GeneNews Limited
TSX : GEN

GeneNews Limited

November 15, 2010 16:11 ET

GeneNews Reports Third Quarter 2010 Financial Results and Provides Update on Recent Events

TORONTO, ONTARIO--(Marketwire - Nov. 15, 2010) - GeneNews Limited (TSX:GEN), a company focused on developing blood-based biomarker tests for the early detection of diseases and personalized health management, today reported operational and financial results for the three- and nine-months ended September 30, 2010. In addition, it reported on several important events for the company that happened subsequent to the quarter-end.

Events Subsequent to Quarter-End:

  • Submission of ColonSentry™ validation data package to New York State health regulatory authorities by Enzo Clinical Labs (NYSE:ENZ)
  • Completion of two concurrent private placement offerings for total gross proceeds of approximately $2.1 million
  • Seed capital grant of approximately $600,000 (MYR 1,876,000) from the Malaysia Biotech Corp. to the company's commercialization partner, GeneNews Diagnostics, to support ColonSentry™ commercialization in Malaysia and Southeast Asia

"The completion of the recent financing transactions combined with the seed capital grant to our Malaysian partner puts us in a stronger position to broaden the global commercial footprint of ColonSentry™ and to engage with potential strategic partners to expand the application of our Sentinel Principle® technology. We appreciate the vote of confidence from investors as we look forward to the commercial launch of ColonSentry™ in the United States, China and Malaysia in the coming months," said Gailina J. Liew, President and Chief Operating Officer of GeneNews.

Commenting on the ColonSentry™ submission to the New York State health regulatory authorities, Enzo Clinical Labs' President, Dr. Kevin Krenitsky, said, "Offering first-in-class tests such as ColonSentry™ is a central component of Enzo's strategy of bringing leading edge, world-class molecular tests to our customers. This submission brings us one step closer to being able to provide the people of New York State with access to this groundbreaking test, the world's first blood-based test for colorectal cancer."

Third Quarter Highlights:

  • Presentation of positive ColonSentry™ validation data from a 786-cohort study entitled "Blood RNA Biomarker Detects Both Left- and Right-sided Colorectal Neoplasms" at the at the Next Generation Dx Summit, Washington, DC August 24-26.
  • Approval of approximately $1,665,000 (MYR 5,000,000) grant from the Government of Malaysia to support the identification and development of blood-based biomarkers for liver cancer and hepatitis B

Financial Results:

For the three months ended September 30, 2010, the Company reported a consolidated net loss of $1,051,719, or $0.02 loss per common share, as compared to a consolidated net loss of $1,405,458, or $0.02 loss per common share for the three months ended September 30, 2009. For the nine months ended September 30, 2010, the Company reported a consolidated net loss of $3,780,855, or $0.06 loss per common share, as compared to a consolidated net loss of $5,130,215, or $0.09 loss per common share, for the nine months ended September 30, 2009. This year-to-date improved financial performance is primarily due to a 36% reduction in research and development costs that resulted from reductions in the number of scientific and technical staff needed to support the Company's ColonSentry™ test service through its Canadian operations.

As at September 30, 2010, the Company's unrestricted cash, cash equivalents and short-term investments amounted to $827,590. The Company noted that this amount does not include any of the aforementioned total gross proceeds from the approximately $2.1 million financing that it announced on November 10, 2010.

The Company's financial statements and management's discussion and analysis are available on www.sedar.com.

About GeneNews

GeneNews is an emerging molecular diagnostics company focused on the application of functional genomics to enable early diagnosis and personalized health management based on disease-specific biomarkers. The Company has a patented core platform technology, the Sentinel Principle®, which has the power to detect and stage virtually any disease or medical condition from a simple blood sample. GeneNews is currently applying the Sentinel Principle® in major areas with unmet clinical needs such as cancer, arthritis, cardiovascular disease and neurological disorders. GeneNews launched its first commercial product, ColonSentry™, a blood-based test to pre-screen and assess an individual's risk for colorectal cancer, in Canada in 2008. The Company's marketing partners, GeneDiagnostics and Enzo Clinical Labs, are expected to launch the ColonSentry™ test in China and the United States in the fourth quarter of 2010 and the first half of 2011, respectively. For more information on GeneNews and ColonSentry™, www.genenews.com or www.ColonSentry.com.

