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PreMD Reports First Quarter Results
Date:5/15/2008

- FDA appeal progressing

- Appointment of new board of director

- PREPARE data selected as a 'highlighted' poster at American Heart Association Conference on Arteriosclerosis, Thrombosis and Vascular Biology

(ATVB) in Atlanta

TORONTO, May 15 /PRNewswire-FirstCall/ - Predictive medicine company PreMD Inc. (TSX: PMD; Amex: PME) today announced unaudited financial results for the first quarter fiscal 2008 ended March 31, 2008.

"During the first quarter of 2008, we continued to develop and execute processes that address the concerns we have faced as an organization recently," said Brent Norton, president and CEO of PreMD. "To date, we have implemented a comprehensive strategic plan which includes our FDA appeal options and further reductions in the Company's cost structure. This will enable us to reduce our expenses going forward, and extend our cash reserves. We are focused on the future and all that we can accomplish with PREVU(x) globally, our cosmeceutical opportunities and relationship, and in advancing our late stage clinical trials with our cancer detection platform. We have also maximized our cash resources and have made significant cutbacks throughout the entire organization this quarter. With continued discretion in spending, we anticipate that our existing cash, exclusive of any potential revenues or additions, will sustain operations towards the end of the year."

"With respect to our appeal of the non-substantially equivalent (NSE) letter from the US Food and Drug Administration (FDA) regarding our 510(k) submission, we have been in communication with the FDA to determine an appropriate means for resolution of the existing differences in opinion, including issuing a formal request for the dispute resolution. Our discussions thus far with the FDA have been productive and we look forward to continuing our work in an effort to secure regulatory approval. 35,320 49,124

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Net loss and comprehensive loss for the

period (1,682,729) (1,589,195)

Deficit, beginning of period (40,436,154) (34,162,342)

Adjustment to opening deficit - 42,000

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Deficit, end of period (42,118,883) (35,709,537)

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Basic and diluted loss per share $ (0.07) $ (0.07)

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Weighted average number of common shares

outstanding 25,320,049 22,044,772

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See accompanying note

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PreMD Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Canadian dollars)

Unaudited Three months ended

March 31,

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

2008 2007

$ $

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OPERATING ACTIVITIES

Net loss and comprehensive loss for the

period (1,682,729) (1,589,195)

Add items not involving cash

Amortization 22,363 41,380

Stock-based compensation costs included in:

Research and development expense 37,775 32,097

General and administration expense 75,015 57,293

Imputed interest on long-term debt 290,279 248,346

Accrued interest on debenture 6,779 -

Interest on convertible debentures paid

in common shares 167,218 136,944

Loss (gain) on foreign exchange 281,222 (83,553)

Net change in non-cash working capital

balances related to operations (111,451) (1,021,467)

Decrease in deferred revenue (26,670) -

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Cash used in operating activities (940,199) (2,178,155)

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INVESTING ACTIVITIES

Short-term investments 445,372 1,817,691

Proceeds from sale of capital assets - 873

Purchase of capital assets (9,161) (1,749)

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Cash provided by investing activities 436,211 1,816,815

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FINANCING ACTIVITIES

Issuance of debentures, net of issue costs 1,153,512 -

Issuance of capital stock, net of issue costs - 3,779,721

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Cash provided by financing activities 1,153,512 3,779,721

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Effect of exchange rate changes on cash and

cash equivalents (2,900) 2,776

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Net increase in cash and cash equivalents

during the period 646,624 3,421,157

Cash and cash equivalents, beginning of

period 282,200 112,577

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Cash and cash equivalents, end of period 928,824 3,533,734

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Represented by:

Cash 80,248 133,732

Cash equivalents 848,576 3,400,002

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928,824 3,533,734

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Supplemental cash flow information

Cash paid during the period for interest 1,503 29,615

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See accompanying note

NOTE TO CONSOLIDATED FINANCIAL STATEMENTS

(In Canadian dollars unless otherwise noted)

March 31, 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 $1,682,729 for the

three months ended March 31, 2008, has a shareholders' deficiency of

$5,055,125 as at March 31, 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.

