Diagnocure decreases operating expenses after Q1 restructuring

    Ticker Symbol: CUR

    QUEBEC CITY, March 14 /CNW Telbec/ - DiagnoCure Inc. (TSX: CUR), a
leading developer and provider of innovative high-value molecular diagnostic
assays for the detection and management of cancer, today announced its
financial results for the first quarter ended January 31, 2007.

    Highlights of the Quarter

    The roll out of the PCA3 test continues. Gen-Probe, DiagnoCure's
exclusive sub-licensee for diagnostic applications of the PCA3 gene, announced
in May 2006 the commercial availability of the PCA3 assay at two US
laboratories. This past quarter, Gen-Probe signed on a third US laboratory to
distribute the test, MOD Lab of Dallas, Texas, and confirmed that it is in
discussions with additional US based laboratories to provide reagents (ASRs)
for use in a laboratory-developed PCA3 test. In early November 2006, after
receiving the European CE Mark for their PCA3 prostate cancer test, Gen-Probe
completed the first phase of its European launch in six laboratory sites
across Europe. Additional labs will be offering the test in planned phases
over the coming months. Gen-Probe has also initiated clinical research studies
at seven prestigious European universities. Given the recent release of the
assay, there is not yet any developed sales pattern for the Gen-Probe PCA3
test so it is difficult to predict what any quarter to quarter future royalty
revenue flow will accrue to DiagnoCure. However, with the assay now
commercially available in both the US and Europe, each quarter DiagnoCure is
receiving increased royalty revenues.
    Overall ImmunoCyt(TM) / uCyt+(TM) sales decreased in the first quarter of
2007 from that of 2006. In line with the decision to focus on molecular
diagnostics, during the past quarter the Company discontinued support of
research and development activities related to product improvements in its
bladder cancer product and also reduced the marketing activities related to
this product. As a result, DiagnoCure reduced staff in research and
development, sales and marketing and administrative support relating to this
product. These restructuring actions resulted in a non-recurring charge of
$912,685 in the quarter. This announcement follows the decision last November
to also discontinue financial support for SAMBA, the Company's subsidiary in
France, which had been developing automation software for the bladder cancer
test. DiagnoCure believes ImmunoCyt(TM) / uCyt+(TM) can thrive in a cytology
environment, and the Company is actively searching for a strong outside
partner to facilitate the continued growth of the product, while ensuring that
customers continue to receive quality products, technical support and services
during the transition.
    Also, during the quarter, DiagnoCure continues to review of a number of
new lung cancer markers obtained from Gen-Probe. DiagnoCure is refining the
direction of its lung cancer program, including exploring additional
applications of these molecular markers for lung cancer detection using
testing medium such as blood, sputum, or biopsy materials. The search for new
markers and potential partners and acquisitions continued during the past
quarter with the objective of bringing innovative methods for the detection
and management of cancer to patients and their physicians.

    Results for the First Quarter of Fiscal 2007

    Total revenues for the first quarter of 2007 were $1,176,577 compared
with $1,405,313 for the first quarter of 2006. Revenue recognition of the
continued calendar payments from Gen-Probe were $772,668 for the period, up
$33,561 from the prior year due to a favourable US to Canadian exchange rates.
Sales of DiagnoCure's non-invasive bladder cancer test, ImmunoCyt(TM) /
uCyt+(TM), were $81,912 for the first quarter of 2007 versus $102,642 for the
same period a year ago. There were no sales of uPM3(TM) by DiagnoCure in the
first quarter of 2007. In mid 2006, DiagnoCure had withdrawn its uPM3(TM) test
from the market when Gen-Probe began to sell their version of the PCA3 test.
Sales of DiagnoCure developed uPM3(TM) ASR prostate cancer test for the first
quarter of 2006 were $165,429. Income from research and development contracts,
predominantly with Gen-Probe, has decreased in 2007 by $67,901 as specific
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 $38,036 compared to $66,656 in the first quarter of
    Cost of sales decreased $104,519 from $188,981 for the first quarter of
2006 to $84,462 for the first quarter of 2007. This decrease is related to
lower actual product sales, as noted above, for ImmunoCyt(TM) / uCyt+(TM) and
uPM3(TM). Interest income, was relatively stable at $196,295 for the first
quarter of 2007 compared to $192,991 for the first quarter of 2006. DiagnoCure
invests its surplus cash in secure interest bearing instruments.
    Operating expenses from continuing operations, before stock-based
compensation and restructuring charges, dropped from $2,579,139 for the first
quarter of 2006 to $2,181,685 for the same period in 2007, a decrease of
$397,454 (15%), reflecting early cost savings from the restructuring noted
above. Total operating expenses for the first quarter, including the non-cash
charge for stock-based compensation and restructuring charges were $3,549,595
compared to $2,862,532 in 2006, primarily as a result of the following:

