GeneNews announces third quarter results

TORONTO, Nov. 11 /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 third quarter-ended September 30, 2009.

"We recently accomplished two major milestones. We were issued a US patent for our proprietary Sentinel Principle(R) platform technology and positive validation data was published for a novel blood-based, seven-gene biomarker set that forms the basis of our lead product ColonSentry(TM), the world's first blood test for colorectal cancer," said Dr. Heiner Dreismann, Lead Director and Interim CEO of GeneNews. "Our proprietary Sentinel Principle(R) platform technology is used to identify clinically actionable biomarkers that reflect complex changes in blood gene expression patterns and this patent could entrench this technology in the rapidly-growing molecular diagnostics industry. We look forward to further leveraging the potential of our platform as we continue our ongoing discussions with potential marketing partners in the United States and selected countries in Europe and Asia to expand access to ColonSentry(TM) outside of Canada."

    
    Recent highlights:

    -   Entered into an agreement allowing Eli Lilly and Company (NYSE:   LLY)
        select access to research from its osteoarthritis genomic biomarker
        program.
    -   Granted a U.S. patent for its core platform technology, the Sentinel
        Principle(R), a powerful method for identifying clinically actionable
        biomarkers relating to disease and health from a basic blood sample.
    -   Publication of positive validation data in the International Journal
        of Cancer for a novel blood-based, seven-gene biomarker panel for
        colorectal cancer that can stratify average risk patients according
        to their current relative risk of actually having colorectal cancer,
        the basis of the Company's lead product ColonSentry(TM).
    -   Publication of a paper in the Journal of Clinical Gastroenterology
        reporting data using GeneNews' proprietary Sentinel Principle(R)
        platform technology to identify complex changes in blood gene
        expression patterns that were differentially regulated between active
        and inactive Crohn's disease.
    -   Completed non-brokered, private placement for total gross proceeds in
        the amount of $2,000,000.

    GeneNews has sufficient funds to continue its operations into the first
quarter of 2010. Efforts to secure access to additional capital resources are
continuing; however there is no assurance that these initiatives will be
successful.

    Financial results (CDN dollars) for the third quarter-ended September 30,
    2009:
    

For the three-month period ended September 30, 2009, the Company recorded revenue of $0.4 million compared with $0.3 million for the three-month period ended September 30, 2008. Revenues in the three-month period for 2009 were attributable to a collaborative research agreement, recovery of receivables from an Asian biomedical consortium, and ColonSentry sales. For the same period 2008, revenues were from the Asian biomedical consortium. For the nine-month period ended September 30, 2009, the Company recorded revenue of $0.7 million compared with $0.9 million for the nine-month period ended September 30, 2008.

For the three-month period ended September 30, 2009, total operating expenditures were $1.8 million compared to $4.3 million for the same period last year. For the nine-month period ended September 30, 2009, total operating expenditures were $5.9 million compared to $11.6 million for the same period last year. Research and development expenses for the quarter were $0.7 million compared to $2.6 million for the same period last year. Research and development expenses for the nine-month period ended September 30, 2009 were $2.4 million compared to $7.9 million for the same period last year. Sales and marketing expenses for the quarter were $0.1 million compared to 0.3 for the same quarter last year. Sales and marketing expenses for the nine-month period ended September 30, 2009, were $0.4 million compared to 0.3 for the same period last year. General and administrative expenses for the quarter were $0.5 million compared to $0.7 million for the corresponding quarter in 2008. General and administrative expenses for the nine-month period ended September 30, 2009, were $1.7 million compared with $2.0 million in the corresponding period last year.

Net loss for the three-month period ended September 30, 2009, totalled $1.4 million or ($0.02) per common share compared to a net loss of $3.9 million or ($0.07) per common share for the three-month period ended September 30, 2008. Net loss for the nine-month period ended September 30, 2009, was $5.1 million or ($0.09) per common share compared to a net loss of $10.5 million or ($0.19) per common share the corresponding period last year.

As at September 30, 2009, the Company's unrestricted cash and cash equivalents amounted to $1.3 million compared to $1.4 million as at December 31, 2008, and the Company had 63,883,437 common shares and 9,131,014 stock options outstanding.

The Company's annual financial statements and management's discussion and analysis will be available on www.sedar.com.

    
    About GeneNews
    --------------
    

GeneNews is focused on the application of functional genomics to enable early diagnosis and personalized health management 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 and ColonSentry(TM), visit www.genenews.com and www.colonsentry.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
                                                      2009           2008
                                                        $              $
    -------------------------------------------------------------------------
    ASSETS
    Current
    Cash and cash equivalents                        1,331,005     1,414,395
    Restricted cash                                    252,208     1,239,605
    Accounts receivable                                131,416       549,134
    Investment tax credits recoverable                 200,000       400,000
    Prepaid expenses and deposits                      396,285       284,423
    -------------------------------------------------------------------------
    Total current assets                             2,310,914     3,887,557
    -------------------------------------------------------------------------
    Property, plant and equipment, net               2,874,722     3,400,298

    -------------------------------------------------------------------------
                                                     5,185,636     7,287,855
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Accounts payable and accrued liabilities         1,735,683     3,156,397
    Deferred revenue                                    13,500        15,871
    Current portion of long-term debt                   81,085     1,061,368
    -------------------------------------------------------------------------
    Total current liabilities                        1,830,268     4,233,636
    -------------------------------------------------------------------------
    Long-term debt                                     158,141       219,548
    Convertible debentures                           2,568,595       729,646
    -------------------------------------------------------------------------
    Total liabilities                                4,557,004     5,182,830
    -------------------------------------------------------------------------

