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ChondroGene Inc. (CDG.V) Reports Second Quarter 2006 Financial Results


8/17/2006 11:09:23 AM

TORONTO, Aug. 17 /PRNewswire-FirstCall/ - ChondroGene Limited today announced its financial results for the second quarter ended June 30, 2006. The Company reported revenues of $873,020 for the period, compared to $1,498,472 for the three months ended June 30, 2005. Revenues were attributable to fees for service and amortization of the one time payment under the research collaboration with Pfizer that was announced in December 2004. The net loss for the quarter was $1,902,187 or $0.04 per share, compared to a net loss of $731,545 or $0.02 per share for the three-month period ended June 30, 2005. Revenues for the first six months of 2006 were $1,741,242 with a net loss of $4,106,290 or $0.10 per share, compared to revenues of $2,376,723 with a net loss of $1,858,140 or $0.05 per share, for the corresponding period in 2005. At the end of the quarter, the Company had $25,814,059 in cash and cash equivalents.

"In May, we completed our largest financing to date raising $25 million by way of a private placement. This will allow us to focus on the development and commercialization of our lead product ColonSentry(TM)," stated K. Wayne Marshall, President and CEO of ChondroGene. "The financing was one of the largest biotech financings in Canada this year and is a major accomplishment for ChondroGene."

Also during the quarter, the Company entered into a collaborative research study with Kaiser Permanente in Northern California to access clinical samples from an enriched population of patients with colon pathologies. These samples will be used to refine and evaluate ChondroGene's ColonSentry test. Kaiser Permanente is America's leading integrated health plan with headquarters in Oakland, California. Kaiser Permanente serves the health care needs of 8.3 million members in 9 states and the District of Columbia.

The Company presented data on its work on colon cancer and prostate cancer at the American Society of Clinical Oncology (ASCO) Annual Meeting in June. ASCO is the world's leading professional organization representing physicians who treat people with cancer and the Annual Meeting provides a venue where many new discoveries and innovations for cancer diagnosis and treatment are first disclosed. The two ChondroGene presentations were entitled "Novel blood biomarker panel detects human colorectal cancer" and "Blood-based biomarkers for detecting aggressive prostate cancer at time of biopsy".

A paper entitled "Novel Blood Biomarkers of Human Urinary Bladder Cancer" was also published in the June issue of Clinical Cancer Research, a journal that publishes original articles describing clinical research on the cellular and molecular characterization, prevention, diagnosis, and therapy of human cancer. The paper describes the use of ChondroGene's Sentinel Principle(TM) in a study to identify blood-based biomarkers for use in differentiating between bladder cancer and other genitourinary cancers, and between bladder cancer and healthy controls.

