IMI announces second quarter financial results and provides operational update

Share Name	Share Symbol	Market	Type
Imi International Medical Innovations	AMEX:IME	AMEX	Ordinary Share

Imi Medical Innovations (AMEX:IME)
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- Major ColorectAlert(TM) study with U.S. National Cancer Institute - 25,000-participant PREPARE study underway in life insurance testing market - Expanded scientific validation for PREVU(x) - Positioned to receive milestone payments later this year TORONTO, Aug. 10 /PRNewswire-FirstCall/ -- Predictive medicine company IMI International Medical Innovations Inc. (TSX: IMI; Amex: IME) today announced financial results for the second quarter of fiscal 2005 ended June 30, 2005 and provided an update on operating activities. "We have realized a number of important achievements in the first half of 2005 that will contribute significantly to the long-term value of the company," said Dr. Brent Norton, President and Chief Executive Officer. "We have started the 25,000-participant PREPARE (PREVU(x) Predicts Atherosclerosis Risk and Events) clinical trial in the life insurance testing industry for PREVU(x) LT (Lab Test) Skin Sterol Test, the lab-processed format of the technology --- a study that includes LabOne and, most recently, Allstate Life Insurance Company. Interim results from PREPARE, along with data from other studies, will create near-term revenue opportunities and may lead to regulatory applications in Canada and Europe as well as milestone payments as early as later this year. We are also continuing to generate compelling skin sterol data, with four scientific publications and three presentations to date in 2005, and more expected in the second half of the year." Dr. Norton added, "Our cancer portfolio is likewise advancing, with a major study with ColorectAlert(TM) sponsored by the U.S. National Cancer Institute's Early Detection Research Network (EDRN). The EDRN study will add significant credibility to our cancer platform and raise awareness of our technology among key thought leaders. Most importantly, pending favorable data we anticipate this study will help pave the way for regulatory approval of ColorectAlert(TM). We also have a pivotal study underway for our breast cancer test, which is expected to be completed by the end of the year." PREVU(x) Commercialization Update Total revenue for the quarter amounted to $411,000, reflecting $333,000 in sales of product to McNeil Consumer Healthcare and license revenue of $78,000. McNeil has completed its first sales of PREVU(x) Point of Care (POC) Skin Sterol Test. McNeil is actively promoting PREVU(x) POC through medical conferences in major world markets, including the upcoming annual meetings for the European Society of Cardiology, Canadian Cardiovascular Society and American Heart Association. McNeil is also targeting specific health care programs and providers, with a number of training initiatives for operators underway to support planned programs in Europe, Canada and the U.S. with PREVU(x) POC. These programs are aimed primarily at clinics where cardiovascular risk assessment is conducted. Additionally, McNeil expects to work with certain national retailers in select markets to establish in-store PREVU(x) POC clinics, possibly starting in fall 2005. McNeil also continues to meet with life insurance companies to prepare for the upcoming launch of PREVU(x) LT and will be attending the upcoming Association of Home Office Underwriters conference to raise market awareness of PREVU(x) LT. Recent Operational Highlights Increased visibility of PREVU(x) with presentation of new clinical data - Data presented at the 6th Annual Conference on Arteriosclerosis, Thrombosis and Vascular Biology showed that patients with elevated skin sterol and a high Framingham global risk score have a significantly higher risk of multi-vessel disease (a narrowing or blockage in two or more coronary arteries, which provide the heart muscle with blood rich in oxygen). - Data published in the July 2005 issue of the journal Atherosclerosis showed that skin sterol is at least as predictive of the presence of coronary calcium as traditional risk factors, including serum (blood) lipid measures. Deposits of calcium in the coronary arteries indicate a narrowing or blockage. - Data presented in July at the American Association for Clinical Chemistry (AACC) Annual Meeting showed that PREVU(x) LT can effectively measure skin sterol on the palm of the hand and that results from PREVU(x) LT and PREVU(x) POC are comparable. - Data published in the August 2005 issue of Atherosclerosis showed that skin sterol is strongly associated with history of myocardial infarction (MI), or heart attack, and may indicate increased risk of coronary-related events. Expanded patent protection for PREVU(x) - A patent titled Multilayer Analytical Element, which describes a "thin film" that could lead to new film-based techniques for determining the amount of cholesterol in skin tissues, was granted in Mexico. This patent has been granted in the United States, Canada, Europe, China, Australia and Korea, and is pending in Japan and Brazil. - A patent titled Method of Determining Skin Tissue Cholesterol, which describes an alternative method of using reagents for the measurement of cholesterol on the skin surface, was allowed in Canada and Japan. This patent has been granted in the United States