- More than 46,300 tests were processed by the Company's joint-venture, Innovative Diagnostic Laboratory, LLP ("IDL") in the fourth quarter; with more than 150,000 in its first full year - 65,000 of those being ColonSentry®.
- In-licensed two innovative new biomarker assays that aid physicians in identifying those females at highest risk for breast cancer.
- Brought vital functions such as marketing, human resources, reimbursement and finance in-house at IDL to complement lab operations.
- Subsequent to year-end, veteran medical/diagnostic industry reimbursement executive, Karl Florence, appointed to senior management team.
TORONTO, March 31, 2015 (GLOBE NEWSWIRE) -- GeneNews Limited (TSX:GEN) ("GeneNews" or the "Company") today reported operational and financial results for the three-month and full year period ended December 31, 2014 and provided a further progress update on IDL's operations.
Fourth Quarter and Full Year 2014 Financial Results
All dollar amounts are expressed in Canadian currency unless otherwise indicated and results are reported in accordance with International Financial Reporting Standards.
With a successful limited scale launch of IDL's operations in the fourth quarter of 2013, full scale up activities began in Q1-2014, including growing IDL's lab capacity, increasing the size and scope of its sales organization and expanding the menu of novel, proprietary tests offered by it throughout the United States. In the first half of 2014, IDL's key priority was to add new customer accounts, together with rapid expansion of its sales force.
For the second half of the year, and continuing in the first quarter of 2015, the primary focus shifted to the refinement of IDL's organizational structure, sales territory re-alignment and adding an additional third party specialty servicer to strengthen private payer reimbursement efforts. During the fourth quarter of 2014 GeneNews also began to take a proactive role in bringing a number of vital functions, such as lab operations, human resources, finance, marketing and reimbursement in house directly at IDL, transitioning these responsibilities from Health Diagnostic Laboratory, Inc. ("HDL").
"We would like to thank HDL for its contributions in getting IDL's Richmond, Virginia lab established and fully operational," commented GeneNews' Executive Chairman, James Howard-Tripp. "Now, as we shift 100% of our focus toward continuing to build the business, we believe that the time is right for GeneNews to take greater leadership roles in driving IDL's success."
Mr. Howard-Tripp continued, "IDL's model is designed to help stratify commercial risk by leveraging multiple test offerings to provide a smoother growth curve and more predictable revenue stream. "That approach served us well in 2014. Despite the changes we were making to the overall operations and sales force at IDL, many of which impacted ColonSentry® numbers, total test volumes were 97,400 in H2-2014, up approximately 50% from 65,700 in the first half of the year."
Revenues earned by IDL for the year ended December 31, 2014 were approximately $10.2 million (US$9.1 million) with costs incurred of approximately $30.9 million (US$28.1 million), including a fourth quarter $5.5 million charge related to a shortfall in minimum PHI test volumes under its contract with Beckman Coulter Diagnostics, resulting in a loss of approximately $20.6 million (US$19.0 million). As GeneNews currently has joint control of IDL with its American partners, the Company accounts for its interest in IDL using the equity method. As such, GeneNews reflects its share of the total revenues less total expenses in its consolidated statements of loss and comprehensive loss, which was $5.3 million, limiting its share of these losses to GeneNews' total investment made in 2014 of $5.4 million.
"In many respects, we only just crossed the starting line at the beginning of 2014 with the initiation of full scale up activities at IDL," said Mr. Howard-Tripp. "The lab achieved stellar growth in its first year, processing more than 150,000 tests in total. Of those, more than 65,000 were ColonSentry®, the world's first blood test designed to assess an individual's current risk for colorectal cancer and guide high-risk patients to colonoscopy."
Mr. Howard-Tripp continued, "Other key achievements in 2014 included the addition of four new, innovative advanced cancer assays - EarlyCDT®-Lung, PHI, sphingotest® pro-NT and sphingotest® pro-ENK."
IDL estimates that approximately 70% of the patients that have elected to have the ColonSentry® test are covered by private insurers with the remainder of patients undergoing the test covered by Medicare. Reimbursement from Medicare has not been forthcoming as ColonSentry® is not approved for coverage, unlike the other IDL tests. As a relatively new entity, IDL does not yet have a history of collections of invoiced test revenue and recognizes revenue only upon receipt of payment from its customers. As a result of customary lag times between when a test is processed and payment is received, IDL's test volumes to date are not yet fully reflected in its financial results.
