PreMD Reports Second Quarter Results



    
      -  FDA update expected imminently
      -  Successfully completed initial project for Cosmetics company
      -  AMEX appeal continuing
    

    TORONTO, Aug. 13 /CNW/ - Predictive medicine company PreMD Inc.
(TSX: PMD; Amex:   PME) today announced unaudited financial results for the
second quarter fiscal 2008 ended June 30, 2008 ("Q2 2008").
    "The second quarter of 2008 continued to be one of tremendous focus and
dedication in resolving some of the challenges that we have faced," said Brent
Norton, president and CEO of PreMD. "We believe that we have made significant
progress with the US Food and Drug Administration (FDA) regarding our appeal
of the non-substantially equivalent (NSE) letter for our 510(k) submission. We
are encouraged by the FDA's request for additional analysis of the data and
believe that this is a positive step towards regulatory approval in the U.S.
The request follows several constructive discussions over the past three
months. We maintain that our clinical data warrants the approval of our
non-invasive skin cholesterol test and that we are on a path towards resolving
the outstanding matters and achieving our objectives. We are also pleased to
continue working with our partner, AstraZeneca Pharmaceuticals LP, and our
medical colleagues throughout the appeal process." PreMD has complied with all
the FDA's requests and it is anticipated that PreMD will be hearing from the
FDA imminently and will continue to release any news as it becomes available.
    Dr. Norton continued, "Despite the setbacks faced, management has also
focused on business development activities during this quarter. We are driven
and will continue to expand on our leading position in the skin cholesterol
testing field through our diverse pipeline of products and capabilities. As
previously announced in June, we also successfully completed a project for one
of the leading health and beauty organizations in the world and expect to
enter into additional agreements with the company for further product
development and other skin testing initiatives. As part of this achievement,
we continued with our efforts to establish partnerships and alliances in order
to extend our capabilities in the marketplace. Going forward, we believe that
we have the technology, vision and business strategy to drive us back to
growth and increased value."
    PreMD also continues to appeal the recent decision made by the American
Stock Exchange (the "AMEX") to delist its stock.
    As previously noted in PreMD's 2007 annual report and, pursuant to the
AMEX Rule 610 for the year ended December 31, 2007, the Company has received a
going concern opinion from its independent auditors as a result of recurring
operating losses and negative cash flows from operations.

    Financial Review (All amounts are in Canadian dollars)
    ------------------------------------------------------

    The consolidated net loss for the three months ended June 30, 2008 (Q2
2008) was $1,318,000 or $(0.05) per share compared with a loss of $1,341,000
or $(0.05) per share for the quarter ended June 30, 2007 (Q2 2007).
    Total product sales were $6,000 for Q2 2008 compared with $8,000 for Q2
2007. License revenue was $27,000 for Q2 2008, compared to nil for Q2 2007.
Product sales reflect direct sales to customers. The license revenue in 2008
consisted of the upfront cash payment received in accordance with the 2007
licensing agreement with AstraZeneca, which was deferred and recognized into
income on a straight-line basis over five years.
    Research and development expenditures for the quarter decreased by
$418,000 to $313,000 from $731,000 in Q2 2007. Significant causes of the
variance include:

    
      -  a decrease of $94,000 in spending on clinical trials for skin
         cholesterol;
      -  a decrease of $124,000 in spending on clinical trials for cancer;
      -  a decrease of $110,000 on product development related to
         manufacturing validation for the new cordless reader, as this
         project nears completion;
      -  an increase of $42,000 in legal fees on intellectual property;
      -  a decrease of $104,000 in salaries and benefits for research
         personnel due to reduction in staff;
      -  an increase in recovery of research costs of $33,000 related to a
         special contract to develop a test for use in the cosmetics
         industry; and

    General and administration expenses amounted to $503,000 for Q2 2008
compared with $911,000 in Q2 2007, a decrease of $408,000. Significant causes
of the variance include:

      -  a decrease of $230,000 in professional fees for legal, audit and
         human resources; the 2007 amount included expenses of a business
         development consultant;
      -  a decrease of $81,000 in salaries and benefits due to reductions in
         administrative staff;
      -  a reduction in annual meeting and annual report costs of $61,000 due
         to cost containment activities; and
    

