QUEBEC CITY, June 6 /PRNewswire-FirstCall/ - DiagnoCure Inc. , a leading developer and provider of innovative high-value molecular diagnostic assays for the detection and management of cancer, today announced its financial results for the second quarter ended April 30, 2007.
Highlights of the Quarter
Gen-Probe, DiagnoCure’s exclusive sub-licensee for diagnostic applications of the PCA3 genetic marker, is now distributing analyte specific reagents (ASR) for PCA3 in the U.S., and is selling its fully CE-marked PROGENSA(TM) PCA3 in Europe. Major U.S. laboratories now selling PCA3-based tests include; the Dianon unit of LabCorp with their CaPDetect:PCA3(TM) test, Bostwick Laboratories with their PCA3 PCA3Plus(TM) test, and AmeriPath , with their PCA3 ProfileR(TM) test.
During the past quarter, the Company successfully completed a public offering of 5,850,000 common shares at a price of $4.30 per common share, for gross proceeds of $25,155,000. This bought deal financing was conducted through a syndicate of underwriters, led by National Bank Financial Inc., including Orion Securities, Canaccord Adams Securities and Industrial Alliance Securities.
An interim analysis presented at the EAU (European Association of Urologists) meeting in March 2007 concluded that Gen-Probe’s PROGENSA(TM) PCA3 assay, currently commercialized in Europe, was better than free PSA at predicting the result of the repeat biopsy. Researchers reported the PCA3 test had a specificity of 73% in the study, compared to only 16% for free PSA (prostate specific antigen). PCA3 was also prominently displayed at the recent (May 2007) American Urology Association meeting, with two additional posters and studies being presented. These studies further validate the potential of the PCA3-based test to predict the outcome of a prostate biopsy, and provide important findings, which will give clinicians more confidence that the PCA3 Score will be reliable.
According to a study of 233 men published in the March issue of the peer-reviewed journal UROLOGY(R) (69: 532-535, 2007), Gen-Probe’s research test for the genetic marker PCA3 in urine predicted the results of repeat biopsies more accurately than traditional PSA testing.
On April 30th, the Company strengthened its leading position in cancer diagnostics by securing exclusive worldwide rights to two high-value molecular tests for colorectal cancer and an option to a CLIA-certified U.S. service laboratory to commercialize molecular cancer diagnostics tests. The two tests for colorectal cancer in-licensed from Targeted Diagnostics & Therapeutics, Inc. (TDT) of Philadelphia, PA, are based on the detection of GCC (guanylyl cyclase C), a gene that appears normally in cells lining the intestinal track, but has only been found outside the intestine when colorectal cancer has metastasized. While the total value of the transaction was not disclosed for competitive reasons, DiagnoCure’s initial payment terms include US$2.2 million in shares, each valued at CA$4.30. TDT will also receive performance-based milestone payments and royalties on revenues generated by the tests. More than 150,000 Americans are diagnosed with colorectal cancer each year, with a post-surgery recurrence rate close to 50 percent. About 53,000 Americans die of the disease annually, making it the second leading cause of cancer-related deaths.
Results for the Second Quarter of Fiscal 2007
Total revenues for the second quarter of 2007 were $1,232,559 compared with $1,263,057 for the second quarter of 2006. Revenue recognition of the continued calendar payments from Gen-Probe was $772,668 for the period, up $33,561 from the prior year due to favourable changes in the U.S. to Canadian foreign currency exchange rates. Sales of DiagnoCure’s bladder cancer test, ImmunoCyt(TM) / uCyt+(TM), were up $45,098 to $127,059 for the second quarter of 2007 versus $81,961 for the same period a year ago. There were no sales of uPM3(TM) by DiagnoCure in the second quarter of 2007. In mid 2006, DiagnoCure has withdrawn its uPM3(TM) test from the market when Gen-Probe began to sell their version of the PCA3 test. Sales of DiagnoCure developed uPM3(TM) ASR prostate cancer test for the second quarter of 2006 were $183,711.
Income from research and development contracts has increased in the second quarter of 2007 by $72,918, attributable to a new R&D contract obtained from Gen-Probe. Also in this quarter, DiagnoCure sold clinical samples to Gen-Probe, in support of their prostate cancer testing R&D, for an amount of $25,035 compared to $67,595 in 2006.
Interest income increased $16,324 to $207,007 for the second quarter of 2007 compared to $190,683 for the second quarter of 2006. The increase is attributable to the interest generated on the net proceed of $23,353,098 received from the April 2007 financing.
Cost of sales decreased $115,358 from $179,882 for the second quarter of 2006 to $64,524 for the second quarter of 2007. This decrease is related to lower actual product sales, as noted above, for uPM3(TM).
