             -
        Prepaid expenses
         and deposits      103,452       166,687        57,583       241,671
        Accounts payable
         and accrued
         liabilities       220,553       122,972       (17,018)      120,718
        Deferred revenue  (288,437)      531,700      (582,723)      531,700
    -------------------------------------------------------------------------
                        (2,482,716)   (1,393,794)   (4,320,086)   (2,716,265)

    Financing:
      Net proceeds from
       issue of
       capital stock
      Proceeds from
       exercise of
       employee stock
       options             220,350                     251,100        25,459
      Net proceeds from
       exercise of 2004
       broker warrants                                                     -
      Payments on long
       term debt          (145,256)      (38,258)     (288,156)      (75,401)
    -------------------------------------------------------------------------
                            75,094       (38,258)      (37,056)      (49,942)

    Investments:
      Additions to
       capital assets      (20,057)   (1,168,630)     (233,161)   (1,277,031)
    -------------------------------------------------------------------------

    Increase (decrease)
     in cash and cash
     equivalents        (2,427,679)   (2,600,682)   (4,590,303)   (4,043,238)

    Cash and cash
     equivalents,
     beginning of period 9,116,406    19,151,012    11,279,030    20,593,568

    -------------------------------------------------------------------------
    Cash and cash
     equivalents, end
     of period        $  6,688,727  $ 16,550,330  $  6,688,727  $ 16,550,330
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental cash
     flow information:
      Interest received     27,999       137,213       123,957       232,700
      Interest paid         28,172         1,538        58,700         4,191
    

SOURCE GeneNews Limited

For further information: For further information: James Smith, (416) 815-0700 x 229, jsmith@ equicomgroup.com


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