Interleukin Genetics Reports Fourth Quarter and Year End 2008 Financial Results

WALTHAM, Mass., March 9 /PRNewswire-FirstCall/ — Interleukin Genetics, Inc. (NYSE: Alternext US: ILI) today announced financial and operational results for the fourth quarter and year ended December 31, 2008.

“In 2008, we put an experienced staff in place to establish the Company as a market leader in personalized healthcare and focus our business strategy on increasing revenue from our intellectual property,” said Lewis H. Bender, Chief Executive Officer. “During the past year, we achieved milestones in several critical areas that support our goals of increasing genetic test and consumer product sales, as well as forming new partnerships.”

2008 and Recent Highlights

• Presented Important New Osteoarthritis Data. Interleukin Genetics, Inc. Chief Scientific Officer Kenneth Kornman presented research findings on the genetics of osteoarthritis at the Osteoarthritis Research Society International (OARSI). The research highlighted the clinical utility of an osteoarthritis genetic test for both guiding the medical management of high risk patients and future use and development of related therapies.
• Expanded Distribution Networks. Interleukin Genetics, Inc. and Alticor, Inc. reached an agreement on its intellectual property that permits the expansion of Interleukin Genetics’ distribution network for certain genetic tests.
• Established New Partnerships. Interleukin Genetics, Inc. partnered both with Geisinger clinic in 2008 to analyze DNA samples from over 800 morbidly obese patients in effort to develop a genetic test for bariatric surgery candidates, as well as with Oral DNA to sell our PST(R) test.
• Awarded for Industry Research. Interleukin Genetics, Inc. received the 12th John M. Kinney Award for Nutrition and Metabolism at the annual Congress of the European Society of Parenteral and Enteral Nutrition. The award was given for the paper, “Interleukin-1 genotype-selective inhibition of inflammatory mediators by a botanical: a nutrigenetics proof of concept,” which was published in Nutrition: The International Journal of Applied and Basic Nutritional Sciences.
• Enhanced Company Leadership. Throughout 2008, Interleukin Genetics, Inc. enhanced its management team with the addition of a new chief financial officer, vice president of marketing, senior business development executive, and staffed other critical positions in research and development, public relations, human resources, laboratory management and computer and information technology.

The Company reported revenues of $10.0 million and a net loss of $6.7 million, or $(0.21) per basic and diluted common share, for the year ended December 31, 2008, compared to revenues in 2007 of $9.7 million and a net loss of $6.2 million, or $(0.22) per basic and diluted common share. The revenue increase is primarily attributable to growth in consumer product revenue in combination with increased royalty and contract research revenue offset by a slight decrease in genetic testing revenue.

Research and development expenses were $3.6 million for the year ended December 31, 2008 compared to $2.9 million for the year ended December 31, 2007. The increase is attributable to expenses relating to the Company’s sponsored research agreement with Yonsei University, as well as additional expenses relating to our patent portfolio.

Selling, general and administrative expenses were $7.0 million for the year ended December 31, 2008 compared to $6.4 million for the prior year. The increase is primarily attributable to increased promotional and advertising expenses, as well as increased expenses due to additional headcount.

Fourth Quarter Results

Revenue for the three months ended December 31, 2008, was $2.7 million compared to $2.3 million for the same period in 2007. The increase is primarily due to increased research revenue and an increase in royalty revenue offset by a decrease in genetic testing revenue compared to the same period last year.

Research and development expenses were $1.1 million for the quarter ended December 31, 2008, compared to $682,000 for the same period in 2007. The increase was primarily due to expenses relating to our expanded research programs in the areas of osteoarthritis, obesity, sports medicine and osteoporosis.

Selling, general and administrative expenses were $1.6 million for the three months ended December 31, 2008, compared to $1.5 million for the quarter ended December 31, 2007. The increase is primarily due to increased promotional and advertising expenses across both segments of the Company’s business as well as increased expenses due to additional headcount.

