DiagnoCure Announces Second Quarter Financial Results
Ticker Symbol: CUR
Gen-Probe to initiate FDA pivotal clinical study for the PCA3 prostate
QUEBEC CITY, June 8 /PRNewswire-FirstCall/ - DiagnoCure Inc. , a life sciences company commercializing high-value cancer diagnostic tests and delivering laboratory services, announced a net loss of $2,622,237 or $0.06 per share for the second quarter ending April 30, 2009. This net loss reflects in part the budgeted sales and marketing initiatives to promote the Previstage(TM) GCC Colorectal Cancer Staging Test, partly offset by the increasing PCA3 royalties. At the end of the quarter, cash, short-term investments and long-term investments stood at $14,083,829.
Highlights of the Quarter
The second quarter of 2009 marked a turning point for DiagnoCure's two commercialized tests, PCA3 for prostate cancer and Previstage(TM) GCC for colorectal cancer. Important studies were published and major initiatives were undertaken that should significantly impact the market penetration and future sales of both tests.
PCA3 testing for prostate cancer
DiagnoCure and Gen-Probe, the Company's partner for the PCA3 test, are still fully committed to make the PCA3 test a worldwide success. In April, they announced that they had signed an amendment to their collaboration and license agreement. Pursuant to this amendment, Gen-Probe purchased 4.9 million of DiagnoCure's preferred shares for a total investment of US$5million. In addition, Gen-Probe will make annual payments of US$500,000 to DiagnoCure until specific milestones are met.
Along with this agreement, Gen-Probe announced that they were initiating a 500-man multicenter clinical study designed to obtain a regulatory approval by the Food and Drug Administration (FDA), allowing Gen-Probe to fully promote and sell the PCA3 test in the United States. Gen-Probe stated that it will seek an initial indication from the FDA to use PCA3 as an aid in the diagnosis of prostate cancer in men with an elevated PSA level and a negative prostate biopsy. The annual worldwide market potential for this initial indication is estimated at US$180 million. But given the other potential clinical uses of PCA3, the annual worldwide market could be much larger. The experience in Europe is showing that PCA3 sales grow significantly and steadily when promoted aggressively with the right strategy. In their Q1 webcast, Gen-Probe disclosed that the global sales of PCA3, that is in both Europe and the United States, increased 100% over the same quarter the prior year, reaching US$1.5 million.
Several factors make Gen-Probe "highly motivated to begin their U.S. clinical trial." They include promising clinical data, early feedback from the FDA and opinion leaders, and the fact that they will now devote more resource to PCA3 and the clinical trial. Furthermore, in addition to the 17 peer-reviewed articles already published to date, an impressive 13 new studies supporting the clinical potential of PCA3 for prostate cancer management were presented at the annual meetings of the European Association of Urology and the American Urology Association.
At the same time, in May, a U.S. National Cancer Institute (NCI) study was published in the New England Journal of Medicine (2009; 360:1310-9), which concluded that PSA did not reduce the number of prostate cancer deaths. Based on these results, the NCI stated that a better method was needed to reduce unnecessary biopsies and better assess the aggressiveness of the cancer to guide treatment decisions. An article published this year in the British Journal of Urology International (2009; 103:441-445) provided a review of many PCA3 studies and suggested that the PCA3 test had the potential to answer these key clinical questions.
Previstage(TM) GCC for colorectal cancer
In February, the peer-reviewed Journal of the American Medical Association published the results of a major, NIH-sponsored, prospective five-year study conducted by Dr. Scott Waldman of Thomas Jefferson University on the GCC (or GUCY2C) marker. The results demonstrated that GCC is the strongest independent predictor of the risk of recurrence among colorectal cancer patients considered low risk by current assessment methods. Dr. Waldman's study is a key validation of the clinical potential of the GCC marker, to which DiagnoCure owns the worldwide exclusive diagnostic rights. DiagnoCure's Previstage(TM) GCC test was developed to detect the GCC marker in the lymph nodes removed during colorectal cancer surgery to better determine the stage of the cancer. Moreover, it uses the latest advances in molecular technologies and methodologies that have emerged in the past few years.