Forward-Looking Statements

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  
 [Unaudited]  
 [Expressed in Canadian dollars]  
   
As at      
  September 30,   December 31,  
  2010   2009  
  $   $  
   
ASSETS        
Current        
Cash and cash equivalents 477,510   510,806  
Cash held in trust -   2,286,200  
  477,510   2,797,006  
Restricted cash 485,691   252,054  
Short-term investments 350,080   91,710  
Accounts receivable 52,112   293,528  
Investment tax credits recoverable -   400,000  
Prepaid expenses and deposits 116,495   126,505  
Total current assets 1,481,888   3,960,803  
   
Property, plant and equipment, net 2,266,962   2,698,450  
  3,748,850   6,659,253  
   
LIABILITIES AND SHAREHOLDERS' EQUITY      
Current        
Accounts payable and accrued liabilities 871,553   1,159,141  
Deferred revenue 1,500   10,200  
Deferred grant 222,941   -  
Current portion of long-term debt 87,701   82,690  
Total current liabilities 1,183,695   1,252,031  
   
Convertible debentures 3,078,065   2,662,677  
Long-term debt 70,441   136,858  
Total liabilities 4,332,201   4,051,566  
   
Subsequent event        
Commitments        
   
Shareholders' equity        
Capital stock 48,752,731   48,752,731  
Warrants 1,020,486   1,020,486  
Contributed surplus 5,537,789   4,947,972  
Deficit (55,894,357 ) (52,113,502 )
Total shareholders' (deficit) equity (583,351 ) 2,607,687  
  3,748,850   6,659,253  
   
GeneNews Limited  
   
CONSOLIDATED STATEMENTS OF OPERATIONS, COMPREHENSIVE LOSS  
AND DEFICIT  
[Unaudited]  
[Expressed in Canadian dollars]  
   
   
  Three months   Three months   Nine months   Nine months  
  ended   ended   ended   ended  
  September 30,   September 30,   September 30,   September 30,  
  2010   2009   2010   2009  
   
REVENUE                        
  Milestone revenue $ -   $ 34,430   $ -   $ 131,174  
  Non-refundable license revenue   162,619     311,684     176,604     566,144  
  Sales   3,896     16,850     13,371     38,100  
    166,515     362,964     189,975     735,418  
   
EXPENSES                        
  Research and development   414,966     613,540     1,408,404     2,214,103  
  Sales and marketing   29,089     145,187     117,071     415,750  
  General and administrative   345,293     368,308     1,024,291     1,357,067  
  Stock-based compensation   164,353     371,585     589,817     962,040  
  Amortization of property, plant and equipment   146,773     138,275     440,488     530,760  
  Foreign exchange (gain) loss   (20,836 )   5,238     (30,363 )   23,108  
  Interest on long term debt   141,849     127,372     426,754     376,779  
      1,221,487     1,769,505     3,976,462     5,879,607  
   
Interest income   3,253     1,083     5,632     13,974  
Net and comprehensive loss for the period   (1,051,719 )   (1,405,458 )   (3,780,855 )   (5,130,215 )
   
Deficit, beginning of period   (54,842,638 )   (50,244,390 )   (52,113,502 )   (46,519,633 )
Deficit, end of period $ (55,894,357 ) $ (51,649,848 ) $ (55,894,357 ) $ (51,649,848 )
   
Net and comprehensive loss per common share                        
  Basic and fully diluted $ (0.02 ) $ (0.02 ) $ (0.06 ) $ (0.09 )
   
Weighted average number of common                        
shares outstanding                        
  Basic and fully diluted   69,027,881     62,687,251     69,027,881     58,176,297  

Contact Information

  • Company Contact:
    Gailina Liew
    President & COO
    Office: (905) 739-2036 or Mobile: (416) 844-0649
    gliew@genenews.com
    or
    Investor Contact:
    Kilmer Lucas Inc.
    Stephen Kilmer
    Office: (905) 690-2400 X21
    stephen@kilmerlucas.com
    or
    Media Contact:
    Kilmer Lucas Inc.
    Leonard Zehr
    Office: (905) 690-2400 X41
    len@kilmerlucas.com