GeneNews Reports Second Quarter 2010 Financial Results

TORONTO, ONTARIO--(Marketwire - August 11, 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 six- months ended June 30, 2010.

Recent highlights:

 -- Executed a formal marketing partnership agreement with GeneDiagnostics Inc. to market and sell ColonSentry™, the world’s first blood-based test to determine a person’s current risk for colorectal cancer, in China. -- Presentation of positive ColonSentry™ validation data from a 210- patient Malaysian study entitled “Blood-based Seven-gene Biomarker Panel for Colorectal Cancer: Validation in Malaysia” at the 2010 National Committee for Clinical Research conference, Kuala Lumpur, Malaysia June 2 to 4. -- Granted two new U.S. patents for Schizophrenia and Osteoarthritis, representing specific practical applications of the Company’s core platform technology, the Sentinel Principle®. -- Management and Board changes including the appointment of Ms. Leslie Auld as Chief Financial Officer, the election of Ms. Gailina J. Liew, GeneNews’ President and Chief Operating Officer, to the Company’s Board of Directors and the re-election of six incumbent directors at the Company’s annual shareholder meeting. 

“Throughout the second quarter, we continued to focus on the commercialization of our lead product, ColonSentry™. Now, as we move into the second half of the year, we will continue to work with our U.S. marketing partner, Enzo Clinical Labs, and our Chinese marketing partner, GeneDiagnostics, as they prepare to launch ColonSentry in their respective territories,” said Ms. Liew. “At the same time, we will continue to pursue financing activities and discussions with additional potential ColonSentry™ marketing and strategic partners for other regions of the United States, Europe and Asia.”

Financial results:

For the three months ended June 30, 2010, the Company reported a consolidated net loss of $1,291,648, or $0.02 loss per common share, as compared to a consolidated net loss of $1,755,474, or $0.03 loss per common share for the three months ended June 30, 2009. For the six months ended June 30, 2010, the Company reported a consolidated net loss of $2,729,136, or $0.04 loss per common share, as compared to a consolidated net loss of $3,724,755, or $0.07 loss per common share, for the six months ended June 30, 2009. This year-to-date improved financial performance is primarily due to a 38% 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 June 30, 2010, the Company’s unrestricted cash and cash equivalents, cash held in trust and short-term investments amounted to $1,090,144. Subsequent to quarter-end, the Company received over $800,000 in non-dilutive cash, primarily into the Company’s Malaysian subsidiary for the development of liver cancer and hepatitis biomarkers.

As previously disclosed, the Company has 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.

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 first US marketing partner, Enzo Clinical Labs, is expected to launch the ColonSentry™ test in New York and New Jersey in the second half of 2010. For more information on GeneNews and ColonSentry™, visit 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 June 30, December 31, 2010 2009 $ $ ---------------------------------------------------------------------------- ASSETS Current Cash and cash equivalents 191,864 510,806 Cash held in trust - 2,286,200 ---------------------------------------------------------------------------- 191,864 2,797,006 ---------------------------------------------------------------------------- Restricted cash 252,134 252,054 Short-term investments 898,280 91,710 Accounts receivable 31,443 293,528 Investment tax credits recoverable 303,484 400,000 Prepaid expenses and deposits 144,726 126,505 ---------------------------------------------------------------------------- Total current assets 1,821,931 3,960,803 ---------------------------------------------------------------------------- Property, plant and equipment, net 2,413,734 2,698,450 ---------------------------------------------------------------------------- 4,235,665 6,659,253 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS’ EQUITY Current Accounts payable and accrued liabilities 809,283 1,159,141 Deferred revenue 3,750 10,200 Current portion of long-term debt 85,998 82,690 ---------------------------------------------------------------------------- Total current liabilities 899,031 1,252,031 ---------------------------------------------------------------------------- Convertible debentures 2,939,603 2,662,677 Long-term debt 93,015 136,858 ---------------------------------------------------------------------------- Total liabilities 3,931,649 4,051,566 ---------------------------------------------------------------------------- Subsequent events Commitments Shareholders’ equity Capital stock 48,752,731 48,752,731 Warrants 1,020,486 1,020,486 Contributed surplus 5,373,437 4,947,972 Deficit (54,842,638) (52,113,502) ---------------------------------------------------------------------------- Total shareholders’ equity 304,016 2,607,687 ---------------------------------------------------------------------------- 4,235,665 6,659,253 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- GeneNews Limited CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT (Unaudited) (Expressed in Canadian dollars) Three months Three months Six months Six months ended ended ended ended June 30 June 30 June 30 June 30 2010 2009 2010 2009 ---------------------------------------------------------------------------- REVENUE Milestone revenue $ - $ 96,744 $ - $ 96,744 Non-refundable license revenue 13,454 - 13,986 254,460 Sales 5,590 16,500 9,475 21,250 ---------------------------------------------------------------------------- 19,044 113,244 23,461 372,454 EXPENSES Research and development 518,446 736,197 993,436 1,600,563 Sales and marketing 31,502 50,457 87,982 270,564 General and administrative 273,143 441,623 678,999 988,757 Stock-based compensation 205,851 314,068 425,465 590,455 Amortization of property, plant and equipment 146,772 200,634 293,715 392,485 Foreign exchange (gain) loss (5,713) (4,110) (9,526) 17,870 Interest on long term debt 142,254 139,021 284,906 249,407 --------------------------------------------------------------------------- 1,312,255 1,877,890 2,754,977 4,110,101 --------------------------------------------------------------------------- Interest income 1,563 9,172 2,380 12,892 ---------------------------------------------------------------------------- Net and comprehensive loss for the period (1,291,648) (1,755,474) (2,729,136) (3,724,755) Deficit, beginning of period (53,550,990) (48,488,914) (52,113,502) (46,519,633) ---------------------------------------------------------------------------- Deficit, end of period $ (54,842,638) $ (50,244,388) $ (54,842,638) $ (50,244,388) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Net and comprehensive loss per common share Basic and fully diluted $ (0.02) $ (0.03) $ (0.04) $ (0.07) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Weighted average number of common shares outstanding Basic and fully diluted 69,027,881 55,883,437 69,027,881 55,883,437 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------