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PreMD Reports Fiscal 2007 Results

- PASA Data published in American Journal of Cardiology

- FDA appeal progressing

TORONTO, March 28 /PRNewswire-FirstCall/ - Predictive medicine company PreMD Inc. (TSX: PMD; Amex: PME) today announced audited financial results for the year ended December 31, 2007.

"During 2007, PreMD faced many significant changes and challenges," said Brent Norton, president and CEO. We made tremendous progress on several fronts, including a License, Development and Supply Agreement with AstraZeneca Pharmaceuticals LP for the marketing and distribution of our point-of-care (POC) skin cholesterol test in the United States. We also successfully penetrated the cosmetics industry as we recently signed an agreement with one of the world's leading cosmetics company, which will enable us to further explore the potential our technology holds in other viable markets. In addition, we continue to achieve several clinical and scientific validations related to both our cardiovascular and cancer franchises, including the publication of our 'Increased Skin Cholesterol Identifies Individuals at Increased Cardiovascular Risk: The Predictor of Advanced Subclinical Atherosclerosis (PASA) Study' this week in the American Journal of Cardiology, April 2008 edition."

Dr. Norton continued, "despite these critical achievements, the company faced difficulties, as we received a non-substantially equivalent (NSE) letter from the US Food and Drug Administration (FDA) regarding our 510(k) submission. We have appealed the FDA decision, including submitting a detailed brief and meeting with them to present our case. We are pleased to have the support of AstraZeneca Pharmaceuticals LP, as well as several leading consultants, through the internal agency review process and we expect to hear from the FDA with the next steps in the next 30 days. We also recently completed a financing, which will enable us to move forward with our business development initia---------------------------------------------------------------------


PreMD Inc.


(In Canadian dollars)

Years ended December 31

2007 2006 2005

$ $ $



Net loss and comprehensive

loss for the year (6,315,812) (5,948,971) (4,989,705)

Add (deduct) items not

involving cash

Amortization 165,753 319,205 256,260

Stock-based compensation

costs included in

Research and development

expense 193,527 156,920 147,085

General and administration

expense 400,821 383,767 421,812

Loss (gain) on sale of capital

assets 139,669 (1,743) -

Imputed interest on

convertible debentures 1,002,394 819,609 255,529

Mark-to-market adjustment

on derivative 18,000 - -

Interest on convertible

debentures paid in

common shares 543,312 281,462 -

Loss (gain) on foreign exchange (1,288,160) 97,748 (35,734)

Net change in non-cash working

capital balances related to

operations (1,011,237) 1,422,730 (1,061,397)

Increase (decrease) in deferred

revenue 480,060 (2,609,315) (301,885)


Cash used in operating activities (5,671,673) (5,078,588) (5,308,035)



Short-term investments 2,218,115 4,589,356 (3,065,568)

Purchase of trademark - (150,000) -

Purchase of capital assets (11,868) (24,965) (130,310)

Proceeds from sale of capital

assets 1,435 3,000 -


Cash provided by (used in)

investing activities 2,207,682 4,417,391 (3,195,878)



Issuance of convertible

debentures - - 9,827,616

Financing fees - (51,399) (861,328)

Issuance of capital stock, net of

issue costs 3,683,804 - 198,400


Cash provided by (used in)

financing activities 3,683,804 (51,399) 9,164,688


Effect of exchange rate changes

on cash and cash equivalents (50,190) 51,974 (127,034)


Net increase (decrease) in cash

and cash equivalents during the

year 169,623 (660,622) 533,741

Cash and cash equivalents,

beginning of year 112,577 773,199 239,458


Cash and cash equivalents, end

of year 282,200 112,577 773,199



Represented by

Cash 164,776 112,577 773,199

Cash equivalents 117,424 - -


282,200 112,577 773,199



Supplemental cash flow information

Cash paid during the year for

interest 120,106 396,261 228,481



tives, pending FDA clearance and the subsequent commercialization of our products. We appreciate the patience and support of our stakeholders, as we determine the most effective steps toward enhancing shareholder value while evaluating the opportunities before us."

Financial Review (All amounts are in Canadian dollars)


The consolidated loss for the year ended December 31, 2007 was $6,316,000 or $(0.26) per share compared with a loss of $5,949,000 or $(0.27) per share for the year ended December 31, 2006, an increase of $367,000.

Total product sales of PREVU(x) Skin Cholesterol tests amounted to $41,000 in 2007 compared with $7,000 in 2006. License revenue was $53,000 in 2007 compared to $3,329,000 in 2006, a decrease of $3,276,000. License revenue consists primarily of the upfront cash payments received in accordance with the respective licensing agreements, which have been deferred and recognized into income on a straight-line basis over the terms of the agreements. For 2007, the license revenue represents the amortization of the $533,000 (US$500,000) received upon signing of the license agreement with AstraZeneca on July 13, 2007.

Research and development expenses for the year decreased by $1,996,000 to $2,778,000 from $4,774,000 in 2006. The variance for the year reflects:

- A decrease of $2,224,000 in spending on clinical trials for skin

cholesterol and cancer to $347,000 from $2,571,000 in 2006, following

the submission of the US FDA application;

- An decrease of $103,000 in product liability insurance due which is

related to the reduced number of clinical trials undertaken in 2007;

- An increase of $175,000 in performance-based compensation expense

resulting from achievement of milestones;

- An increase of $88,000 in product development and subcontract

research as related to the validation of subcontract manufacturers

for the skin cholesterol kits and the second-generation color reader,

as well as for general product improvements;

- An increase of $37,000 in stock-based compensation, a non-cash

expense, due to the vesting of options granted in prior years; and

- Minor changes in other development costs during the period.