and is pending in Europe. Continuing to pursue re-instatement of two U.S. skin sterol patents In June 2005, IMI submitted a request to the U.S. Patent and Trademark Office (U.S. PTO) for consideration to accept unavoidably delayed payments of maintenance fees for two U.S. patents related to IMI's skin sterol technology. As disclosed in February, the U.S. PTO had asked for more information regarding the credentials and procedures of IMI's patent agents and their performance of clerical functions related to the payment of the maintenance fees. Outlook "Our outlook for the remainder of 2005 is positive," said Dr. Norton. "With the start of PREPARE, McNeil is advancing its strategy for PREVU(x): having multiple formats of the product available in multiple markets. While we cannot provide specific guidance on revenue, we expect to see sales of PREVU(x) build through the year and into 2006." Dr. Norton continued, "Another important objective for us is to accelerate our cancer franchise. With new data expected this fall from two LungAlert studies as well as the pivotal breast cancer trial, we expect to initiate discussions with possible partners as early as the fourth quarter this year." Primary objectives for 2005 include: - Initiate a clinical trial directed at expanding PREVU(x)'s regulatory claims to screening for risk of heart attack; - Develop an additional test format for PREVU(x); - Seek regulatory approval of PREVU(x) LT in Canada and Europe later this year; - Achieve milestone payments from McNeil; and - Initiate discussions with potential partners for IMI's cancer portfolio. Financial Review Total product-related sales to McNeil were $333,000 for Q2 2005 compared with $100,000 for Q2 2004. Product sales for the six months ended June 30, 2005 were $345,000 compared with $100,000 for 2004. This increase is attributable to McNeil's commercial launch of PREVU(x) POC in Q1 2005. License revenue was $78,000 compared with $27,000 for Q2 2004. For the six months ended June 30, 2005 and 2004, license revenue was $155,000 and $28,000, respectively, reflecting the upfront payments received in 2004 and 2003. License revenue consists primarily of the upfront cash payments received in accordance with the respective worldwide and Canadian licensing agreements. The net loss for Q2 2005 was $1,455,000 or $0.07 per share compared with a loss of $1,480,000 or $0.07 per share in the same period last year. For the six months ended June 30, 2005, the net loss was $2,757,000 or $0.13 per share compared with $2,562,000 or $0.12 per share for the six months ended June 30, 2004. Research and development expenditures in the quarter increased by $29,000 to $805,000 from $776,000 in Q2 2004. Total research and development expenditures for the six months ended June 30, 2005 and 2004 amounted to $1,448,000 and $1,348,000, respectively. The primary reasons for the variance for the quarter are: - A decrease of $131,000 in salaries and benefits due to the timing of incentive compensation in Q2 2004 resulting from the achievement of predetermined performance milestones; - An increase of $137,000 in professional fees related to the petition to reinstate two of IMI's U.S. skin sterol patents that had been listed as abandoned in 2004; and - An increase of $12,000 in clinical trial costs for cancer and skin sterol. General and administration expenses amounted to $758,000 for Q2 2005 compared with $766,000 in Q2 2004, a decrease of $8,000. General and administration expenses for the six months ended June 30, 2005 and 2004 amounted to $1,522,000 and $1,287,000, respectively. The primary reasons for the variance for the quarter are: - A decrease of $85,000 in salaries and benefits due to the incentive compensation payments in Q2 2004 resulting from the achievement of predetermined performance milestones; - A $132,000-increase in stock-based compensation, a non-cash expense, to $183,000 for Q2 2005 from $51,000 for Q2 2004; - An increase of $32,000 in expenses related to the annual report and annual meeting; - A decrease of $33,000 in fees related to investor relations for consulting and development of public relations materials; and - A decrease of $42,000 in office administration and travel expenses. Amortization expenses for equipment and acquired technology for Q2 2005 amounted to $54,000 compared with $63,000 for Q2 2004 as a result of the lower net book value of the acquired technology. Total amortization for the six months ended June 30, 2005 and 2004 amounted to $106,000 and $120,000, respectively. Purchases of capital assets, primarily in support of our clinical trial program and manufacturing, amounted to $116,000 during 2005 compared to $151,000 in 2004. Recoveries of provincial scientific investment tax credits (ITCs) amounted to $48,000 for Q2 2005 compared with $63,000 in Q2 2004. For the six months ended June 30, 2005 and 2004, recoveries of ITCs amounted to $98,000 and $100,000, respectively. Interest income amounted to $22,000 for Q2 2005, compared with $30,000 for Q2 2004. This decrease resulted from lower cash balances invested through most of the quarter. As at June 30, 2005, IMI had cash, cash equivalents and short-term investments totaling $2,386,000. Cash used in operating activities during Q2 2005 amounted to $1,163,000 compared with cash provided of $1,459,000 in Q2 2004. The 2004 period was affected by the $3,000,000-up-front licensing fee received in Q2 2004. To