TORONTO, March 28 /PRNewswire-FirstCall/ -- Predictive medicine
company PreMD Inc. (TSX: PMD; Amex: PME) today announced audited
financial results for the fiscal year ended December 31, 2005. "As
we reported in mid-March, in 2005 we advanced our business
significantly with the start of two major clinical trials to
broaden PREVU(x)'s regulatory claims, new scientific papers and
presentations on PREVU(x) and the launch of new studies for
ColorectAlert(TM) and the breast cancer test," said Dr. Brent
Norton, President and Chief Executive Officer. "We are continuing
to build on that momentum in 2006 with several clinical and
development initiatives underway for our skin sterol technology and
cancer portfolio. Most recently, we announced that PREVU(x) Point
of Care (POC) Skin Sterol Test data will be presented at the
American Heart Association's annual Arteriosclerosis, Thrombosis
and Vascular Biology conference at the end of April. In addition,
McNeil successfully launched a retail pilot program in the United
States with a major North American retailer, collaborating with a
third-party to offer PREVU(x) POC as part of a cardiovascular risk
assessment clinic. McNeil also unveiled the new PREVU(x) website,
at http://www.prevu.com/." Dr. Norton continued, "We expect 2006 to
be a productive year for PreMD. Equally encouraging, the biotech
sector overall is showing considerable improvement in the first few
months of 2006 compared with 2005, with increased volumes as well
as renewed institutional buying. We are working hard to capitalize
on these favorable conditions to broaden market awareness and
support for PreMD." Financial Review ---------------- For the year
ended December 31, 2005, revenue was $1,579,000 compared with
$485,000 in fiscal 2004. Product sales of PREVU(x) Skin Sterol
Tests to McNeil Consumer Healthcare amounted to $426,000 in 2005
compared with $183,000 in 2004. McNeil made PREVU(x) POC available
for sale in 2005 to medical professionals in Canada, the U.S. and
select European markets. License revenue amounted to $1,153,000 for
2005 compared with $302,000 in 2004. The consolidated loss for
fiscal 2005 was $4,990,000 or $(0.23) per share compared with a
loss of $5,569,000 or $(0.26) per share for the year ended December
31, 2004, a decrease of $579,000. This variance reflects the
increase in sales and license revenue of $1,094,000, which was
partially offset by an increase in interest and imputed interest of
$484,000 on convertible debentures, issued on August 30, 2005.
Research and development expenditures for the year increased by
$507,000 to $3,120,000 from $2,613,000 in 2004. This variance
reflects: - A $410,000 increase in spending on clinical trials for
skin cholesterol and cancer to $898,000 from $488,000 in 2004. This
increase is related to additional trials for skin cholesterol to
lead to additional regulatory approvals, a new trial for breast
cancer and continuation of the lung cancer trial (the I-ELCAP
study). PreMD currently has 15 clinical trials ongoing; - Increased
legal fees on intellectual property, which amounted to $331,000
compared with $292,000 in fiscal 2004. These costs include $189,000
in 2005 ($96,000 in 2004) related to the petition for reinstatement
of two U.S. patents for skin cholesterol that had been deemed
abandoned; - An increase of $135,000 in subcontract research to
$451,000 in support of the development of a second-generation color
reader for the skin cholesterol test. This was partially offset by
a decrease in product development expenditures for supplies of
$55,000; - An increase in stock-based compensation expense of
$23,000, which resulted in non-cash expenses for research personnel
of $147,000 in 2005 compared with $124,000 for 2004. This reflects
the amortization of the 2003 and 2004 grants as well as the 2005
grants; and - A decrease in compensation of $53,000, reflecting
lower incentive payments for the year for performance milestones.
