IMI announces third quarter results

IMI announces third quarter results 


TORONTO, Nov. 11  /PRNewswire-FirstCall/ -- IMI International Medical
Innovations Inc. (TSX:IMI; Amex: IME), a leader in predictive medicine, today
announced financial results for the third quarter of fiscal 2004 ended
September 30, 2004 (Q3 2004).

"IMI is making solid progress on all of our business plan objectives," said Dr.
Brent Norton, President and Chief Executive Officer. "We are continuing to
publish and present key findings, most recently at the Canadian Cardiovascular
Congress, which strengthens the scientific credibility of our products while
raising our profile with the medical community. Additionally, a new paper on
our skin sterol technology has just been accepted by the Journal of Clinical
Chemistry for publication in January 2005."

Dr. Norton continued, "During the quarter we worked closely with McNeil to
brand our cardiovascular products as PREVU(x) Skin Sterol Test, a complex
process that ranged from software enhancements to extended dating on the test
kits. Moreover, we shipped additional product to McNeil subsequent to quarter
end."

"IMI is building a world class portfolio of predictive medicine technologies,"
Dr. Norton said. "Our recent bid to acquire IBEX Technologies Inc. reflects our
growth focus and will help position IMI to be a significant force in the North
American biotech industry and globally, with products that address urgent
health needs. We believe our offer, which enables IBEX shareholders to unlock
the full value of their company's assets, will result in an even stronger, more
dynamic predictive medicine company and increased shareholder value."

  Recent Highlights
  -----------------

  Publications and Presentations


New findings presented at the Canadian Cardiovascular Congress on October 25,
2004 confirmed that skin sterol provides new information about heart disease
risk in patients on statin drug therapy independent of traditional risk
factors. Additionally, this trial provided important new data about skin sterol
levels, which were higher in patients with a history of stroke, angina and
diabetes. Conversely, blood markers did not positively correlate with prior
stroke, angina or diabetes.

During the quarter positive study results for IMI's breast cancer test were
published in the prestigious journal Cancer. The data showed that IMI's test
demonstrated a statistically significant difference between early-stage breast
cancer and non-cancerous samples, which demonstrates the test's effectiveness
in identifying early-stage disease.

PREVU(x) Skin Sterol Test

McNeil Consumer Healthcare continues its commercialization process, forming
plans for the international build-out of PREVU(x) as well as ongoing marketing
and sales initiatives this fall and through 2005. McNeil has exhibited at
several major medical conferences, including the Canadian Cardiovascular
Congress and the American Heart Association annual conference as the planned
rollout of the product begins to the professional medical community. McNeil's
educational newsletter, titled Prediction and Prevention: New Perspectives in
Cardiovascular Disease Risk, has recently been made available on IMI's website.

Patents

In August 2004, IMI learned that two of its U.S. skin sterol patents had been
listed as abandoned by the United States Patent and Trademark Office (PTO) for
failure to pay maintenance fees. The failure to pay these fees appears to have
occurred while management of the files was being transferred between two
separate patent agents. IMI and its agents have filed a petition with the PTO
for reinstatement of the patents, which is a process that could take several
months.

Investor Relations Activities

IMI is continuing to broaden its relationships with the professional investment
community in Canada as well as the United States, where the company has engaged
The Investor Relations Group (IRG). IRG is increasing investor awareness of IMI
by individually and personally introducing IMI and its management to
pre-qualified fund managers and analysts. IRG is also working to increase
public awareness of IMI through media placement in television, radio, magazine,
newspaper and trade media outlets.

  Financial Review
  ----------------



For the three months ended September 30, 2004 (Q3 2004), IMI reported a net
loss of $1,203,000 or $0.06 per share compared with a loss of $992,174 or $0.05
per share for the quarter ended September 30, 2003 (Q3 2003). For the nine
months ended September 30, 2004, IMI reported a net loss of $3,765,000 or $0.18
per share, compared with $2,636,000 or $0.13 per share for the nine months
ended September 30, 2003.

In Q2 2004, IMI made its first sales of product to its marketing partner,
McNeil Consumer Healthcare. IMI reported no product sales of its skin sterol
tests during Q3 2004, however additional product was shipped to McNeil
subsequent to quarter end.

