TORONTO, Nov. 13, 2015 (GLOBE NEWSWIRE) -- GeneNews Limited (TSX:GEN) ("GeneNews" or the "Company") today provided an update and reported operational and financial results for the three-month and nine-month periods ended September 30, 2015, for GeneNews and provided an update on the operations of its Innovative Diagnostics Laboratory, LLP ("IDL") joint-venture. All dollar amounts are expressed in US dollars unless otherwise indicated and results are reported in accordance with International Financial Reporting Standards.
For the nine months ended September 30, 2015, GeneNews' total revenues were approximately $0.3 million as compared to $1.6 million in the same period in 2014. The net loss for nine months in 2015 was approximately $4.5 million, or $0.09 loss per common share, as compared to a net loss of approximately $4.9 million, or $0.12 loss per common share, for the same period in 2014.
As previously discussed, in May 2015, GeneNews (through a wholly owned subsidiary) and Cobalt Healthcare Consultants, Inc. ("Cobalt") acquired HDL's thirty-three and one third percent (33 1/3%) ownership stake in IDL. Combined with their prior investments in IDL, GeneNews and Cobalt currently each own a 50% equity interest in the joint-venture.
Revenues earned by IDL for the three-month period ended September 30, 2015 were approximately $1.3 million with costs incurred of approximately $2.9 million, resulting in a loss of approximately $1.6 million. Revenues earned by IDL for the nine-month period ended September 30, 2015 were approximately $6.4 million with costs incurred of approximately $13.2 million, resulting in a loss of approximately $6.8 million. As GeneNews has joint control of IDL with Cobalt, the Company accounts for its interest in IDL using the equity method. As a result, GeneNews reflected its share of the total revenues less total expenses in its consolidated statements of loss and comprehensive loss, which was $2.3 million for the nine-month period ended September 30, 2015.
In August 2015, GeneNews laid out a five-point action plan designed to reinvigorate IDL's business. This consisted of completing the transition of IDL billings to a new third-party billing provider, bringing the Cobalt contract sales force in-house at IDL, adding marketing and sales support, building out an inside-sales effort, establishing additional contractual relationships with hospital and large practice groups, and continuing to expand IDL's menu of advanced cancer assays.
"In order to support this strategy, we set out to raise approximately C$3 million in a non-brokered private placement," said GeneNews' Executive Chairman, James Howard-Tripp. "Unfortunately, that capital raise fell short of its funding target."
"A requirement of any substantial financing that we investigated involved buying out our partner in IDL, Cobalt, resulting in GeneNews having full control of IDL," continued Mr. Howard-Tripp. "We have been unable to reach a satisfactory agreement in buying out Cobalt. GeneNews has therefore terminated the license agreement for ColonSentry® with IDL and is exploring a number of scenarios through which it may be able to continue making its flagship test available across the United States."
Without adequate time or financial resources to fully execute its turn-around plan, test volumes and revenues at IDL have continued to decline. As a result of its business performance, IDL has increasingly had to rely on financial support from its joint-venture partners and IDL has been unable to pay its obligations, including to its joint-venture partners, as they came due. This has resulted in GeneNews having very limited cash resources, of approximately $450,000, and a working capital deficit at September 30, 2015.
A major shareholder, who is also a director of GeneNews, has agreed to provide the Company with interim working capital financing, subject to TSX approval. Given its current financial situation, and in an effort to maximize shareholder value, GeneNews anticipates that these funds will be used for an orderly restructuring of the Company's operations, which may include a sale, merger, strategic financing or other business combination. No decision has been made with regard to these alternatives, and there is no assurance that any transaction will be entered into or consummated.
"While joint-venture dynamics and external events have combined to produce a very different business result for IDL than we had hoped, we have been successful in bringing three major cancer diagnostics to market," said Mr. Howard-Tripp. "We are committed to unlocking as much value from that as possible for our shareholders and will provide updates as developments materialize."
The Company's financial statements and management's discussion and analysis are available on www.sedar.com.
About GeneNews
GeneNews is 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. The Company's lead 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 can be found at www.GeneNews.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 restructuring of its business. These forward-looking statements involve risks and uncertainties and material assumptions - including those related to general business and economic conditions as well as our ability to complete an orderly restructuring of the Company's operations which may include a sale, merger, strategic financing or other business combination - 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.