GeneNews reports second quarter 2007 results

TORONTO, Aug. 14 /CNW/ - GeneNews Limited (TSX: GEN), a company focused on developing simple blood-based biomarker tests for the early detection of diseases and personalized health management, today reported operational and financial results for the second quarter, ended June 30, 2007.

Financial results (CDN dollars) for the second quarter (Apr. 1, 2007 -

June 30, 2007):

Total revenue for the quarter ended June 30, 2007 was $0.5 million compared to $0.9 million for the same period last fiscal year. Revenues 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 June 30, 2007 was $358,000, compared with $116,000 during the prior year. The increase was due to increased balances of cash and short-term investments.

Total operating expenditures for the quarter ended June 30, 2007 were $2.7 million compared with $2.9 million for the same period last year. Research and development expenses for the quarter were $1.8 million compared with $2.1 million for the same period last year. General and administrative expenses for the first quarter were $0.7 million compared with $0.5 million for the corresponding quarter in the previous year.

The net loss for the quarter ended June 30, 2007 was $1.8 million or ($0.03) per common share compared with a net loss of $1.9 million or ($0.04) 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 detect colon cancer, and the advancement of related products in the Company's pipeline.

Financial results (CDN dollars) for the six month period ended June 30,

2007:

Total revenue for the six-month period ended June 30, 2007 was $2.2 million compared with $1.7 million for the same period last fiscal year. Revenues in 2007 resulted from the prostate disease biomarker development agreement and the final revenue from the Pfizer collaboration agreement, and in 2006, resulted entirely from the Pfizer agreement, which was completed in the first fiscal quarter of 2007.

Interest earned during the six-month period ended June 30, 2007 was $541,000, compared to $153,000 during the prior year, the result of increased balances of cash and short-term investments.

Total operating expenditures for the six-month period ended June 30, 2007 were $6.2 million compared with $6.0 million for the same period last year. Research and development expenses for the quarter were $4.4 million compared with $4.5 million for the same period last year. General and administrative expenses for the six-month period ended June 30, 2007 were $1.3 million compared with $1.0 million for the corresponding period in 2006.

The net loss for the six-month period ended June 30, 2007 was $3.4 million or ($0.06) per common share compared to a net loss of $4.1 million or ($0.10) 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 June 30, 2007 the Company had cash and cash equivalents totalling $16.6 million compared to $20.6 million as at December 31, 2006. Accounts payable and accrued liabilities at June 30, 2007 were $1.9 million compared with $1.8 million at December 31, 2006.

As at June 30, 2007 the Company had 55,450,571 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

    Amounts in Canadian dollars                            "Unaudited"
    -------------------------------------------------------------------------
                                                       June 30   December 31
                                                          2007          2006
    -------------------------------------------------------------------------

    ASSETS

    Current assets:
      Cash and cash equivalents                   $ 16,550,330  $ 20,593,568
      Accounts receivable                              447,021       135,315
      Investment tax credits recoverable               796,900       796,900
      Prepaid expenses and deposits                    444,148       685,819
      -----------------------------------------------------------------------
                                                    18,238,399    22,211,602

    Capital assets                                   2,747,658     1,645,488
    Intellectual property                              621,454       842,528

    -------------------------------------------------------------------------
                                                  $ 21,607,511  $ 24,699,618
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES and SHAREHOLDERS' EQUITY

    Current liabilities:
      Accounts payable and accrued liabilities    $  1,942,073  $  1,821,355
      Current portion of long term debt                 27,148       102,549
      -----------------------------------------------------------------------
                                                     1,969,221     1,923,904

    Long term debt                                           -             -

    Shareholders' equity:
      Capital stock                                 44,261,204    44,234,409
      Contributed surplus                            2,532,241     2,255,390
      Deficit                                      (27,155,155)  (23,714,085)
      -----------------------------------------------------------------------
                                                    19,638,290    22,775,714

    -------------------------------------------------------------------------
                                                  $ 21,607,511  $ 24,699,618
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    GeneNews Limited

