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PreMD Reports Second Quarter Results

- FDA update expected imminently

- Successfully completed initial project for Cosmetics company

- AMEX appeal continuing

TORONTO, Aug. 13 /PRNewswire-FirstCall/ - Predictive medicine company PreMD Inc. (TSX: PMD; Amex: PME) today announced unaudited financial results for the second quarter fiscal 2008 ended June 30, 2008 ("Q2 2008").

"The second quarter of 2008 continued to be one of tremendous focus and dedication in resolving some of the challenges that we have faced," said Brent Norton, president and CEO of PreMD. "We believe that we have made significant progress with the US Food and Drug Administration (FDA) regarding our appeal of the non-substantially equivalent (NSE) letter for our 510(k) submission. We are encouraged by the FDA's request for additional analysis of the data and believe that this is a positive step towards regulatory approval in the U.S. The request follows several constructive discussions over the past three months. We maintain that our clinical data warrants the approval of our non-invasive skin cholesterol test and that we are on a path towards resolving the outstanding matters and achieving our objectives. We are also pleased to continue working with our partner, AstraZeneca Pharmaceuticals LP, and our medical colleagues throughout the appeal process." PreMD has complied with all the FDA's requests and it is anticipated that PreMD will be hearing from the FDA imminently and will continue to release any news as it becomes available.

Dr. Norton continued, "Despite the setbacks faced, management has also focused on business development activities during this quarter. We are driven and will continue to expand on our leading position in the skin cholesterol testing field through our diverse pipeline of products and capabilities. As previously announced in June, we also successfully completed a project for one of the leading health and beauty organizations in the world and expect to enter Six months ended

June 30 June 30

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

2008 2007 2008 2007

$ $ $ $



Net loss and

comprehensive loss for

the period (1,318,003) (1,341,363) (3,000,732) (2,930,558)

Add (deduct) items not

involving cash

Amortization 22,000 41,318 44,363 82,698

Stock compensation

costs included in:

Research and


expense 39,500 35,286 77,275 67,383

General and


expense 132,599 123,312 207,614 180,605

Gain on sale of

capital assets - 143 - 143

Imputed interest on


debentures 369,923 231,228 660,202 479,574

Capitalized interest

on debenture 33,671 - 40,450 -

Interest on


debentures paid in

common shares 164,948 133,967 332,166 270,911

Add loss (deduct

gain) on foreign

exchange (54,239) (670,888) 226,983 (754,441)

Net change in non-cash

working capital

balances related to

operations (289,885) (182,749) (401,336) 838,718

Decrease in deferred

revenue 26,670 - (53,340) -


Cash used in operating

activities (926,156) (1,264,248) (1,866,355) (3,442,403)



Short-term investments 45,780 291,768 491,152 2,109,459

Proceeds from sale of

capital assets - 562 - 1,435

Purchase of capital

assets - (484) (9,161) (2,233)


Cash provided by

investing activities 45,780 291,846 481,991 2,108,861



Issuance of debentures,

net of issue costs (15,978) - 1,137,534 -

Issuance of capital

stock, net of issue

costs - (49,764) - 3,729,957


Cash provided by (used

in) financing

activities (15,978) (49,764) 1,137,534 3,729,957


Effect of exchange

rate changes on cash

and cash equivalents (6,001) 3,870 8,901 6,646


Net increase (decrease)

in cash and cash

equivalents during

the period (902,355) (1,018,296) (255,731) 2,402,861

Cash and cash


Beginning of period 928,824 3,533,734 282,200 112,577


End of period 26,469 2,515,438 26,469 2,515,438



Represented by

Cash 26,469 105,372 26,469 105,372

Cash equivalents - 2,410,066 - 2,410,066


26,469 2,515,438 26,469 2,515,438



See accompanying note


(In Canadian dollars unless otherwise noted)

June 30, 2008



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 $1,318,003 for the

three months ended June 30, 2008, has a shareholders' deficiency of

$6,046,507 as at June 30, 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.

into additional agreements with the company for further product development and other skin testing initiatives. As part of this achievement, we continued with our efforts to establish partnerships and alliances in order to extend our capabilities in the marketplace. Going forward, we believe that we have the technology, vision and business strategy to drive us back to growth and increased value."

PreMD also continues to appeal the recent decision made by the American Stock Exchange (the "AMEX") to delist its stock.

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.

Financial Review (All amounts are in Canadian dollars)


The consolidated net loss for the three months ended June 30, 2008 (Q2 2008) was $1,318,000 or $(0.05) per share compared with a loss of $1,341,000 or $(0.05) per share for the quarter ended June 30, 2007 (Q2 2007).