    Interest on convertible debentures (issued on August 30, 2005) amounted
to $165,000 in Q2 2008 compared with $164,000 in Q2 2007. These debentures
bear interest at an annual rate of 7%, payable quarterly in either cash or
stock. The amount accrued for Q2 2008 was subsequently paid in common shares,
whereas the amount for Q2 2007 was paid partly in shares ($134,000) and partly
in cash. Imputed interest on convertible debentures of $370,000 and $231,000
in Q2 2008 and 2007, respectively, represents the expense related to the
accretion of the liability component at an effective interest rate of
approximately 15%.
    The gain on foreign exchange was $54,000 for Q2 2008, compared with a
gain of $671,000 for Q2 2007. The major contributing factor for the change was
the impact of foreign exchange rates on the convertible debentures which are
repayable in US dollars.
    Refundable scientific investment tax credits ("ITCs") accrued for Q2 2008
amounted to $20,000 versus $26,000 for Q2 2007. For the six months ended
June 30, 2008 and 2007, ITC's amounted to $45,000 and $48,000, respectively.
    As at June 30, 2008, PreMD had cash, cash equivalents and short-term
investments totaling $443,000 ($1,190,000 as at December 31, 2007). Cash used
to fund operating activities during Q2 2008 amounted to $926,000 compared with
$1,264,000 in Q2 2007. To date, we have financed our activities through
product sales, license revenues, the issuance of shares and debentures and the
recovery of provincial ITCs. The Company reported a loss of $1,318,000 for the
three months ended June 30, 2008, has a shareholders' deficiency of $6,047,000
as at June 30, 2008 and has experienced significant operating losses and cash
outflows from operations since its inception. The Company has operating and
liquidity concerns due to its significant net losses and negative cash flows
from operations.
    Financial statements are attached to this press release and are available
at www.sedar.com.

    About PreMD

    PreMD Inc. is a leader in predictive medicine, dedicated to developing
rapid, non-invasive tests for the early detection of life-threatening
diseases. PreMD's cardiovascular products include a line of non-invasive skin
cholesterol tests. PreMD's other skin cholesterol products include PREVU(*) LT,
a skin cholesterol test designed for use in the life insurance industry. The
company's cancer tests include ColorectAlert(TM), LungAlert(TM) and a breast
cancer test. PreMD's head office is located in Toronto, Ontario and its
research and product development facility is at McMaster University in
Hamilton, Ontario. For more information about PreMD, please visit
www.premdinc.com.

    This press release contains forward-looking statements. These statements
involve known and unknown risks and uncertainties, which could cause the
Company's actual results to differ materially from those in the
forward-looking statements. Such risks and uncertainties include, among
others, the successful development or marketing of the Company's products, the
competitiveness of the Company's products if successfully commercialized, the
lack of operating profit and availability of funds and resources to pursue R&D
projects, the successful and timely completion of clinical studies, product
liability, reliance on third-party manufacturers, the ability of the Company
to take advantage of business opportunities, uncertainties related to the
regulatory process, and general changes in economic conditions.
    In addition, while the Company routinely obtains patents for its products
and technology, the protection offered by the Company's patents and patent
applications may be challenged, invalidated or circumvented by our competitors
and there can be no guarantee of our ability to obtain or maintain patent
protection for our products or product candidates.
    Investors should consult the Company's quarterly and annual filings with
the Canadian and U.S. securities commissions for additional information on
risks and uncertainties relating to the forward-looking statements. Investors
are cautioned not to rely on these forward-looking statements. PreMD is
providing this information as of the date of this press release and does not
undertake any obligation to update any forward-looking statements contained in
this press release as a result of new information, future events or otherwise.