date, the Company has financed its activities through product sales, license revenues, the issuance of shares and the recovery of ITCs. Management believes that, based on historic cash expenditures and the current expectation of further revenues from partnering activities, product sales and royalties, its existing cash resources together with the ITC receivable of $299,000 will be sufficient to meet its current operating and capital requirements until at least Q2 2006. ------------------------------------------------------------------------- Conference Call and Webcast IMI will hold a conference call and webcast tomorrow, August 11, 2005, at 10 a.m. ET. To access the conference call, please dial 1-866-249-6463. A live audio webcast will be available at http://www.imimedical.com/, and will be subsequently archived for three months. To access the replay via telephone, which will be available until August 20, 2005, please dial (416) 640-1917 or (877) 289-8525 and enter the passcode 21133790 followed by the number sign. ------------------------------------------------------------------------- About IMI IMI (http://www.imimedical.com/) is a leading predictive medicine company dedicated to developing rapid, non-invasive tests for the early detection of life-threatening diseases. IMI's cardiovascular products, which are branded as PREVU(x) Skin Sterol Test, are marketed and distributed worldwide by McNeil Consumer Healthcare, Canada. The company's cancer tests include ColorectAlert(TM), LungAlert(TM) and a breast cancer test. IMI's head office is located in Toronto, and its research and product development facility is at McMaster University in Hamilton, Ontario. For information regarding PREVU(x), please go visit http://www.prevu.com/. Corporate Name Change In September 2005, IMI will change its corporate name to PreMD Inc. to better reflect the company's leading position in the predictive medicine field. The new website will be http://www.premdinc.com/. This press release contains forward-looking statements. These statements involve known and unknown risks and uncertainties, which could cause the Company's actual results to differ materially from those in the forward- looking statements. Such risks and uncertainties include, among others, the successful development or marketing of the Company's products, the competitiveness of the Company's products if successfully commercialized, the lack of operating profit and availability of funds and resources to pursue R&D projects, the successful and timely completion of clinical studies, product liability, reliance on third-party manufacturers, the ability of the Company to take advantage of business opportunities, uncertainties related to the regulatory process, the inability of the Company to change its name to PreMD Inc. in the time projected due to any reason, and general changes in economic conditions. In addition, while the Company routinely obtains patents for its products and technology, the protection offered by the Company's patents and patent applications may be challenged, invalidated or circumvented by our competitors and there can be no guarantee of our ability to obtain or maintain patent protection for our products or product candidates. Investors should consult the Company's quarterly and annual filings with the Canadian and U.S. securities commissions for additional information on risks and uncertainties relating to the forward-looking statements. Investors are cautioned not to rely on these forward-looking statements. IMI is providing this information as of the date of this press release and does not undertake any obligation to update any forward-looking statements contained in this press release as a result of new information, future events or otherwise. ------------------------------------------------------------------------- IMI International Medical Innovations Inc. Incorporated under the laws of Canada ------------------------------------------------------------------------- Consolidated Balance Sheets (in Canadian Dollars) As at June 30, 2005 and December 31, 2004 (Unaudited) June 30 December 31 2005 2004 ------------------------------------------------------------------------- ASSETS Current Cash and cash equivalents $ 75,161 $ 239,458 Short-term investments 2,311,328 4,956,945 Accounts receivable 41,704 222,348 Inventory 63,969 267,500 Prepaid expenses and other receivables 164,861 137,015 Investment tax credits receivable 299,000 389,000 ------------------------------------------------------------------------- Total current assets 2,956,023 6,212,266 ------------------------------------------------------------------------- Capital assets, net of accumulated amortization of $650,879 (2004 - $581,155) 467,006 420,955 Acquired technology, net of accumulated amortization of $820,685 (2004 -$784,399) 326,572 362,858 ------------------------------------------------------------------------- $ 3,749,601 $ 6,996,079 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable $ 330,857 $ 1,021,086 Accrued liabilities 352,221 566,951 Current portion of deferred revenue 306,900 306,900 ------------------------------------------------------------------------- Total current liabilities 989,978 1,894,937 ------------------------------------------------------------------------- Deferred revenue 2,450,850 2,604,300 ------------------------------------------------------------------------- Total liabilities 