For the three months ended December 31, 2014, GeneNews' total revenues were approximately $701,000 as compared to $37,000 in the same period in 2013. The net loss for the fourth quarter of 2014 was approximately $2.3 million, or $0.04 loss per common share, as compared to a net loss of approximately $2.5 million, or $0.07 loss per common share, for Q4-2013.
For the year ended December 31, 2014, GeneNews reported a net loss of approximately $7.7 million or $0.14 loss per common share, as compared to a net loss of approximately $9.4 million, or $0.31 loss per common share for the year ended December 31, 2013. The approximate $1.7 million decrease in net loss was primarily due to an increase in total revenues in the current year, the elimination of research and development spending, and the non-recurring nature of restructuring and related costs that were recorded in 2013 and decreases in sales and marketing expenses. These factors were partially offset by an increase in our share of IDL losses and in general and administrative expenses.
As of December 31, 2014, GeneNews had approximately $2.7 million in cash and cash equivalents, which did not include approximately $1.5 million in total proceeds from February 2015 warrant exercises.
The Company's financial statements and management's discussion and analysis are available on www.sedar.com.
IDL Progress Update
Over the course of the past few months, there have been numerous structural and management team changes designed to further position IDL for continued sales success and growth.
As announced in February 2015, a number of vital functions, such as lab operations, human resources, finance, marketing and reimbursement have been brought in-house at IDL. In addition, IDL recently appointed Karl Florence to its senior management team to head up reimbursement efforts. Mr. Florence's mandate will be leading IDL's payer access and reimbursement efforts. He has an accomplished history of reimbursement strategy development and operations success within the medical/diagnostic industry. Most recently, he served as the Director of Reimbursement for Vermillion, Inc. In a career that spans over 25 years of reimbursement management, Mr. Florence's previous reimbursement management experience includes senior positions at various other companies, including USGI Medical, Pathwork Diagnostics, DexComm, Inc., Novasys Medical, Inc. and Conceptus, Inc.
"Karl is a seasoned leader with a strong track record of helping bring novel diagnostic products to market," commented Mr. Howard-Tripp. "I have tremendous confidence in his ability to develop and execute a comprehensive reimbursement strategy for IDL, and in so doing, significantly improve our revenue collections."
Other recent organizational changes have included Mr. Howard-Tripp and GeneNews' Chief Financial Officer and Treasurer, Leslie Auld, taking on additional responsibilities, concurrently assuming the positions of IDL's President and CFO, respectively. IDL is also recruiting a Chief Scientific Officer.
"As IDL continues to grow, it is important that its management team is optimally structured to support both its current business and its ability to offer physicians and their patients an expanding menu of advanced cancer tests," commented Mr. Howard-Tripp. "To that end, final preparations are being made to launch the sphingotest® breast cancer risk prediction assays early in the second quarter. And we are not stopping there. Indeed, we are in discussions with respect to in-licensing additional technologies in 2015."
Mr. Howard-Tripp concluded, "2014 provided us with a solid foundation for continued growth and we are very excited about the opportunity we see ahead of us in 2015 and beyond. As always, we look forward to updating our stakeholders as we progress."
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. In 2013, GeneNews created a U.S. joint venture, Innovative Diagnostic Laboratory, LLP ("IDL"), that it is committed to help become a leader in molecular diagnostics and personalized medicine, serving as a strong commercialization outlet for advanced cancer tests. Taking a multi-view approach to the diagnosis and treatment of cancer, IDL is working to assemble, through a combination of internal pipeline development, third-party licenses and potential acquisitions, a robust menu of novel, proprietary tests to be offered by it throughout the United States. GeneNews' common shares trade on the Toronto Stock Exchange under the symbol 'GEN'. More information on GeneNews and IDL can be found at www.GeneNews.com and www.MyInnovativeLab.com, respectively.
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 across the United States and the assembling of a robust menu of other advanced cancer tests to be offered by IDL. The forward-looking statements involve risks and uncertainties, including market reaction to the launch of the ColonSentry® test into new regions, 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.