Communications are ongoing and the Company will provide further updates as additional information becomes available. In the interim, we are extremely pleased to continue to receive support and commitment from our partner, AstraZeneca Pharmaceuticals LP, and medical colleagues throughout our appeal initiatives."

"During the first quarter, we were pleased to have our PREPARE (PREVU(x) Predicts Atherosclerosis Risk and Events) data selected as a highlighted poster at the American Heart Association Conference on Arteriosclerosis, Thrombosis and Vascular Biology (ATVB) recently. Subsequently, an article based on the data was published in HealthDay, which can be viewed on our website at http://www.premdinc.com/news_mediacov.htm."

PreMD is also appointing Paul Davis as a new member of the board of directors. Mr. Davis has held senior executive positions in both public and private companies and in investment banking, and has served on several boards of directors. Mr. Davis began his career at Davies, Ward & Beck (predecessor to Davies Ward Phillips & Vineberg LLP) and was also the Chief Operating Officer and a director of MedcomSoft Inc. and Executive Vice President and Director, Investment Banking of Octagon Capital Canada Corporation. Mr. Davis will be replacing Ron Henriksen, who is not standing for re-election to PreMD's board of directors at our upcoming annual meeting. "We look forward to working with Paul Davis as a new addition to our board of directors," said Dr. Norton. "We also thank Mr. Henriksen for his valuable contributions during his years of service to PreMD and wish him success in his future endeavors."

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.

PreMD will be holding its annual general meeting (AGM) on May 21st, 2008 at 4pm. The meeting will take place at The Design Exchange in the Patty Watt room. The Design Exchange is located at 234 Bay Street in Toronto, Ontario.

Financial Review (All amounts are in Canadian dollars)

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The consolidated net loss for the three months ended March 31, 2008 (Q1 2008) was $1,683,000 or $(0.07) per share compared with a loss of $1,589,000 or $(0.07) per share for the quarter ended March 31, 2007 (Q1 2007).

Total product sales were $9,000 for Q1 2008 compared with $18,000 for Q1 2007. License revenue was $27,000 for Q1 2008, compared to nil for Q1 2007. Product sales reflect direct sales to customers, following the termination of the license agreement on December 28, 2006 with McNeil Consumer Healthcare ("McNeil"). The license revenue in 2008 consisted of the upfront cash payment received in accordance with the licensing agreement with AstraZeneca Pharmaceuticals LP ("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 $98,000 to $543,000 from $641,000 in Q1 2007. Significant causes of the variance include:

- a decrease of $23,000 in spending on clinical trials for skin

cholesterol;

- a decrease of $40,000 on product development related to manufacturing

validation for the new cordless reader, as this project nears

completion;

- an increase of $49,000 in legal fees on intellectual property;

- a decrease of $38,000 in salaries and benefits for research personnel

due to reduction in staff; and

- 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.

General and administration expenses amounted to $444,000 for Q1 2008 compared with $641,000 in Q1 2007, a decrease of $197,000. Significant causes of the variance include:

- an increase in stock-based compensation, a non-cash expense, of

$18,000 resulting from payment of directors fees in stock options in

lieu of cash. This is offset by a reduction in directors fees of

$33,000;

- a decrease of $91,000 in professional fees for legal, audit and human

resources; the 2007 amount includes expenses of a business

development consultant;

- a decrease of $22,000 in salaries and benefits for administrative

personnel due to reductions in staff; and

- a reduction in annual report costs of $30,000 due to a significant

reduction in the number of copies printed.

Interest on long term debt amounted to $172,000 in Q1 2008 compared with $164,000 in Q1 2007. The 2008 amount includes $7,000 for interest on the senior unsecured debentures, issued on March 12, 2008. Interest on convertible debentures (issued on August 30, 2005) amounted to $165,000 in Q1 2008 compared with $164,000 in Q1 2007. The debentures bear interest at an annual rate of 7%, payable quarterly in either cash or stock. The amount accrued for Q1 2008 was subsequently paid in common shares, whereas the amount for Q1 2007 was paid partly in shares ($134,000) and partly in cash. Imputed interest of $275,000 and $248,000 in Q1 2008 and 2007 respectively, represents the expense related to the accretion of the liability component at an effective interest rate of approximately 15%.