General and administration expenses amounted to $2,655,000 compared
with $3,355,000 in 2004, a decrease of $700,000. The decrease for
the year reflects: - A reduction of $434,000 in professional
expenses resulting from the non-recurring expenditure of $478,000
incurred in 2004 for the unsolicited offer to acquire the shares of
IBEX Technologies Inc.; - A reduction of $54,000 in stock-based
compensation for options for administrative personnel and
consultants. This resulted in a non-cash expense of $422,000
compared with $476,000 in 2004. The 2004 amount included $95,000 as
the fair value of the cashless exercise of options by an officer of
PreMD; - A reduction in investor relations expenses by $61,000
following the completion of some consulting contracts during 2005;
- A reduction in compensation of $38,000, reflecting lower
incentive payments for 2005 for performance milestones; and - A
reduction of $45,000 in travel expenses as a result of fewer
international business development meetings. Interest on
convertible debentures (issued on August 30, 2005) amounted to
$228,000 in 2005 compared to nil in 2004. The debentures bear
interest at an annual rate of 7%, payable quarterly in either cash
or stock. Imputed interest of $256,000 (compared to nil in 2004)
represents the amortization of the fair value of the warrants and
equity component of the debentures. Amortization expenses for
equipment and acquired technology for 2005 amounted to $210,000
compared with $224,000 in 2004. The amortization of production
molds amounted to $3,000 in 2005 (2004 - $7,000), and was recorded
as a cost of inventory. Purchases of equipment to support
administration, clinical trials and manufacturing amounted to
$130,000 in 2005 and $165,000 in 2004. Amortization of deferred
financing fees amounted to $43,000 for 2005 compared to nil in
2004. The financing fees are amortized over the life of the
convertible debentures. As at December 31, 2005 PreMD had cash,
cash equivalents and short-term investments totaling $8,679,000
($5,196,000 as at December 31, 2004). Management believes that,
based on historic cash expenditures and the current expectation of
further revenues from product sales, royalties and license
revenues, PreMD's existing cash resources together with the
investment tax credits receivable of $200,000 will be sufficient to
meet our current operating and capital requirements through at
least 2008. PreMD's fiscal 2005 annual report will be available on
SEDAR at http://www.sedar.com/ and on the corporate website at
http://www.premdinc.com/. About PreMD Inc. PreMD Inc. is a world
leader in predictive medicine, dedicated to developing rapid,
non-invasive tests for the early detection of life-threatening
diseases. PreMD's cardiovascular products, which are branded as
PREVU(x) Skin Sterol Test, are licensed worldwide to McNeil
Consumer Healthcare. The company's cancer tests include
ColorectAlert(TM), LungAlert(TM) and a breast cancer test. PreMD's
head office is located in Toronto, and its research and product
development facility is at McMaster University in Hamilton,
Ontario. For further information, please visit
http://www.premdinc.com/. For more information about PREVU(x),
please visit http://www.prevu.com/ or call 1-866-283-8328 (North
America) or 00-800-8283-8328 (Europe), or email . 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. PreMD Inc. (formerly, IMI International Medical
Innovations Inc.) Incorporated under the laws of Canada
CONSOLIDATED BALANCE SHEETS (In Canadian dollars) As at December 31
2005 2004 $ $
-------------------------------------------------------------------------
ASSETS Current Cash and cash equivalents 773,199 239,458 Short-term
investments 7,905,883 4,956,945 Accounts receivable 881,891 222,348
Inventory 36,306 267,500 Prepaid expenses and other receivables
317,264 137,015 Investment tax credits receivable 200,000 389,000
-------------------------------------------------------------------------
Total current assets 10,114,543 6,212,266
-------------------------------------------------------------------------
Deferred financing fees, net of accumulated amortization of $43,059
(2004 - nil) 477,725 - Capital assets, net 410,636 420,955 Acquired
technology, net of accumulated amortization of $856,970 (2004 -
$784,398) 290,286 362,858
-------------------------------------------------------------------------
11,293,190 6,996,079
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable
291,125 1,021,086 Accrued liabilities 655,113 566,951 Current
portion of deferred revenue 311,915 306,900
-------------------------------------------------------------------------
Total current liabilities 1,258,153 1,894,937
-------------------------------------------------------------------------
Convertible debentures 5,893,340 - Deferred revenue 2,297,400
2,604,300
-------------------------------------------------------------------------
Total liabilities 9,448,893 4,499,237
-------------------------------------------------------------------------
Shareholders' equity Capital stock 24,449,826 24,192,321
Contributed surplus 1,840,979 1,328,187 Equity component of
convertible debentures 2,393,145 - Warrants 1,373,718 200,000
Deficit (28,213,371) (23,223,666)
-------------------------------------------------------------------------
Total shareholders' equity 1,844,297 2,496,842
-------------------------------------------------------------------------
11,293,190 6,996,079
-------------------------------------------------------------------------
-------------------------------------------------------------------------
PreMD Inc. (formerly, IMI International Medical Innovations Inc.)
CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT (In Canadian dollars)
Years ended December 31 2005 2004 2003 $ $ $
-------------------------------------------------------------------------
REVENUE Product sales 425,730 183,258 - License revenue 1,153,308
302,080 16,900
-------------------------------------------------------------------------
1,579,038 485,338 16,900 Cost of product sales, including
amortization of $3,456 (2004-$6,600) 428,650 190,214 -
-------------------------------------------------------------------------
Gross profit 1,150,388 295,124 16,900
-------------------------------------------------------------------------
EXPENSES Research and development 3,120,276 2,612,770 1,918,800
General and administration 2,655,056 3,355,451 2,361,602 Interest
on convertible debentures 228,481 - - Imputed interest on
convertible debentures 255,529 - - Amortization 252,804 224,428
280,777
-------------------------------------------------------------------------
6,512,146 6,192,649 4,561,179
-------------------------------------------------------------------------
RECOVERIES AND OTHER INCOME Investment tax credits 198,923 205,000
223,146 Interest 173,130 123,626 258,422
-------------------------------------------------------------------------
372,053 328,626 481,568
-------------------------------------------------------------------------
Net loss for the year (4,989,705) (5,568,899) (4,062,711) Deficit,
beginning of year (23,223,666) (17,654,767) (13,592,056)
-------------------------------------------------------------------------
Deficit, end of year (28,213,371) (23,223,666) (17,654,767)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic and diluted loss per share $(0.23) $(0.26) $(0.19)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Weighted average number of common shares outstanding 21,487,008
21,276,497 20,967,677
-------------------------------------------------------------------------
-------------------------------------------------------------------------
PreMD Inc. (formerly, IMI International Medical Innovations Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS (In Canadian dollars) Years
ended December 31 2005 2004 2003 $ $ $
-------------------------------------------------------------------------
OPERATING ACTIVITIES Net loss for the year (4,989,705) (5,568,899)
(4,062,711) Add items not involving cash Amortization 256,260
231,028 280,777 Stock-based compensation costs included in:
Research and development expense 147,085 123,925 189,105 General
and administration expense 421,812 476,164 255,112 Loss on sale of
capital asset - 6,098 3,873 Imputed interest on convertible
debenture 255,529 - - Deduct gain on foreign exchange (35,734) - -
Net change in non-cash working capital balances related to
operations (1,061,397) 544,015 (54,970) Increase (decrease) in
deferred revenue (301,885) 2,818,100 (6,900)
-------------------------------------------------------------------------
Cash used in operating activities (5,308,035) (1,369,569)
(3,395,714)
-------------------------------------------------------------------------
INVESTING ACTIVITIES Short-term investments (3,065,568) 1,678,190
3,326,608 Purchase of capital assets (130,310) (164,789) (385,605)
Sale of capital assets - 628 2,775
-------------------------------------------------------------------------
Cash provided by (used in) investing activities (3,195,878)
1,514,029 2,943,778
-------------------------------------------------------------------------
FINANCING ACTIVITIES Issuance of convertible debentures 9,827,616 -
- Financing fees (861,328) - - Issuance of capital stock, net of
issue costs 198,400 33,373 363,110
-------------------------------------------------------------------------
Cash provided by financing activities 9,164,688 33,373 363,110
-------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash equivalents
(127,034) - -
-------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents during the
year 533,741 177,833 (88,826) Cash and cash equivalents, beginning
of year 239,458 61,625 150,451
-------------------------------------------------------------------------
Cash and cash equivalents, end of year 773,199 239,458 61,625
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Represented by: Cash 773,199 173,302 61,625 Cash equivalents -
66,156 -
-------------------------------------------------------------------------
773,199 239,458 61,625
-------------------------------------------------------------------------
-------------------------------------------------------------------------
DATASOURCE: PreMD Inc. CONTACT: Sarah Borg-Olivier, Director,
Communications, T: (416) 222-3449, ; Ron Hosking, Chief Financial
Officer, T: (416) 222-3449,
Copyright