Operating expenses from continuing operations, before stock-based compensation, dropped from $2,423,298 for the second quarter of 2006 to $1,930,852 for the same period in 2007, a decrease of $492,446 (20%) reflecting cost savings from the restructuring initiated in late 2006. Total operating expenses for the second quarter, including the non-cash charge for stock-based compensation, were $2,358,127 compared with $2,688,389 in 2006, a decrease of 12%.
Based on the above, for the second quarter of 2007, DiagnoCure reduced its recorded net loss for the quarter by $476,160 (29%), from $1,666,252 for the second quarter of 2006 to $1,190,092 for the second quarter of 2007. The net loss from continuing operations was $1,190,092 or $0.03 per share for the second quarter of 2007, compared with $1,605,214, or $0.05 per share, for the second quarter of 2006. These results are substantially in line with management expectations and reflect steps undertaken during the past six months to focus activities in line with the Company’s plans and on-going commitment to develop high-value tests for the detection and management of cancer. At the end of the quarter, cash, short-term investments and long-term investments stood at $39,190,161, up from $18,319,194 as at October 31, 2006. This increase of $20,870,967 is attributable to the net proceeds of $23,353,098 from the April 2007 financing. Management is satisfied that it has adequate cash resources to execute its business plan in the near-term and mid-term.
Financial data ------------------------------------------------------------------------- For the periods of Three months ended Six months ended April 30 April 30 ---------------------------------------------------- 2007 2006 2007 2006 ------------------------------------------------------------------------- Sales 179,967 333,267 316,992 667,993 ------------------------------------------------------------------------- Revenue under research and license agreement 845,585 739,107 1,688,842 1,616,703 ------------------------------------------------------------------------- Interest 207,007 190,683 403,302 383,674 ------------------------------------------------------------------------- Total revenues 1,232,559 1,263,057 2,409,136 2,668,370 ------------------------------------------------------------------------- Cost of sales 64,524 179,882 148,986 368,863 ------------------------------------------------------------------------- Gross margin 1,168,035 1,083,175 2,260,150 2,299,507 ------------------------------------------------------------------------- Operating expenses (before stock-based compensation and restructuring charges) 1,930,852 2,423,298 4,112,537 5,002,437 ------------------------------------------------------------------------- Net loss (before stock-based compensation and restructuring charges) (762,817) (1,340,123) (1,852,387) (2,702,930) ------------------------------------------------------------------------- Restructuring charges - - 912,685 - ------------------------------------------------------------------------- Stock-based compensation 427,275 265,091 882,500 548,484 ------------------------------------------------------------------------- Net loss from continuing operations (1,190,092) (1,605,214) (3,647,572) (3,251,414) ------------------------------------------------------------------------- Net loss from discontinued operations - (61,038) - (113,486) ------------------------------------------------------------------------- Net loss (1,190,092) (1,666,252) (3,647,572) (3,364,900) ------------------------------------------------------------------------- Diluted net loss per share (0.03) (0.05) (0.10) (0.10) ------------------------------------------------------------------------- Weighted average number of common shares outstanding 36,493,714 34,372,585 35,461,293 34,365,301 ------------------------------------------------------------------------- Balance Sheet (Unaudited) As of April 30 ------------------------------------------------------------------------- 2007 2006 ------------------------------------------------------------------------- Total assets before discontinued operations 45,583,883 24,541,270 ------------------------------------------------------------------------- Assets related to discontinued operations - 602,938 ------------------------------------------------------------------------- Total assets 45,583,883 25,144,208 ------------------------------------------------------------------------- Shareholders’ equity 40,422,159 22,592,089 ------------------------------------------------------------------------- Number of common shares outstanding 40,382,878 34,373,476 ------------------------------------------------------------------------- About DiagnoCure
DiagnoCure specializes in the development, production and commercialization of molecular diagnostics for the detection and management of cancer. In 2003, the Company entered into a strategic alliance with Gen-Probe for the development and commercialization of a second-generation PCA3-based diagnostic test for prostate cancer. This test is now available in the U.S. through laboratories using PCA3 analyte specific reagents (ASR), as well as in Europe as the CE-marked Gen-Probe PROGENSA(TM) PCA3 in vitro assay. In 2007, DiagnoCure acquired two tests for the staging and monitoring of colorectal cancer based on the detection of the GCC gene. The Company continues its own research and intends to acquire or in-license additional promising cancer biomarkers from both academic and commercial institutions. Additional information can be found at www.diagnocure.com.
Forward-looking statements
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.
DIAGNOCURE INC.
CONTACT: DiagnoCure Inc.: Thom Skinner, Chief Financial Officer, (418)527-6100, communications@diagnocure.com
