GeneNews Reports First Quarter 2010 Financial Results

TORONTO, CANADA--(Marketwire - May 04, 2010) - GeneNews Limited (TSX: GEN), an emerging molecular diagnostics company focused on the application of functional genomics to enable early diagnosis and personalized health management, today reported operational and financial results for the three months ended March 31, 2010.

Recent highlights:

 -- Publication of positive validation data in the International Journal of Cancer for the Company’s lead product, ColonSentry™, a novel blood- based molecular test that assesses an individual’s current risk for colorectal cancer to encourage greater adherence to screening guidelines. -- Granted a second U.S. patent covering the application of the Company’s core platform technology, the Sentinel Principle®, in any health management context, including diagnosis, staging of disease, drug testing, monitoring response to treatment and biomarker screening. -- Retained Dundee Securities Corporation, a Canadian-based investment dealer, and Reedland Capital Partners, an institutional division of Financial West Investment Group, Inc., a US-based, SEC-registered broker-dealer, to assist in expanding the Company’s shareholder base and accessing additional working capital to support the pursuit of its milestones in 2010. 

“Our primary goal for 2010 is to drive the commercialization and clinical adoption of the ColonSentry™ test as a cost-effective and patient-friendly first step to facilitate greater adherence to colorectal cancer screening guidelines. Throughout the first quarter, we have been working with our U.S. marketing partner, Enzo Clinical Labs, as they prepare to launch ColonSentry in New York and New Jersey in the second half of 2010,” said Gailina J. Liew, President and Chief Operating Officer of GeneNews. “We are also engaged in discussions with potential ColonSentry marketing partners for other regions of the United States, Europe and Asia as we prepare for the launch of ColonSentry in these jurisdictions.”

Financial results for the three months ended March 31, 2010:

For the three months ended March 31, 2010, the Company reported a consolidated net loss of $1,437,488, or $0.02 loss per common share, as compared to a consolidated net loss of $1,969,281, or $0.04 loss per common share for the three months ended March 31, 2009. This improved financial performance is primarily due to a 45% 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 March 31, 2010, the Company’s unrestricted cash and cash equivalents, cash held in trust and short-term investments amounted to $2,064,357 as compared with $2,888,716 as at December 31, 2009.

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 been granted two U.S. patents for its 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 assess an individual’s risk for colorectal cancer, in Canada in 2008. The Company expects ColonSentry™ to be introduced to the New York and New Jersey markets, via GeneNews’ exclusive partnership for these U.S. states with Enzo Clinical Labs, in the second half of 2010. For more information on GeneNews and ColonSentry™, visit www.genenews.com and 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 March 31 December 31 2010 2009 $ $ ---------------------------------------------------------------------------- ASSETS Current Cash and cash equivalents 770,847 510,806 Cash held in trust - 2,286,200 ---------------------------------------------------------------------------- 770,847 2,797,006 ---------------------------------------------------------------------------- Restricted cash 252,134 252,054 Short-term investments 1,293,510 91,710 Accounts receivable 43,996 293,528 Investment tax credits recoverable 400,000 400,000 Prepaid expenses and deposits 108,889 126,505 ---------------------------------------------------------------------------- Total current assets 2,869,376 3,960,803 ---------------------------------------------------------------------------- Property, plant and equipment, net 2,560,506 2,698,450 ---------------------------------------------------------------------------- 5,429,882 6,959,253 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS’ EQUITY Current Accounts payable and accrued liabilities 1,031,502 1,159,141 Deferred revenue 7,950 10,200 Current portion of long-term debt 84,328 82,690 ---------------------------------------------------------------------------- Total current liabilities 1,123,780 1,252,031 ---------------------------------------------------------------------------- Convertible debentures 2,801,140 2,662,677 Long-term debt 115,150 136,858 ---------------------------------------------------------------------------- Total liabilities 4,040,070 4,051,566 ---------------------------------------------------------------------------- Commitments Shareholders’ equity Capital stock 48,752,731 48,752,731 Warrants 1,020,486 1,020,486 Contributed surplus 5,167,585 4,947,972 Deficit (53,550,990) (52,113,502) ---------------------------------------------------------------------------- Total shareholders’ equity 1,389,812 2,607,687 ---------------------------------------------------------------------------- 5,429,882 6,959,253 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- 

GeneNews Limited

 CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT (Unaudited) (Expressed in Canadian dollars) Three month period ended March 31 2010 2009 $ $ ---------------------------------------------------------------------------- REVENUE Non-refundable license revenue 532 254,460 Sales 3,885 4,750 ---------------------------------------------------------------------------- 4,417 259,210 EXPENSES Research and development 474,990 864,365 Sales and marketing 56,480 119,059 General and administrative 405,858 648,182 Stock-based compensation 219,613 276,387 Amortization of property, plant and equipment 146,944 191,851 Foreign exchange (gain) loss (3,814) 21,980 Interest on long-term debt 142,651 110,387 ---------------------------------------------------------------------------- 1,442,722 2,232,211 ---------------------------------------------------------------------------- Interest income 817 3,720 ---------------------------------------------------------------------------- Net loss and comprehensive loss for the period (1,437,488) (1,969,281) Deficit, beginning of period (52,113,502) (46,519,633) ---------------------------------------------------------------------------- Deficit, end of period (53,550,990) (48,488,914) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Net loss and comprehensive loss per common share Basic and fully diluted $(0.02) $(0.04) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Weighted average number of common shares outstanding Basic and fully diluted 69,027,881 55,883,437 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------