As reported in Q2 2004, IMI completed a worldwide licensing agreement with
McNeil to sell the company's cardiovascular products, which have been branded
as PREVU(x) Skin Sterol Test. The upfront cash payments from both the original
Canadian agreement and the worldwide agreement have been deferred and are being
recognized into income on a straight-line basis over the relative terms of the
agreements. Therefore, $76,725 has been reported as license revenue for Q3 2004
compared with $1,725 in Q3 2003.

At September 30, 2004 IMI had cash, cash equivalents and short-term investments
totaling $6,116,000 ($6,697,000 as at December 31, 2003). Management believes
that, based on historic burn rates and the current expectation of revenues from
partnering activities and product sales, the company's cash resources, together
with investment tax credits receivable, are sufficient to meet current
operating and capital requirements through at least 2005.

Research and development expenditures for the quarter increased by $68,000 to
$525,000 from $457,000 in Q3 2003.

  The variance for the quarter reflects:
    -  A $33,000 increase in spending on clinical trials for skin sterol
       and cancer to $107,000 from $74,000 during fiscal 2003. This
       increase is related to a lung cancer trial that commenced in the
       latter part of 2003. IMI currently has 17 clinical trials ongoing.
    -  Increased filing fees on intellectual property, which amounted to
       $74,000 compared with $17,000 in fiscal 2003. During the quarter IMI
       filed new patents on skin sterol in numerous European countries.
    -  Subcontract research increased by $11,000 as IMI continued to
       develop new prototypes of the skin sterol technology.
    -  Stock-based compensation, which was prospectively adopted in 2003,
       resulted in non-cash expenses for research of $23,000 in Q3 2004
       compared with $22,000 for Q3 2003.



Other development costs remained at fairly constant levels during the period.
Total research expenditures for the nine months ended September 30, 2004 and
2003 amounted to $1,872,000 and $1,154,000, respectively.

General and administration expenses for the quarter increased by $267,000 to
$791,000 from $524,000 in Q3 2003.

  The variance for the quarter reflects:

    -  Stock-based compensation for options granted for administration
       resulted in a non-cash expense of $286,000 for the quarter compared
       with $3,000 for Q3 2003. This increase was primarily for options
       granted in Q3 that vest over 12 months pursuant to a consulting
       contract. It also reflects the cashless exercise of options that
       were granted prior to the January 1, 2003 adoption of the policy for
       expensing the fair value of options.
    -  A $21,000 increase in professional fees, primarily due to legal fees
       related to finalizing the global licensing agreement.
    -  A $21,000 increase in insurance over Q3 2003. This primarily
       reflects IMI's decision to increase its liability insurance coverage
       following the September 2003 U.S. listing on the American Stock
       Exchange. However, Q3 2004 U.S. listing costs were nil compared with
       $61,000 in Q3 2003.
    -  Annual report, annual meeting and investor relations expenses were
       higher by $40,000 as a result of additional expenses to improve
       shareholder communications.
    -  Directors' fees were lower by $17,000 during the quarter compared
       with Q3 2003 but were comparable for the nine-month periods. The
       difference is due to the timing of the meetings in 2003.



Total general and administration expenses for the nine months ended September
30, 2004 and 2003 amounted to $2,078,000 and $1,637,000, respectively.

Amortization expenses for equipment and acquired technology for the three
months and nine months ended September 30, 2004 amounted to $51,000 and
$177,000, respectively. (The nine-month amount comprises $6,000 that was
included as an overhead allocation in cost of sales.) This is a decrease of
$68,000 and $35,000, respectively, over the corresponding periods in 2003. In
Q3 2003, there was a large purchase of equipment that resulted in the
extraordinary amortization charge for that quarter. Purchases of equipment to
support clinical trials and manufacturing amounted to $16,000 and $167,000 for
the three and nine months ended September 30, 2004, respectively.

Interest income amounted to $32,000 for the quarter, compared with $48,000 for
Q3 2003, reflecting lower interest rates on invested cash and lower cash
balances through most of the quarter.

  Conference Call and Webcast
  ---------------------------



IMI will hold a conference call and webcast to discuss third quarter results on
Friday, November 12, 2004 at 10 a.m. ET. To listen to the call, please dial
416-640-4127 or 1-800-814-4853, or visit http://www.imimedical.com/. A
rebroadcast of the call will be available until November 19, 2004. Please dial
416-640-1917 or 1-877-289-8525 and enter the passcode 21101081 followed by the
number sign.

