TORONTO, Nov. 14, 2013 (GLOBE NEWSWIRE) -- GeneNews Limited (TSX:GEN) ("GeneNews" or the "Company") today reported operational and financial results for the three-month period ended September 30, 2013, announced the appointment of Floyd C. Dent to its Board of Directors, and provided a progress update on the start-up of its recently formed joint venture, Innovative Diagnostic Laboratory LLP ("IDL").
Q3-2013 Financial Results
The Company's net loss for the three months ended September 30, 2013, was approximately $3.4 million, or $0.10 loss per common share. This included approximately $1.4 million, or $0.04 per share, in charges related to the Company's previously announced strategic restructuring and approximately $310,000, or $0.01 per share, in costs associated with its share of the initial set-up costs for IDL. In last year's third quarter, net loss was approximately $1.4 million, or $0.07 loss per share.
For the three months ended September 30, 2013, total revenues were approximately $37,000, a decrease from approximately $158,000 for the same period in 2012. Revenues in 2013 have been negatively impacted by the sales performance of Enzo Clinical Labs Inc., GeneNews' regional marketing partner in New York and New Jersey. Enzo has reportedly found it difficult in the current reimbursement environment to meet its contracted targets. As a result, the commercial relationship has been placed on hold at least until such time as GeneNews is confident that they will be able to satisfy the terms of their marketing partnership agreement.
"Results from the initial promotion of ColonSentry® were positive," commented GeneNews' Executive Chairman, James R. Howard-Tripp. "Physician and patient acceptance of the test was good, uptake was quick and usage was building nicely. These factors combine to heighten our confidence that, once the current reimbursement issues are properly addressed, ColonSentry® will be well positioned to reach its full potential throughout all of the United States."
"While the restructuring is expected to reduce the Company's overall cost structure by close to 50% on a go-forward basis, its positive impact was not fully reflected in this quarter's financial results due to the timing of staff reductions and other activities," said Mr. Howard-Tripp.
As of September 30, 2013, the Company's cash and short-term investments amounted to approximately $5.1 million.
Private placements undertaken by the Company since December 31, 2008 have included the issuance of 5-year term convertible debentures of the Company (the "Convertible Debentures"), accruing simple interest at 15%. Currently, the Company has approximately $3.1 million in aggregate principal outstanding. As previously announced on November 13, 2013, in an effort to reduce indebtedness under the outstanding Convertible Debentures and, thereby, improve its working capital position, GeneNews has offered a one-time conversion opportunity for debenture holders. Management believes that the improved working capital position of the Company that would result from a reduction of the Company's indebtedness under the Convertible Debentures would enhance the financial prospects of the Company and allow GeneNews to more readily expand its activities with respect to the commercialization of its products in the United States.
The Company's financial statements, management's discussion and analysis and rights offering circular are available on www.sedar.com.
Appointment of Floyd C. Dent as a Director
Mr. Dent has an accomplished history of strategic sales and marketing management success within the advanced therapeutics and diagnostics areas. A graduate of the United States Naval Academy, Mr. Dent began his business career with Pfizer Inc. after retiring from active service in the U.S. Navy in 1997. He moved to Aventis in 2001 and worked with the company until it was acquired by Sanofi-Synthelabo in 2004. From Sanofi-Aventis, Mr. Dent joined Berkeley HeartLab, a provider of cardiovascular disease management tools with a focus on the secondary prevention market. Currently, Mr. Dent is a founding partner of a privately-held sales and marketing company in the United States.
"We are delighted to have a healthcare executive of his caliber join the Company's Board," stated Mr. Howard-Tripp. "His sales and marketing experience, particularly in the diagnostics space, will be a tremendous asset to GeneNews as we roll-out ColonSentry® and other tests via IDL."
IDL Progress Update
GeneNews is fully committed to helping IDL become a leader in molecular diagnostics and personalized medicine. Serving as a powerful platform for an expanded launch of the ColonSentry® test, IDL is also expected to serve as a strong commercialization outlet for other advanced cancer tests. Taking a "multi-view" approach to the diagnosis and treatment of cancer, IDL intends to assemble, through a combination of internal pipeline development, third-party licenses and potential acquisitions, a robust menu of advanced cancer assays to be offered by it throughout the United States.
Mr. Howard-Tripp said, "I am pleased to report that start-up operations at IDL's Richmond, Virginia lab facility, which were initiated in the third quarter, have gone smoothly."
"Soon after successfully obtaining CLIA certification, ColonSentry® was rolled out on a limited basis to select states to help establish full operation of the lab, initiate the reimbursement process and ensure everything is satisfactory before scale-up to a full launch, planned for Q1-2014," continued Mr. Howard-Tripp. "Like our early experience in New York and New Jersey, interest by doctors and patients in ColonSentry® has been high, with good initial uptake of the test. Importantly, while still very early in the process, our initial reimbursement experience has also been positive."
Mr. Howard-Tripp concluded, "The IDL model is designed to help stratify commercial risk by ensuring that multiple tests with differing reimbursement approaches provide a more predictable revenue stream. To that end, we expect to add two additional tests to the IDL offering before the end of 2013, with more to follow in the first half of next year. We look forward to updating our stakeholders as we progress."
About GeneNews
GeneNews is a company focused on developing and commercializing proprietary molecular diagnostic tests for the early detection of diseases and personalized health management, with a primary focus on cancer-related indications. GeneNews' first product, ColonSentry®, is the world's first blood test to assess an individual's current risk for colorectal cancer. GeneNews' common shares trade on the Toronto Stock Exchange under the symbol 'GEN'. More information on GeneNews and ColonSentry®, can be found at www.GeneNews.com or www.ColonSentry.com.
Forward-Looking Statements
This press release contains forward-looking statements identified by words such as "expects", "will" and similar expressions, which reflect the Company's current expectations regarding future events, including the launch of ColonSentry® test into regions of the U.S. beyond New York and New Jersey, the assembling of a robust menu of other advanced cancer tests to be offered by IDL, the conversion of the Company's convertible debentures and the ability of the strategic restructuring to sharpen the focus on commercialization and to improve the overall cost structure of the Company. The forward-looking statements involve risks and uncertainties including market reaction to the launch of the ColonSentry® test into new regions and the strategic restructuring changes, that could cause the Company's actual events to 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, except as required by law.