Total product sales were $6,000 for Q2 2008 compared with $8,000 for Q2 2007. License revenue was $27,000 for Q2 2008, compared to nil for Q2 2007. Product sales reflect direct sales to customers. The license revenue in 2008 consisted of the upfront cash payment received in accordance with the 2007 licensing agreement with 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 $418,000 to $313,000 from $731,000 in Q2 2007. Significant causes of the variance include:

- a decrease of $94,000 in spending on clinical trials for skin


- a decrease of $124,000 in spending on clinical trials for cancer;

- a decrease of $110,000 on product development related to

manufacturing validation for the new cordless reader, as this

project nears completion;

- an increase of $42,000 in legal fees on intellectual property;

- a decrease of $104,000 in salaries and benefits for research

personnel due to reduction in staff;

- 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; and

General and administration expenses amounted to $503,000 for Q2 2008 compared with $911,000 in Q2 2007, a decrease of $408,000. Significant causes of the variance include:

- a decrease of $230,000 in professional fees for legal, audit and

human resources; the 2007 amount included expenses of a business

development consultant;

- a decrease of $81,000 in salaries and benefits due to reductions in

administrative staff;

- a reduction in annual meeting and annual report costs of $61,000 due

to cost containment activities; and

Interest on convertible debentures (issued on August 30, 2005) amounted to $165,000 in Q2 2008 compared with $164,000 in Q2 2007. These debentures bear interest at an annual rate of 7%, payable quarterly in either cash or stock. The amount accrued for Q2 2008 was subsequently paid in common shares, whereas the amount for Q2 2007 was paid partly in shares ($134,000) and partly in cash. Imputed interest on convertible debentures of $370,000 and $231,000 in Q2 2008 and 2007, respectively, represents the expense related to the accretion of the liability component at an effective interest rate of approximately 15%.

The gain on foreign exchange was $54,000 for Q2 2008, compared with a gain of $671,000 for Q2 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.

Refundable scientific investment tax credits ("ITCs") accrued for Q2 2008 amounted to $20,000 versus $26,000 for Q2 2007. For the six months ended June 30, 2008 and 2007, ITC's amounted to $45,000 and $48,000, respectively.

As at June 30, 2008, PreMD had cash, cash equivalents and short-term investments totaling $443,000 ($1,190,000 as at December 31, 2007). Cash used to fund operating activities during Q2 2008 amounted to $926,000 compared with $1,264,000 in Q2 2007. To date, we have financed our activities through product sales, license revenues, the issuance of shares and debentures and the recovery of provincial ITCs. The Company reported a loss of $1,318,000 for the three months ended June 30, 2008, has a shareholders' deficiency of $6,047,000 as at June 30, 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.

Financial statements are attached to this press release and are 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* 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)

(See note 1 - Nature of Operations and Going Concern Uncertainty)


As at As at

June 30, December 31,

2008 2007

$ $




Cash and cash equivalents 26,469 282,200

Short-term investments 416,616 907,768

Accounts receivable 79,215 8,292

Inventory 24,888 61,177

Prepaid expenses and other receivables 947,268 758,715

Investment tax credits receivable 185,000 340,000


Total current assets 1,679,456 2,358,152


Capital assets, net of accumulated

amortization of $281,242 (2007 - $267,458) 89,244 93,867

Intangible assets, net of accumulated

amortization of $676,075 (2007 - $991,473) 275,204 305,783


2,043,904 2,757,802





Accounts payable 239,025 305,333

Accrued liabilities 495,599 765,312

Current portion of deferred revenue 106,680 106,680


Total current liabilities 841,304 1,177,325


Long-term debt

Debentures 521,410 -

Convertible debentures 6,407,657 5,626,987


6,929,067 5,626,987

Deferred revenue 320,040 373,380


Total liabilities 8,090,411 7,177,692


Shareholders' deficiency

Capital stock 29,452,822 29,120,655

Contributed surplus 3,383,816 3,098,928

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

Warrants 2,314,356 1,557,296

Deficit (43,436,886) (40,436,154)


Total shareholders' deficiency (6,046,507) (4,419,890)


2,043,904 2,757,802



See accompanying note PreMD Inc.


(In Canadian dollars)


(note 1)

Three months ended Six months ended

June 30 June 30

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

2008 2007 2008 2007

$ $ $ $



Product sales 6,050 8,250 14,750 26,334

License revenue 26,670 - 53,340 -


32,720 8,250 68,090 26,334

Cost of product sales 25,738 3,720 26,679 8,566


Gross profit 6,982 4,530 (41,411) 17,768



Research and

development 312,859 730,799 855,734 1,371,636

General and

administration 503,067 911,141 947,078 1,552,105

Interest on long-term

debt 198,618 165,400 370,346 328,983

Imputed interest on

long-term debt 369,923 231,228 660,202 479,574

Amortization 22,000 41,318 44,363 82,698

Loss (gain) on foreign

exchange (54,239) (670,888) 226,983 (754,441)


1,352,228 1,408,998 3,104,706 3,060,555




Investment tax credits 20,000 26,000 45,000 48,000

Interest 7,243 37,105 17,563 64,229


27,243 63,105 62,563 112,229


Net loss and

comprehensive loss

for the period (1,318,003) (1,341,363) (3,000,732) (2,930,558)

Deficit, beginning of

period (42,118,883) (35,709,537) (40,436,154) (34,162,342)

Adjustment to opening

deficit - - - 42,000


Deficit, end of

period (43,436,886) (37,050,900) (43,436,886) (37,050,900)



Basic and diluted

loss per share $(0.05) $(0.05) $(0.12) $(0.12)



Weighted average

number of common

shares outstanding 25,875,114 24,950,579 25,716,541 23,505,688



See accompanying note

PreMD Inc.


(In Canadian dollars)


(note 1)

Three months ended

Copyright©2008 PR Newswire.
All rights reserved

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