  About IMI
  ---------


IMI is a world leader in predictive medicine, 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, will
be marketed and distributed worldwide by McNeil Consumer Healthcare. 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 further information, please visit http://www.imimedical.com/.

This press release contains forward-looking statements. These statements
involve known and unknown risks and uncertainties, which could cause IMI's
actual results to differ materially from those in the forward-looking
statements. Such risks and uncertainties include, among others, the lack of
operating profit and availability of funds and resources to pursue R&D
projects, the successful and timely completion of clinical studies, the
successful development or marketing of IMI's products, reliance on third-party
manufacturers, the competitiveness of IMI's products if successfully
commercialized, the ability of IMI to take advantage of business opportunities,
uncertainties related to the regulatory process, and general changes in
economic conditions. In addition, while IMI 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.

The following factors related to the business combination of IMI and IBEX could
cause actual results to differ materially from the forward-looking statements:
lack of Shareholder support for the Offer; the timing of the closing of the
transaction, if approved by Shareholders; dilution; the businesses of IMI and
IBEX may suffer due to uncertainty prior to completion of the transaction; the
business of IMI and IBEX may not be integrated successfully or such integration
may be more difficult, time-consuming or costly than expected; changes in
management and organizational structure; and the expected combination benefits
from the IMI/IBEX transaction may not be fully realized nor realized within the
expected time frame.

Investors should consult IMI'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.

Financial statements are attached to this release.  The company's complete
third quarter report is available on IMI's website.

  -------------------------------------------------------------------------
  IMI International Medical Innovations Inc.

  Incorporated under the laws of Canada
  -------------------------------------------------------------------------

  Consolidated Balance Sheets
  (in Canadian Dollars)
  (Unaudited)
  As at September 30, 2004 and December 31, 2003

                                                September 30   December 31
                                                    2004          2003
  -------------------------------------------------------------------------
  ASSETS
  Current
  Cash and cash equivalents                     $  1,169,612  $     61,625
  Short-term investments                           4,946,356     6,635,135
  Prepaid expenses and other receivables             186,873       340,489
  Investment tax credits receivable                  335,000       180,000
  -------------------------------------------------------------------------
  Total current assets                             6,637,841     7,217,249
  -------------------------------------------------------------------------
  Capital assets, net of accumulated
   amortization of $557,781 (2003 - $448,182)        460,158       403,205
  Acquired technology, net of accumulated
   amortization of $761,719 (2003 - $693,684)        385,538       453,573
  -------------------------------------------------------------------------
                                                $  7,483,537  $  8,074,027
  -------------------------------------------------------------------------
  -------------------------------------------------------------------------
  LIABILITIES AND SHAREHOLDERS' EQUITY
  Current
  Accounts payable                              $     73,340  $    139,435
  Accrued liabilities                                253,270       403,213
  -------------------------------------------------------------------------
  Total current liabilities                          326,610       542,648
  -------------------------------------------------------------------------
  Deferred revenue                                 2,987,925        93,100
  -------------------------------------------------------------------------
  Total liabilities                                3,314,535       635,748
  -------------------------------------------------------------------------
  Shareholders' equity
  Capital stock                                   25,384,843    24,780,846
  Warrants                                           204,200       312,200
  Deficit                                        (21,420,041)  (17,654,767)
  -------------------------------------------------------------------------
  Total shareholders' equity                       4,169,002     7,438,279
  -------------------------------------------------------------------------
                                                $  7,483,537  $  8,074,027
  -------------------------------------------------------------------------
  -------------------------------------------------------------------------



  -------------------------------------------------------------------------
  IMI International Medical Innovations Inc.
  -------------------------------------------------------------------------
  Consolidated Statements of Loss and Deficit
  (Unaudited)

                         Three months ended          Nine months ended
                            September 30               September 30
                         2004          2003          2004         2003
  -------------------------------------------------------------------------
  REVENUE
  Product sales     $          -  $          -  $    100,000  $          -
  License revenue         76,725         1,725       105,175         5,175
  -------------------------------------------------------------------------
                          76,725         1,725       205,175         5,175
  Cost of sales                -             -        93,464             -
  -------------------------------------------------------------------------