About ChondroGene

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

ChondroGene is focussed on the application of functional genomics to enable early diagnosis and personalized therapeutic intervention based on disease-specific biomarkers. The Company has developed a novel approach, the Sentinel Principle(TM), to detect and stage virtually any disease or medical condition from a simple blood sample. ChondroGene is currently applying the Sentinel Principle in major areas with unmet clinical needs such as cancer, arthritis, cardiovascular disease and neurological disorders. For more information on ChondroGene, visit www.chondrogene.com.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release. (Financial statements to follow.) ChondroGene Limited Consolidated Balance Sheets Amounts in Canadian dollars ------------------------------------------------------------------------- June 30 December 31 2006 2005 ------------------------------------------------------------------------- ASSETS Current assets: Cash and cash equivalents $ 25,814,059 $ 4,680,882 Accounts receivable 56,556 1,356,392 Investment tax credits recoverable 596,900 1,254,922 Prepaid expenses and deposits 394,885 365,715 ----------------------------------------------------------------------- 26,862,400 7,657,911 Capital assets 1,295,384 1,251,014 Intellectual property 1,063,601 1,284,675 ------------------------------------------------------------------------- $ 29,221,385 $ 10,193,600 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES and SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 1,161,549 $ 929,837 Deferred revenue 782,830 2,134,361 Current portion of long term debt 147,924 139,427 ----------------------------------------------------------------------- 2,092,303 3,203,625 Long term debt 26,400 102,549 Shareholders' equity: Capital stock 44,201,000 20,138,831 Contributed surplus 1,786,384 1,527,007 Deficit (18,884,702) (14,778,412) ----------------------------------------------------------------------- 27,102,682 6,887,426 ------------------------------------------------------------------------- $ 29,221,385 $ 10,193,600 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ChondroGene Limited Consolidated Statements of Operations and Deficit Amounts in Canadian dollars "Unaudited" ------------------------------------------------------------------------- Three months Three months Six months Six months ended ended ended ended June 30 June 30 June 30 June 30 2006 2005 2006 2005 ------------------------------------------------------------------------- Revenue Milestones $ - $ 612,600 $ - $ 612,600 Fees for service 193,792 206,644 390,251 413,132 One-time payment 679,228 679,228 1,350,991 1,350,991 ----------------------------------------------------------------------- 873,020 1,498,472 1,741,242 2,376,723 Expenses Research and development 2,101,928 1,592,652 4,468,129 2,927,746 General and administrative 490,070 420,788 1,002,752 842,491 Stock compensation 182,975 145,604 296,407 319,489 Amortization of intellectual property 110,537 110,538 221,074 221,073 Interest on long term debt 5,470 9,300 11,940 19,489 ----------------------------------------------------------------------- 2,890,980 2,278,882 6,000,302 4,330,288 Interest income 115,773 48,865 152,770 95,425 ------------------------------------------------------------------------- Net loss for the period (1,902,187) (731,545) (4,106,290) (1,858,140) Deficit, beginning of period (16,982,515) (12,829,900) (14,778,412) (11,703,305) ------------------------------------------------------------------------- Deficit, end of period $(18,884,702) $(13,561,445) $(18,884,702) $(13,561,445) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net loss per common share Basic and fully diluted $ (0.04) $ (0.02) $ (0.10) $ (0.05) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average number of common shares outstanding Basic and fully diluted 45,748,373 39,386,286 42,711,255 39,324,289 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ChondroGene Limited Consolidated Statements of Cash Flows Amounts in Canadian dollars "Unaudited" ------------------------------------------------------------------------- Three months Three months Six months Six months ended ended ended ended June 30 June 30 June 30 June 30 2006 2005 2006 2005 ------------------------------------------------------------------------- Cash flows provided by (used in): Operations: Net loss for the period $ (1,902,187) $ (731,545) $ (4,106,290) $ (1,858,140) Items therein not requiring cash Stock based compensation 182,975 145,604 296,407 319,489 Amortization of capital assets 99,054 90,201 191,528 166,523 Amortization of intellectual property 110,537 110,538 221,074 221,073 --------------------------------------------------------------------- (1,509,621) (385,202) (3,397,281) (1,151,055) Changes in non- cash working capital: Accounts receivable 122,410 (10,919) 1,299,836 5,479,387 Investment tax credit recoverable - - 658,022 - Prepaid expenses and deposits (51,328) (170,993) (29,170) (49,955) Accounts payable and accrued liabilities (314,774) 208,792 231,712 (598,104) Deferred revenue (679,532) (679,118) (1,351,531) (1,351,596) ----------------------------------------------------------------------- (2,432,845) (1,037,440) (2,588,412) 2,328,677 Financing: Net proceeds from issue of capital stock 23,940,120 112,542 24,025,139 117,042 Payments on long term debt (34,326) (30,496) (67,652) (60,103) ----------------------------------------------------------------------- 23,905,794 82,046 23,957,487 56,939 Investments: Additions to capital assets (100,154) (218,322) (235,898) (311,638) ----------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents 21,372,795 (1,173,716) 21,133,177 2,073,978 Cash and cash equivalents, beginning of period 4,441,264 9,629,564 4,680,882 6,381,870 ------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 25,814,059 $ 8,455,848 $ 25,814,059 $ 8,455,848 ------------------------------------------------------------------------- -------------------------------------------------------------------------

ChondroGene Limited

CONTACT: Dr. K. Wayne Marshall, President & CEO, (416) 650-0060 x234,wmarshall@chondrogene.com; Bruno Maruzzo, Corporate Development, (416)650-0060 x237, bmaruzzo@chondrogene.com


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