General and administration expenses amounted to $3,213,000 compared with $3,025,000 in 2006, an increase of $188,000. The variance primarily reflects:

- An expense of nil in 2007 compared to $175,000 in 2006 for payments

to amend the ColorectAlert License Agreement;

- An increase of $25,000 in distribution expenses (nil in 2006) related

to the third-party warehouse expenses for storage of inventory;

- An increase of $178,000 in performance-based compensation expense

resulting from achievement of milestones;

- A loss of $125,000 related to disposal of obsolete fixed assets

related to skin cholesterol clinical trials;

- An increase of $57,000 in professional fees for legal, audit and

consulting fees related to business development (including

negotiation of the AstraZeneca agreement); and

- An increase of $17,000 in stock-based compensation for options and

stock grants for administrative personnel and consultants resulting

in a non-cash expense of $401,000 compared with $384,000 in 2006; and

- Minor changes in other general and administration costs during the


Interest on convertible debentures (issued on August 30, 2005) amounted to $663,000 in 2007 compared to $678,000 in 2006. The debentures bear interest at an annual rate of 7%, payable quarterly in either cash or stock. In 2007, $543,000 of the interest expense was paid in stock, rather than cash, compared with $281,000 in 2006. Imputed interest of $1,002,000 (compared with $820,000 in 2006) represents the expense related to the accretion of the liability component at an effective interest rate of 15%.

Amortization expenses for equipment and acquired technology for 2007 amounted to $166,000 compared with $180,000 in 2006. The reduction in 2007 reflects the reduced amortization on the disposal of equipment related to skin cholesterol clinical trials. Amortization of deferred financing fees amounted to $139,000 in 2006.

The gain on foreign exchange was $1,313,000 for 2007 compared to a loss of $98,000 in 2006. The major reason for the increase was the impact of foreign exchange rates on the convertible debentures which are repayable in US dollars. This resulted in an unrealized gain of $1,355,000 on the convertible debenture.

Recoveries of provincial scientific investment tax credits ("ITCs") amounted to $140,000 for 2007 compared with $200,000 in 2006. The lower accrual is based on the reduced spending on clinical trials in 2007.

As at December 31, 2007, PreMD had cash, cash equivalents and short-term investments totaling $1,190,000 ($3,276,000 as at December 31, 2006). 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 $6,316,000 for the year ended December 31, 2007, has a shareholders' deficiency of $4,420,000 as at December 31, 2007 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.

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 one common share at a price of $0.2759 per share.

Financial statements are attached to this press release. PreMD's complete fiscal 2007 annual report is available at

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

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.


(Tables Follow)

PreMD Inc.

Incorporated under the laws of Canada


(In Canadian dollars)

As at December 31

2007 2006

$ $




Cash and cash equivalents 282,200 112,577

Short-term investments 907,768 3,163,482

Accounts receivable 8,292 11,221

Inventory 61,177 179,219

Prepaid expenses and other receivables 758,715 570,773

Investment tax credits receivable 340,000 200,000


Total current assets 2,358,152 4,237,272


Deferred financing fees, net of accumulated

amortization of $174,863 in 2006 - 347,589

Capital assets, net 93,867 312,410

Intangible assets, net of accumulated

amortization of $991,473 (2006 - $915,027) 305,783 382,229


2,757,802 5,279,500





Accounts payable 305,333 963,990

Accrued liabilities 765,312 932,372

Current portion of deferred revenue 106,680 -


Total current liabilities 1,177,325 1,896,362


Convertible debentures 5,626,987 6,350,680

Deferred revenue 373,380 -


Total liabilities 7,177,692 8,247,042



Shareholders' deficiency

Capital stock 29,120,655 25,263,480

Contributed surplus 3,098,928 2,521,915

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

Warrants 1,557,296 1,170,020

Deficit (40,436,154) (34,162,342)


Total shareholders' deficiency (4,419,890) (2,967,542)


2,757,802 5,279,500



PreMD Inc.



(In Canadian dollars)

Years ended December 31

2007 2006 2005

$ $ $



Product sales 41,184 6,513 425,730

License revenue 53,340 3,328,827 1,153,308


94,524 3,335,340 1,579,038

Cost of product sales, including

amortization of nil (2006 - nil;

2005 - $3,456) 140,261 36,824 428,650


(45,737) 3,298,516 1,150,388



Research and development 2,777,651 4,773,762 3,120,276

General and administration 3,213,276 3,024,811 2,690,790

Interest on convertible debentures 663,418 677,723 228,481

Imputed interest on convertible

debentures 1,002,394 819,609 255,529

Mark-to-market adjustment on

derivative 18,000 - -

Amortization 165,753 319,205 252,804

Loss (gain) on foreign exchange (1,313,292) 97,746 (35,734)


6,527,200 9,712,856 6,512,146



Investment tax credits 140,000 200,000 198,923

Interest 117,125 265,369 173,130


257,125 465,369 372,053


Net loss and comprehensive loss

for the year (6,315,812) (5,948,971) (4,989,705)

Deficit, beginning of year (34,162,342) (28,213,371) (23,223,666)

Adjustment to opening deficit 42,000 - -


Deficit, end of year (40,436,154) (34,162,342) (28,213,371)



Basic and diluted loss per share $(0.26) $(0.27) $(0.23)



Weighted average number of

common shares outstanding 24,326,078 21,663,698 21,487,008


Copyright©2008 PR Newswire.
All rights reserved

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