    (*)Trademark


    
                               (Tables Follow)


    PreMD Inc.
    Incorporated under the laws of Canada

                         CONSOLIDATED BALANCE SHEETS
                            (In Canadian dollars)
      (See note 1 - Nature of Operations and Going Concern Uncertainty)
                                  Unaudited

                                                        As at        As at
                                                       June 30,  December 31,
                                                         2008         2007
                                                          $            $
    -------------------------------------------------------------------------

    ASSETS
    Current
    Cash and cash equivalents                            26,469      282,200
    Short-term investments                              416,616      907,768
    Accounts receivable                                  79,215        8,292
    Inventory                                            24,888       61,177
    Prepaid expenses and other receivables              947,268      758,715
    Investment tax credits receivable                   185,000      340,000
    -------------------------------------------------------------------------
    Total current assets                              1,679,456    2,358,152
    -------------------------------------------------------------------------

    Capital assets, net of accumulated
     amortization of $281,242 (2007 - $267,458)          89,244       93,867
    Intangible assets, net of accumulated
     amortization of $676,075 (2007 - $991,473)         275,204      305,783
    -------------------------------------------------------------------------
                                                      2,043,904    2,757,802
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' DEFICIENCY
    Current
    Accounts payable                                    239,025      305,333
    Accrued liabilities                                 495,599      765,312
    Current portion of deferred revenue                 106,680      106,680
    -------------------------------------------------------------------------
    Total current liabilities                           841,304    1,177,325
    -------------------------------------------------------------------------

    Long-term debt
    Debentures                                          521,410            -
    Convertible debentures                            6,407,657    5,626,987
    -------------------------------------------------------------------------
                                                      6,929,067    5,626,987
    Deferred revenue                                    320,040      373,380
    -------------------------------------------------------------------------
    Total liabilities                                 8,090,411    7,177,692
    -------------------------------------------------------------------------

    Shareholders' deficiency
    Capital stock                                    29,452,822   29,120,655
    Contributed surplus                               3,383,816    3,098,928
    Equity component of convertible debentures        2,239,385    2,239,385
    Warrants                                          2,314,356    1,557,296
    Deficit                                         (43,436,886) (40,436,154)
    -------------------------------------------------------------------------
    Total shareholders' deficiency                   (6,046,507)  (4,419,890)
    -------------------------------------------------------------------------
                                                      2,043,904    2,757,802
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying note PreMD Inc.



       CONSOLIDATED STATEMENTS OF LOSS, COMPREHENSIVE LOSS AND DEFICIT
                            (In Canadian dollars)
                                  Unaudited
                                   (note 1)

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

    REVENUE
    Product sales               6,050        8,250       14,750       26,334
    License revenue            26,670            -       53,340            -
    -------------------------------------------------------------------------
                               32,720        8,250       68,090       26,334
    Cost of product sales      25,738        3,720       26,679        8,566
    -------------------------------------------------------------------------
    Gross profit                6,982        4,530      (41,411)      17,768
    -------------------------------------------------------------------------

    EXPENSES
    Research and
     development              312,859      730,799      855,734    1,371,636
    General and
     administration           503,067      911,141      947,078    1,552,105
    Interest on long-term
     debt                     198,618      165,400      370,346      328,983
    Imputed interest on
     long-term debt           369,923      231,228      660,202      479,574
    Amortization               22,000       41,318       44,363       82,698
    Loss (gain) on foreign
     exchange                 (54,239)    (670,888)     226,983     (754,441)
    -------------------------------------------------------------------------
                            1,352,228    1,408,998    3,104,706    3,060,555
    -------------------------------------------------------------------------

    RECOVERIES AND OTHER
     INCOME
    Investment tax credits     20,000       26,000       45,000       48,000
    Interest                    7,243       37,105       17,563       64,229
    -------------------------------------------------------------------------
                               27,243       63,105       62,563      112,229
    -------------------------------------------------------------------------
    Net loss and
     comprehensive loss
     for the period        (1,318,003)  (1,341,363)  (3,000,732)  (2,930,558)

    Deficit, beginning of
     period               (42,118,883) (35,709,537) (40,436,154) (34,162,342)
    Adjustment to opening
     deficit                        -            -            -       42,000
    -------------------------------------------------------------------------
    Deficit, end of
     period               (43,436,886) (37,050,900) (43,436,886) (37,050,900)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted
     loss per share            $(0.05)      $(0.05)      $(0.12)      $(0.12)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted average
     number of common
     shares outstanding    25,875,114   24,950,579   25,716,541   23,505,688
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying note



    PreMD Inc.