3,440,828 4,499,237 ------------------------------------------------------------------------- Shareholders' equity Capital stock 24,412,846 24,192,321 Contributed surplus 1,676,532 1,328,187 Warrants 200,000 200,000 Deficit (25,980,605) (23,223,666) ------------------------------------------------------------------------- Total shareholders' equity 308,773 2,496,842 ------------------------------------------------------------------------- $ 3,749,601 $ 6,996,079 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- IMI International Medical Innovations Inc. ------------------------------------------------------------------------- Consolidated Statements of Loss and Deficit (Unaudited) Three months ended Six months ended June 30 June 30 --------------------------- --------------------------- 2005 2004 2005 2004 ------------------------------------------------------------------------- REVENUE Product Sales $ 332,701 $ 100,000 $ 345,060 $ 100,000 License revenue 78,081 26,725 154,806 28,450 ------------------------------------------------------------------------- 410,782 126,725 499,866 128,450 Cost of product sales 319,322 93,464 330,551 93,464 ------------------------------------------------------------------------- Gross Profit 91,460 33,261 169,315 34,986 ------------------------------------------------------------------------- EXPENSES Research and development 805,088 776,392 1,447,574 1,347,502 General and administration 758,000 766,149 1,521,865 1,286,703 Amortization 53,705 63,023 106,011 120,291 ------------------------------------------------------------------------- 1,616,793 1,605,564 3,075,450 2,754,496 ------------------------------------------------------------------------- RECOVERIES AND OTHER INCOME Investment tax credits 47,923 63,000 97,923 100,000 Interest 22,383 29,637 51,273 57,144 ------------------------------------------------------------------------- 70,306 92,637 149,196 157,144 ------------------------------------------------------------------------- Net loss for the period (1,455,027) (1,479,666) (2,756,939) (2,562,366) Deficit, beginning of period $(24,525,578) $(18,737,467) $(23,223,666) $(17,654,767) Deficit, end of period $(25,980,605) $(20,217,133) $(25,980,605) $(20,217,133) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic and diluted loss per share $ (0.07) $ (0.07) $ (0.13) $ (0.12) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average number of common shares outstanding 21,529,262 21,264,052 21,434,065 21,263,515 ------------------------------------------------------------------------- ------------------------------------------------------------------------- IMI International Medical Innovations Inc. ------------------------------------------------------------------------- Consolidated Statements of Cash Flows (Unaudited) Three months ended Six months ended June 30 June 30 --------------------------- --------------------------- 2005 2004 2005 2004 ------------------------------------------------------------------------- OPERATING ACTIVITIES Net loss for the period $ (1,455,027) $ (1,479,666) $ (2,756,939) $ (2,562,366) Add items not involving cash Amortization 53,705 69,623 106,011 126,891 Stock compensation costs included in: Research and development expense 58,122 55,887 88,443 76,069 General and administrative expense 183,477 50,963 282,027 85,144 Net change in non-cash working capital balances related to operations 73,591 (211,559) (458,630) (72,815) Increase (decrease) in deferred revenue (76,725) 2,973,275 (153,450) 2,971,550 ------------------------------------------------------------------------- Cash provided by (used in) operating activities (1,162,857) 1,458,523 (2,892,538) 624,473 ------------------------------------------------------------------------- INVESTING ACTIVITIES Short term investments 1,009,887 623,950 2,645,617 1,698,366 Purchase of capital assets (80,511) (77,653) (115,776) (150,657) ------------------------------------------------------------------------- Cash provided by investing activities 929,376 546,297 2,529,841 1,547,709 ------------------------------------------------------------------------- FINANCING ACTIVITIES Issuance of capital stock, net - 12,500 198,400 23,368 ------------------------------------------------------------------------- Cash provided by financing activities - 12,500 198,400 23,368 ------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents during the period (233,481) 2,017,320 (164,297) 2,195,550 Cash and cash equivalents - Beginning of period 308,642 239,855 239,458 61,625 ------------------------------------------------------------------------- - End of period $ 75,161 $ 2,257,175 75,161 $ 2,257,175 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Represented by Cash $ 75,161 $ 891,391 $ 75,161 $ 891,391 Cash equivalents - 1,365,784 - $ 1,365,784 ------------------------------------------------------------------------- $ 75,161 $ 2,257,175 $ 75,161 $ 2,257,175 ------------------------------------------------------------------------- ------------------------------------------------------------------------- DATASOURCE: IMI International Medical Innovations Inc. CONTACT: Company Contact: Sarah Borg-Olivier, Director, Communications, Ron Hosking, Chief Financial Officer, T: (416) 222-3449, , ; U.S. Investor Contact: John Nesbett, Sally Martin, The Investor Relations Group, T: (212) 825-3210, ,

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