    Consolidated Statements of Operations and Deficit

    Amounts in
     Canadian dollars                        "Unaudited"
    -------------------------------------------------------------------------
                       Three months  Three months   Six months    Six months
                           ended         ended         ended         ended
                          June 30       June 30       June 30       June 30
                            2007          2006          2007          2006
    -------------------------------------------------------------------------

    Revenue
      Milestones      $    539,950  $          -  $  2,206,186  $          -
      Fees for service           -       193,792             -       390,251
      One-time payment           -       679,228             -     1,350,991
      -----------------------------------------------------------------------
                           539,950       873,020     2,206,186     1,741,242

    Expenses
      Research and
       development       1,772,371     2,101,928     4,361,474     4,468,129
      General and
       administrative      651,441       490,070     1,323,517     1,002,752
      Stock compensation   131,747       182,975       278,186       296,407
      Amortization of
       intellectual
       property            110,537       110,537       221,074       221,074
      Interest on long
       term debt             1,538         5,470         4,191        11,940
      -----------------------------------------------------------------------
                         2,667,634     2,890,980     6,188,442     6,000,302

    Interest income        357,865       115,773       541,186       152,770
    -------------------------------------------------------------------------

    Net loss for the
     period             (1,769,819)   (1,902,187)   (3,441,070)   (4,106,290)

    Deficit, beginning
     of period         (25,385,336)  (16,982,515)  (23,714,086)  (14,778,412)

    -------------------------------------------------------------------------
    Deficit, end of
     period           $(27,155,155) $(18,884,702) $(27,155,156) $(18,884,702)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Net loss per
     common share
      Basic and
       fully diluted  $      (0.03) $      (0.04) $      (0.06) $      (0.10)

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

    Weighted average
     number of
     common shares
     outstanding
      Basic and
       fully diluted    55,441,019    45,748,373    55,441,019    42,711,255

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



    GeneNews Limited

    Consolidated Statements of Cash Flows

    Amounts in
     Canadian dollars                        "Unaudited"
    -------------------------------------------------------------------------
                       Three months  Three months   Six months    Six months
                           ended         ended         ended         ended
                          June 30       June 30       June 30       June 30
                            2007          2006          2007          2006
    -------------------------------------------------------------------------

    Cash flows provided
     by (used in):

    Operations:
      Net loss for
       the period     $ (1,769,819) $ (1,902,187) $ (3,441,070) $ (4,106,290)
      Items therein
       not requiring
       cash
        Stock based
         compensation      131,747       182,975       278,186       296,407
        Amortization
         of capital
         assets             89,917        99,054       174,862       191,528
        Amortization of
         intellectual
         property          110,537       110,537       221,074       221,074
        ---------------------------------------------------------------------
                        (1,437,618)   (1,509,621)   (2,766,948)   (3,397,281)
      Changes in
       non-cash working
       capital:
        Accounts
         receivable       (245,835)      122,410      (311,706)    1,299,836
        Investment tax
         credit recoverable      -             -             -       658,022
        Prepaid expenses
         and deposits      166,687       (51,328)      241,671       (29,170)
        Accounts payable
         and accrued
         liabilities       122,972      (314,774)      120,718       231,712
        Deferred revenue         -      (679,532)            -    (1,351,531)
        ---------------------------------------------------------------------
                        (1,393,794)   (2,432,845)   (2,716,265)   (2,588,412)

    Financing:
      Net proceeds from
       issue of capital
       stock                     -    23,940,120        25,459    24,025,139
      Payments on long
       term debt           (38,258)      (34,326)      (75,401)      (67,652)
      -----------------------------------------------------------------------
                           (38,258)   23,905,794       (49,942)   23,957,487

    Investments:
      Additions to
       capital assets   (1,168,630)     (100,154)   (1,277,031)     (235,898)
      -----------------------------------------------------------------------

    Increase (decrease)
     in cash and cash
     equivalents        (2,600,682)   21,372,795    (4,043,238)   21,133,177

    Cash and cash
     equivalents,
     beginning of
     period             19,151,012     4,441,264    20,593,568     4,680,882

    -------------------------------------------------------------------------
    Cash and cash
     equivalents, end
     of period        $ 16,550,330  $ 25,814,059  $ 16,550,330  $ 25,814,059
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

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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