    Shareholders' equity
    Capital stock                                   47,562,516    44,870,734
    Contributed surplus                              4,715,964     3,753,924
    Deficit                                        (51,649,848)  (46,519,633)
    -------------------------------------------------------------------------
    Total shareholders' equity                         628,632     2,105,025
    -------------------------------------------------------------------------
                                                     5,185,636     7,287,855
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    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
                           2009          2008          2009          2008
    -------------------------------------------------------------------------

    Revenue
      Milestone
       revenue        $     34,430  $    299,828  $    131,174  $    882,552
      Non-refundable
       license revenue     311,684             -       566,144             -
      Sales                 16,850         2,712        38,100         2,712
    -------------------------------------------------------------------------
                           362,964       302,540       735,418       885,264

    Expenses
      Research and
       development         655,575     2,647,640     2,445,131     7,877,621
      Sales and
       marketing           145,187       319,329       417,689       319,329
      General and
       administrative      469,786       725,969     1,677,966     2,045,204
      Stock-based
       compensation        371,585       420,376       962,040       914,914
      Amortization of
       intellectual
       property                  -       110,537             -       331,611
      Interest on
       debentures          122,412             -       336,739             -
      Interest on long
       term debt             4,960        29,554        40,041        88,254
      -----------------------------------------------------------------------
                         1,769,505     4,253,405     5,879,606    11,576,933

    Interest income          1,083        34,738        13,973       194,432
    -------------------------------------------------------------------------

    Net and
     comprehensive loss
     for the period     (1,405,458)   (3,916,127)   (5,130,215)  (10,497,237)

    Deficit, beginning
     of period         (50,244,390)  (39,929,240)  (46,519,633)  (33,348,130)

    -------------------------------------------------------------------------
    Deficit, end
     of period        $(51,649,848) $(43,845,367) $(51,649,848) $(43,845,367)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Net and
     comprehensive loss
     per common share
      Basic and
       fully diluted  $      (0.02) $      (0.07) $      (0.09) $      (0.19)

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

    Weighted average
     number of
     common shares
     outstanding
      Basic and
       fully diluted    62,687,251    56,207,176    58,176,297    56,213,363
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    GeneNews Limited

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


                      September 30  September 30  September 30  September 30
                           2009          2008          2009          2008
    -------------------------------------------------------------------------

    Cash flows provided by (used in):

    Operations:
      Net and
       comprehensive
       loss for the
       period         $ (1,405,459) $( 3,916,127) $ (5,130,215) $(10,497,237)
      Items therein
       not requiring
       cash
        Debenture
         interest          122,412             -       336,739             -
        Stock based
         compensation      371,584       420,376       962,040       914,914
        Amortization
         of capital
         assets            138,274       229,962       530,760       588,326
        Amortization of
         intellectual
         property                -       110,537             -       331,611
        ---------------------------------------------------------------------
                          (773,189)   (3,155,252)   (3,300,676)   (8,662,386)

      Changes in non-
       cash working
       capital:
        Accounts
         receivable        (17,348)       55,512       417,718       916,995
        Investment
         tax credit
         recoverable             -       (49,778)      200,000       817,944
        Prepaid
         expenses and
         deposits           31,190       181,144       210,397       238,728
        Accounts
         payable and
         accrued
         liabilities       (56,807)      (62,834)   (1,420,714)      (79,852)
        Deferred
         revenue           (11,605)     (299,829)       (2,371)     (882,552)
      -----------------------------------------------------------------------
                          (827,759)   (3,331,037)   (3,895,646)   (7,651,123)

    Financing:
      Net proceeds
       from issuance
       of convertible
       debentures                -             -     2,193,993             -
      Proceeds from
       exercise of
       employee stock
       options                   -             -             -       251,100
      Proceeds from
       issuance of
       shares            2,000,000             -     2,000,000             -
      Proceeds from
       issuance of
       shares held
       in trust           (322,259)            -      (322,259)            -
      Restricted
       cash                 74,956             -       987,396             -
      Payments on
       long term debt      (19,297)      178,255    (1,041,689)     (109,901)
      -----------------------------------------------------------------------
                         1,733,400       178,255     3,817,441       141,199

    Investments:
      Additions to
       capital assets            -      (313,097)       (5,185)     (546,258)
      -----------------------------------------------------------------------

    Increase (decrease)
     in cash and cash
     equivalents           905,641    (3,465,879)      (83,390)   (8,056,182)

    Cash and cash
     equivalents,
     beginning of
     period                425,364     6,688,727     1,414,395    11,279,030

    -------------------------------------------------------------------------
    Cash and cash
     equivalents,
     end of period    $  1,331,005  $  3,222,848  $  1,331,005  $  3,222,848
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental
     cash flow
     information:
      Interest
       received              1,083        40,905        13,973       164,862
      Interest paid          4,960        29,544        40,041        88,254
    

%SEDAR: 00009903E

SOURCE GeneNews Limited

For further information: For further information: Gailina Liew, Chief Operating Officer, (905) 739-2036, gliew@genenews.com; Casey Gurfinkel, (416) 815-0700 x 283, cgurfinkel@equicomgroup.com


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