    - Research and development expenses, net of investment tax credits,
      decreased by $384,684, from $1,107,418 for the first quarter of 2006 to
      $722,734 for the same quarter in 2007. The decrease in research and
      development expenses is in line with the decision to focus on molecular
      diagnostics and to discontinue supporting the activities to improve the
      bladder cancer product. As a result, DiagnoCure reduced staff in
      research and development.
    - General and administrative expenses decreased, from $559,019 for the
      first quarter of 2006 to $487,702 for the same quarter in 2007. This
      decrease of $71,317 is attributable a reduction in professional fees
      and reduced staff following the restructuring action.
    - Selling and business development expenses increased by $52,224 from
      $812,266 for the first quarter of 2006 to $864,490 for the same quarter
      in 2007. This increase is attributable to the on-going execution of our
      business plan to support our efforts to identify and conclude new
      potential strategic alliances, acquisitions and in-licensing
    - Non-recurring restructuring charges in the first quarter of 2007 were
      $912,685. As noted above, these charges related to the shift in
      business strategy, including the decision to discontinue supporting R&D
      activities related to improvements in its cell-based bladder cancer
      diagnostic test and a reduction in marketing initiatives for this
      product. This decision resulted in a realignment of resources to
      support the new strategy, with changes in the requisite skills of
      Company researchers and a reduction in the number of employees
      supporting certain research and development projects, including related
      marketing and administrative positions.
    - Stock-based compensation expenses, a non-cash charge, increased by
      $171,832, from $283,393 for the first quarter of 2006 to $455,225 for
      the same period in 2007. This increase is attributable to the grant, in
      late 2006 of 575,000 options outside the plan to the new CEO. The
      impact of this grant represents a $255,593 charge for this quarter. The
      disclosure of this non-cash item was initiated in 2005 to comply with
      the new accounting regulation. (See below, Stock-Based Compensation).

    Based on the above, for the first quarter of 2007, DiagnoCure recorded a
net loss before stock-based compensation and restructuring charges of
$1,089,570 compared to $1,362,807 for the same period of 2006. The net loss
from continuing operations was $2,457,480 or $0.07 per share for the first
quarter of 2007, compared with $1,646,200, or $0.05 per share, for the first
quarter of 2006. These results were substantially in line with management
expectations and reflect activities undertaken during the quarter in line with
our plans and DiagnoCure's on-going commitment to develop testing platforms
for the detection and management of cancer. Further, the first quarter also
reflects the initial steps taken to focus our vision on molecular diagnostics.

    First Quarter Results (Unaudited)

                                                          2007          2006
                                                             $             $
    Sales                                              137,025       334,726
    Revenue under research and license agreement       843,257       877,596
    Interest                                           196,295       192,991
    Total revenues                                   1,176,577     1,405,313
    Cost of sales                                      (84,462)     (188,981)
    Gross margin                                     1,092,115     1,216,332
    Operating expenses (before stock-based
     compensation and restructuring charges)         2,181,685     2,579,139
    Net loss (before stock-based compensation and
     restructuring charges)                         (1,089,570)   (1,362,807)
    Restructuring charges                              912,685             -
    Stock-based compensation                           455,225       283,393
    Net loss from continuing operations             (2,457,480)   (1,646,200)
    Net Profit (Loss) from discontinued operations           -       (52,448)
    Net loss                                        (2,457,480)   (1,698,648)
    Basic and diluted profit (loss) per share
      From continuing operations                         (0.07)        (0.05)
      From discontinued operations                           -         (0.00)
    Basic and diluted loss per share                     (0.07)        (0.05)
    Weighted average number of common shares
     outstanding                                     34,462,537   34,358,256

    Total Assets and Shareholders' Equity

    At the end of the quarter, cash, short-term investments and long-term
investments stood at $17,243,629, down from $18,319,194 as at October 31,
2006. This decrease of $1,075,565 is due to the use of cash to finance our
operating activities this past quarter. Management is satisfied that it has
adequate cash resources to execute its business plan in the near-term and
    Total assets amounted to $19,897,379 as of January 31, 2007, compared with
$21,347,421 as of October 31, 2006. The book value per Common Share is $0.51
as of January 31, 2007 compared to $0.57 as of October 31, 2006.

    Balance Sheet (Unaudited)
    As of January 31                                      2007          2006
                                                             $             $
    Total assets before discontinued operations     19,897,379    26,563,066
    Assets related to discontinued operations                -       547,246
    Total assets                                    19,897,379    27,110,312
    Shareholders' equity                            17,737,429    23,990,725
    Number of common shares outstanding             34,478,009    34,369,310

    About DiagnoCure

    DiagnoCure specializes in the development, production and
commercialization of molecular diagnostics for the detection and management of
cancer. Its first test, ImmunoCyt(TM) / uCyt+(TM) for bladder cancer, is
distributed worldwide. In 2003, the Company entered into a strategic alliance
with Gen-Probe (NASDAQ:   GPRO) for the development and commercialization of a
second generation PCA3-based diagnostic test for prostate cancer. This test is
now available in analyte specific reagent (ASR) format in the U.S. as well as
in Europe with full CE Mark. The Company plans to expand its product
portfolio, namely in prostate, lung and other cancers. In addition to its own
research, the Company intends to acquire or in-license promising cancer
biomarkers from both academic and commercial institutions. Additional
information can be found at 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, and future revenues, and future
savings from restructuring 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.
    %SEDAR: 00003671EF

For further information:

For further information: Thom Skinner, DiagnoCure Inc., Chief Financial
Officer, (418) 527-6100, communications@diagnocure.com

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