The loss on foreign exchange was $281,000 for Q1 2008, compared with a gain of $84,000 for Q1 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.

Investment tax credits receivable ("ITCs") reduced by $175,000 during Q1 2008 as a result of receiving $200,000 for the year ended December 31, 2006 as well as accruing $25,000 ITCs for Q1 2008.

As at March 31, 2008, PreMD had cash, cash equivalents and short-term investments totaling $1,391,000 ($1,190,000 as at December 31, 2007). To date, we have financed our activities through product sales, license revenues, the issuance of shares and convertible debentures and the recovery of provincial ITCs. The Company reported a loss of $1,683,000 for the three months ended March 31, 2008, has a shareholders' deficiency of $5,055,000 as at March 31, 2008. On March 12, 2008, the Company issued, by way of private placement, $1,435,294 senior unsecured debentures maturing on September 12, 2009 and 5,072,395 common share purchase warrants for gross proceeds of approximately $1,220,000. Each common share purchase warrant expires in March 2013 and entitles the holder to acquire on common share at a price of $0.2759 per share.

Financial statements are attached to this press release and are available at http://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(x) 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 http://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.

(x)Trademark

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

March 31, December 31,

2008 2007

$ $

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ASSETS

Current

Cash and cash equivalents 928,824 282,200

Short-term investments 462,396 907,768

Accounts receivable 43,958 8,292

Inventory 50,606 61,177

Prepaid expenses and other receivables 975,702 758,715

Investment tax credits receivable 165,000 340,000

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Total current assets 2,626,486 2,358,152

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Capital assets, net of accumulated

amortization of $274,531 (2007 - $267,458) 95,954 93,867

Intangible assets, net of accumulated

amortization of $1,006,762 (2007 - $991,473) 290,494 305,783

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3,012,934 2,757,802

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LIABILITIES AND SHAREHOLDERS' DEFICIENCY

Current

Accounts payable 368,718 305,333

Accrued liabilities 662,250 765,312

Current portion of deferred revenue 106,680 106,680

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Total current liabilities 1,137,648 1,177,325

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Long-term debt

Debentures 408,190 -

Convertible debentures 6,175,511 5,626,987

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6,583,701 5,626,987

Deferred revenue 346,710 373,380

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Total liabilities 8,068,059 7,177,692

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Shareholders' deficiency

Capital stock 29,287,873 29,120,655

Contributed surplus 3,211,718 3,098,928

Equity component of convertible debentures 2,239,385 2,239,385

Warrants 2,324,782 1,557,296

Deficit (42,118,883) (40,436,154)

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Total shareholders' deficiency (5,055,125) (4,419,890)

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3,012,934 2,757,802

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See accompanying note

PreMD Inc.

CONSOLIDATED STATEMENTS OF LOSS, COMPREHENSIVE LOSS AND DEFICIT

(In Canadian dollars)

Unaudited

Three months ended

March 31

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

2008 2007

$ $

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REVENUE

Product sales 8,700 18,084

License revenue 26,670 -

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35,370 18,084

Cost of product sales 941 4,846

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Gross Profit 34,429 13,238

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EXPENSES

Research and development 542,875 640,837

General and administration 444,011 640,964

Interest on long-term debt 171,728 163,583

Imputed interest on long-term debt 290,279 248,346

Amortization 22,363 41,380

Loss (gain) on foreign exchange 281,222 (83,553)

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1,752,478 1,651,557

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RECOVERIES AND OTHER INCOME

Investment tax credits 25,000 22,000

Interest 10,320 27,124

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SOURCE PreMD Inc.
Copyright©2008 PR Newswire.
All rights reserved

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