Interleukin Genetics reports Q2 2009 financials

www.ilgenetics.comAug 13 2009

Interleukin Genetics, Inc. (NYSE Amex: ILI) today announced financial and operational results for the second quarter ended June 30, 2009.

"The launch of our new Inherent Health brand of genetic test products marked a significant milestone for the Company in the second quarter. Our novel and unique product, the Weight Management genetic test, has been well received and is generating interest through a number of channels," said Lewis H. Bender, Chief Executive Officer. "We further executed on our key strategic objective, which is to grow our genetic testing business, by divesting the Alan James Group and signing a licensing partnership with LABEC Pharma for sales and distribution of our Heart Health product in Spain and Portugal."

Revenue from continuing operations for the three months ended June 30, 2009 was $0.2 million compared to $0.5 million for the same period in the prior year. The decrease was primarily attributable to lower contract research revenue. Genetic test revenue increased this quarter over the same period in the prior year as we experience positive growth in that segment of our business.

In addition, prior to the opening of business on July 1, 2009, the Company executed an agreement to sell substantially all of the Alan James Group assets of its subsidiary AJG Brands, Inc. to Pep Products, Inc. for a sales price of $4.6 million, with $4.4 million received on July 1, 2009 and the balance of $200,000 due to the Company after two years, subject to certain conditions.

Research and development expenses from continuing operations were $0.9 million for the three months ended June 30, 2009 compared to $0.7 million for the same period in the prior year. The increase is primarily attributable to ongoing costs associated with our patent portfolio. In addition, we continue to allocate resources to projects underway with Alticor, as well as the development of our own genetic test products.

Selling, general and administrative expenses from continuing operations were $1.3 million for the three months ended June 30, 2009, compared to $1.2 million for same period in the prior year. The increase was primarily attributable to product development costs associated with our new Inherent Health((TM)) brand of genetic tests.

The Company reported a net loss from continuing operations of $2.3 million, or $(0.07) per basic and diluted common share, for the second quarter of 2009, compared to $1.6 million, or $(0.05) for the same period in the prior year. The Company recorded a net loss from discontinued operations of $1.4 million or $(0.05) per basic and diluted common share. The Company reported a total net loss of $3.7 million, or $(0.12) per basic and diluted common share, for the second quarter of 2009 compared to $1.7 million or $(0.05) for the same period in the prior year. On June 30, 2009, the Company reported cash and cash equivalents of $0.9 million. In addition to cash on hand and the $4.4 million in cash proceeds received on July 1, 2009 from the sale of AJG assets, the Company has access to $9.3 million under its credit facility with Pyxis Innovations, Inc., an affiliate of Alticor.

2009 Highlights to Date

Corporate Highlights

• Sold Alan James Group assets of its subsidiary AJG Brands, Inc. In July, the Company executed an agreement to sell the Alan James Group assets of its subsidiary AJG Brands, Inc. to Pep Products, Inc. for $4.6 million.
• Launched Inherent Health Brand of Genetic Tests. Announced in June the introduction of Inherent Health brand of genetic tests and related programs including the first-of-its-kind test for weight management that identifies an individual's genetic tendencies for weight gain and metabolism.
• Granted License of Heart Health Genetic Test to LABEC Pharma. In April, the Company entered into a licensing agreement to permit LABEC Pharma to market and sell the Company's Heart Health genetic test throughout Spain and Portugal.
• Amex Accepts Plan to Meet Continued Listing Standards. In May, Interleukin Genetics announced the Corporate Compliance Staff of the NYSE Amex LLC (the "Exchange") accepted the Company's plan to meet continued listing standards and granted the Company an extension to become compliant through December 31, 2009.

Scientific Highlights

• Presented Data at the American Diabetes Association's Annual Meeting. In June, Interleukin Genetics presented research findings highlighting associations between perilipin gene variants and response to weight loss in overweight individuals at the ADA's 69(th) Scientific Sessions in New Orleans.
• Co-Presented on Use of Biomarkers in Drug Development at BIO. Moderated and co-presented panel discussion on use of biomarkers in drug development in May at the BIO International Convention.