  Gross profit            76,725         1,725       111,711         5,175
  -------------------------------------------------------------------------
  EXPENSES
  Research and
   development           524,634       456,633     1,872,136     1,154,112
  General and
   administration        790,805       524,109     2,077,508     1,636,957
  Amortization            50,743       118,174       171,034       205,575
  -------------------------------------------------------------------------
                       1,366,182     1,098,916     4,120,678     2,996,644
  -------------------------------------------------------------------------
  RECOVERIES AND
   OTHER INCOME
  Investment tax
   credits                55,000        56,634       155,000       172,217
  Interest                31,549        48,383        88,693       183,342
  -------------------------------------------------------------------------
                          86,549       105,017       243,693       355,559
  -------------------------------------------------------------------------
  Net loss for
   the period         (1,202,908)     (992,174)   (3,765,274)   (2,635,910)

  Deficit,
   beginning
   of period         (20,217,133)  (15,235,792)  (17,654,767)  (13,592,056)
  -------------------------------------------------------------------------
  Deficit, end of
   period           $(21,420,041) $(16,227,966) $(21,420,041) $(16,227,966)
  -------------------------------------------------------------------------
  -------------------------------------------------------------------------
  Basic and
   diluted loss
   per share        $      (0.06) $      (0.05) $      (0.18) $      (0.13)
  -------------------------------------------------------------------------
  -------------------------------------------------------------------------
  Weighted average
   number of
   common
   shares
   outstanding        21,270,199    20,924,582    21,265,760    20,884,113
  -------------------------------------------------------------------------



  -------------------------------------------------------------------------
  IMI International Medical Innovations Inc.
  -------------------------------------------------------------------------
  Consolidated Statements of Cash Flows
  (Unaudited)

                        Three months ended          Nine months ended
                           September 30                September 30
                        2004          2003          2004          2003
  -------------------------------------------------------------------------
  OPERATING
   ACTIVITIES
  Net loss for
   the period       $ (1,202,908) $   (992,174) $ (3,765,274) $ (2,635,910)
  Add items not
   involving cash
    Amortization          50,743       118,174       177,634       205,575
    Stock
     compensation
     costs included
     in:
      Research and
       development
       expense            23,391        21,507        99,460        25,673
      General and
       administrative
       expense           293,425         3,424       378,569        24,694
    Loss on sale
     of capital
     asset                     -             -             -         5,230
  -------------------------------------------------------------------------
                        (835,349)     (849,069)   (3,109,611)   (2,374,738)
  Net change in
   non-cash working
   capital balances
   related to
   operations           (150,007)       93,403      (222,822)          876
  Increase (decrease)
   in deferred
   revenue               (76,725)       (1,725)    2,894,825        (5,175)
  -------------------------------------------------------------------------
  Cash used in
   operating
   activities         (1,062,081)     (757,391)     (437,608)   (2,379,037)
  -------------------------------------------------------------------------
  INVESTING
   ACTIVITIES
  Short term
   investments            (9,587)      704,168     1,688,779     2,156,933
  Purchase of
   capital assets        (15,895)     (102,412)     (166,552)     (133,844)
  -------------------------------------------------------------------------
  Cash provided by
   (used in)
   investing
   activities            (25,482)      601,756     1,522,227     2,023,089
  -------------------------------------------------------------------------
  FINANCING
   ACTIVITIES
  Issuance of
   capital stock,
   net                         -        73,437        23,368       216,437
  -------------------------------------------------------------------------
  Cash provided by
   financing
   activities                  -        73,437        23,368       216,437
  -------------------------------------------------------------------------
  Net increase
   (decrease) in
   cash and
   cash equivalents
   during the
   period             (1,087,563)      (82,198)    1,107,987      (139,511)

  Cash and cash
   equivalents
    - Beginning of
       period          2,257,175        93,138        61,625       150,451
  -------------------------------------------------------------------------
    - End of period $  1,169,612  $     10,940  $  1,169,612  $     10,940
  -------------------------------------------------------------------------
  -------------------------------------------------------------------------
  Represented by
  Cash              $     76,962  $     10,940  $     76,962  $     10,940
  Cash equivalents     1,092,650             -     1,092,650             -
  -------------------------------------------------------------------------
                    $  1,169,612  $     10,940  $  1,169,612  $     10,940
  -------------------------------------------------------------------------
  -------------------------------------------------------------------------


DATASOURCE: IMI International Medical Innovations Inc.



CONTACT: Company Contacts: Sarah Borg-Olivier, Director, Communications,

[phone], ; Ron Hosking, Vice President,

Finance and CFO, [phone], ; U.S. Investor

Contact: John Nesbett, The Investor Relations Group, [phone],

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