In March, the Board of Directors nominated Neil J. Campbell as a non-voting delegated director. Mr. Campbell is Chairman & CEO for Mosaigen(R), Inc., a global healthcare and ICT technology development corporation, headquartered in Germantown, Maryland, USA, and he serves as a General Partner for Endeavour Capital Ltd., an Asia/Pacific private equity fund in the life sciences, cleanTech and information technologies. He brings over 20 years of experience as an executive of publicly traded companies, and in raising capital from both the private and public markets. In particular, Mr. Campbell was President & COO/CEO for EntreMed Pharmaceuticals, and Senior Director of Commercial Development for Celera Genomics (NASDAQ). He also held General & Executive Manager positions at Life Technologies, Inc. (acquired by Invitrogen), at IGEN, Inc. (acquired by Roche) and and at Abbott Laboratories.
Results for the second quarter ended April 30, 2009
Total revenues for the second quarter of 2009 were $467,152 compared with $516,109 for the second quarter of 2008. Royalty revenues from Gen-Probe tripled from $46,591 to $145,107 for the second quarter of 2009. This increase is mostly attributable to the sales of PROGENSA(TM) PCA3 in Europe by Gen-Probe. As part of the amended agreement signed with Gen-Probe on April 29, 2009, DiagnoCure recorded a portion of the annual payment, that is, $148,400 for the second quarter of 2009.
Interest income decreased by $211,065 to $123,903 for the second quarter of 2009 compared with $334,968 for the second quarter of 2008. The decrease is attributable to the use of funds to finance the Company's operations and to the lower interest rates on its investments.
Cost of sales decreased by $70,328, from $86,750 for the second quarter of 2008 to $16,422 for 2009. This decrease is related to the end of direct ImmunoCyt(TM) / uCyt+(TM) sales by DiagnoCure and to lower sample sales to Gen-Probe relative to their prostate cancer research program.
Operating expenses before stock-based compensation decreased by $540,944, from $3,482,329 for the second quarter of 2008 to $2,941,385 for the same period of 2009. This decrease reflects the impact of the layoff of nine people in November 2008 and reduction in R&D expenses, which were mostly related to the completion of the Previstage(TM) GCC Colorectal Cancer Staging Test.
Based on the above, for the second quarter of 2009, DiagnoCure recorded a net loss of $2,622,237 or $0.06 per share, compared with $3,372,374 or $0.08 per share for the same period of 2008. These results are substantially in line with Management expectations and reflect the increasing PCA3 royalties and the sales and marketing initiatives undertaken to promote the Previstage(TM) GCC Colorectal Cancer Staging Test.
DiagnoCure is a life sciences company commercializing high-value cancer diagnostic tests and delivering laboratory services that increase clinician and patient confidence in making critical treatment decisions. DiagnoCure Oncology Laboratories, a subsidiary of DiagnoCure Inc., launched in 2008 the Previstage(TM) GCC Colorectal Cancer Staging Test, the first GCC-based molecular test for the management of colorectal cancer. A major study published in the February 18, 2009, edition of the Journal of the American Medical Association demonstrated that GCC, to which DiagnoCure owns exclusive worldwide diagnostic rights, is the strongest independent predictor of colorectal cancer recurrence. The Company also has a strategic alliance with Gen-Probe for the development and commercialization of a second-generation prostate cancer test using PCA3, DiagnoCure's proprietary molecular marker. This test is also available through laboratories in the U.S. using PCA3 analyte specific reagents (ASR) from Gen-Probe, in Europe as the CE-marked PROGENSA(TM) PCA3 in vitro assay, and in Canada. In addition to its own research, the Company intends to acquire or in-license additional promising cancer biomarkers from both academic and commercial institutions. For more information, visit www.diagnocure.com.
This release contains forward-looking statements that involve known and unknown risks, uncertainties and assumptions that may cause actual results to differ materially from those expected. By their very nature, forward-looking statements are based on expectations and hypotheses and also involve risks and uncertainties, known and unknown, many of which are beyond DiagnoCure's control. As a result, investors are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements regarding the outcome of research and development projects, clinical studies and future revenues are based on management expectations. In addition, the reader is referred to the applicable general risks and uncertainties described in DiagnoCure's most recent Annual Information Form under the heading "Risk Factors". DiagnoCure undertakes no obligation to publicly update or revise any forward-looking statements contained herein unless required by the applicable securities laws and regulations.
CONTACT: Investors: J. F. Bureau, CFA, Sr. Vice President and CFO,
DiagnoCure Inc., (418) 527-6100, email@example.com; Media:
Paule De Blois, Vice President, Corporate Affairs, DiagnoCure Inc., (418)