                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In Canadian dollars)
                                  Unaudited
                                   (note 1)

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

    OPERATING ACTIVITIES
    Net loss and
     comprehensive loss for
     the period            (1,318,003)  (1,341,363)  (3,000,732)  (2,930,558)
    Add (deduct) items not
     involving cash
      Amortization             22,000       41,318       44,363       82,698
      Stock compensation
       costs included in:
        Research and
         development
         expense               39,500       35,286       77,275       67,383
        General and
         administration
         expense              132,599      123,312      207,614      180,605
      Gain on sale of
       capital assets               -          143            -          143
      Imputed interest on
       convertible
       debentures             369,923      231,228      660,202      479,574
      Capitalized interest
       on debenture            33,671            -       40,450            -
      Interest on
       convertible
       debentures paid in
       common shares          164,948      133,967      332,166      270,911
      Add loss (deduct
       gain) on foreign
       exchange               (54,239)    (670,888)     226,983     (754,441)
    Net change in non-cash
     working capital
     balances related to
     operations              (289,885)    (182,749)    (401,336)     838,718
    Decrease in deferred
     revenue                   26,670            -      (53,340)           -
    -------------------------------------------------------------------------
    Cash used in operating
     activities              (926,156)  (1,264,248)  (1,866,355)  (3,442,403)
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Short-term investments     45,780      291,768      491,152    2,109,459
    Proceeds from sale of
     capital assets                 -          562            -        1,435
    Purchase of capital
     assets                         -         (484)      (9,161)      (2,233)
    -------------------------------------------------------------------------
    Cash provided by
     investing activities      45,780      291,846      481,991    2,108,861
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Issuance of debentures,
     net of issue costs       (15,978)           -    1,137,534            -
    Issuance of capital
     stock, net of issue
     costs                          -      (49,764)           -    3,729,957
    -------------------------------------------------------------------------
    Cash provided by (used
     in) financing
     activities               (15,978)     (49,764)   1,137,534    3,729,957
    -------------------------------------------------------------------------
    Effect of exchange
     rate changes on cash
     and cash equivalents      (6,001)       3,870        8,901        6,646
    -------------------------------------------------------------------------
    Net increase (decrease)
     in cash and cash
     equivalents during
     the period              (902,355)  (1,018,296)    (255,731)   2,402,861
    Cash and cash
     equivalents
      Beginning of period     928,824    3,533,734      282,200      112,577
    -------------------------------------------------------------------------
      End of period            26,469    2,515,438       26,469    2,515,438
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Represented by
    Cash                       26,469      105,372       26,469      105,372
    Cash equivalents                -    2,410,066            -    2,410,066
    -------------------------------------------------------------------------
                               26,469    2,515,438       26,469    2,515,438
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying note



    NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
    (In Canadian dollars unless otherwise noted)

    June 30, 2008

    Unaudited

    1.  GOING CONCERN UNCERTAINTY

        The Company's consolidated financial statements have been prepared on
        a going-concern basis which presumes the realization of assets and
        discharge of liabilities in the normal course of business for the
        foreseeable future. The Company reported a loss of $1,318,003 for the
        three months ended June 30, 2008, has a shareholders' deficiency of
        $6,046,507 as at June 30, 2008 and has experienced significant
        operating losses and cash outflows from operations since its
        inception. The Company has operating and liquidity concerns due to
        its significant net losses and negative cash flows from operations.

        The Company's ability to continue as a going-concern is uncertain and
        is dependent upon its ability to raise additional capital to
        successfully complete its research and development programs,
        commercialize its technologies, obtain regulatory approvals for its
        products and ultimately, generate profitable operations and positive
        operating cash flows. It is not possible at this time to predict the
        outcome of these matters. It will be necessary for the Company to
        raise additional funds for the continuing development and marketing
        of its technologies. These consolidated financial statements do not
        include any adjustments and classifications to the carrying values of
        assets and liabilities that may be required should the Company be
        unable to continue as a going concern.
    

    %SEDAR: 00007927E          %CIK: 0001179083




For further information:

For further information: Michelle Rabba, Manager, Corporate
Communications, Tel: (416) 272-7007, Email: mrabba@premdinc.com; Ron Hosking,
Vice President Finance and CFO, Tel: (416) 222-3449 ext. 24, Email:
rhosking@premdinc.com

Organization Profile

PREMD INC.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890