The Company reported a net loss of $1.5 million, or $(0.05) per basic and diluted common share, for the fourth quarter of 2008, which was consistent with the same period in the prior year. On December 31, 2008, the Company reported cash and cash equivalents of $5.0 million compared to $7.6 million of cash and cash equivalents on December 31, 2007. In addition, the Company has access to $10.3 million under credit facilities with Alticor.

“We see an exciting and evolving market opportunity for the services and technology Interleukin Genetics can offer. We believe the needs of pharmaceutical and biotechnology companies to boost innovation and development success will enhance the market for molecular diagnostic tools,” continued Mr. Bender. “As such, we will continue our efforts for 2009 on developing genetic tests for chronic diseases that can provide meaningful value for drug developers, while further exploring exciting areas of new research that resonate with consumers.”

Conference Call and Webcast Information

Interleukin Genetics, Inc. will host a live conference call and webcast today at 4:30 p.m. EDT. To access the live call, dial 877-795-3646 (domestic) or 719-325-4833 (international). The live webcast will be available at the Investors section of the Company’s website, www.ilgenetics.com.

The webcast will be archived following the call at www.ilgenetics.com.

About Interleukin Genetics

Interleukin Genetics, Inc. (NYSE: Alternext US: ILI), is a genetics-focused personalized health company that develops preventive consumer products and genetic tests for sale to the emerging personalized health market. Focused on the future of health and medicine, Interleukin Genetics uses its leading genetics research and scientific capabilities to develop and test innovative preventive and therapeutic products. Interleukin Genetics is headquartered in Waltham, MA. For more information about Interleukin Genetics, its products and ongoing programs, please visit http://www.ilgenetics.com.

Certain statements contained herein are “forward-looking” statements including statements regarding our ability to develop diagnostic, personalized nutritional and therapeutic products to prevent or treat diseases of inflammation and other genetic variations, our ability to screen nutritional compounds for their effects on inflammatory responses and other genetic variations, given specific genetic patterns and our ability to make progress in advancing our core technologies. Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, the risk of market acceptance of our products, the risk of technology and product obsolescence, delays in product development, the performance of our commercial partners, the availability of adequate capital, the actions of our competitors and other competitive risks, and those risks and uncertainties described in our annual reports on Form 10-K, our quarterly reports on Form 10-Q and other documents we file with, or furnish to, the Securities and Exchange Commission. We disclaim any obligation or intention to update these forward-looking statements.

                    INTERLEUKIN GENETICS, INC. AND SUBSIDIARIES
                             FINANCIAL HIGHLIGHTS

    Balance Sheet Data :                 31-Dec        31-Dec
                                          2008          2007
                                          ----          ----

    Cash and cash equivalents         $4,952,481     $7,646,468
    Total current assets               6,866,284     10,012,508
    Total assets                     $12,154,388    $16,385,949

    Total current liabilities         $3,666,961     $6,162,535
    Total liabilities                  7,671,961      6,193,535

    Total shareholders' equity         4,482,427     10,192,414

    Total liabilities and
     shareholders' equity            $12,154,388    $16,385,949

                                     Three Months             Twelve Months
                                     Ended Dec 31,            Ended Dec 31,
                                   2008        2007         2008        2007
                                   ----        ----         ----        ----
    Statement of Operations Data:

    Revenue:
      Genetic testing service
       revenue                 $113,925    $130,328     $409,452    $779,238
      Net consumer products
       sales                  1,801,026   1,699,654    7,394,293   6,873,209
      Contract research
       revenue                  680,389     469,825    2,061,149   2,028,031
      Other                     117,288      11,656      150,086      20,015
                                -------      ------      -------      ------
        Total revenue         2,712,628   2,311,463   10,014,980   9,700,493
                              ---------   ---------   ----------   ---------

    Operating costs and
     expenses:
      Cost of genetic
       testing services         261,205     254,679      940,241     975,769
      Cost of consumer
       products sold            834,001     841,605    3,797,677   3,723,677
      Research and
       development            1,104,772     681,909    3,560,002   2,928,249
      Selling, general and
       administrative         1,583,229   1,546,941    7,034,368   6,367,973
      Amortization of
       intangibles              338,770     415,170    1,335,438   1,651,244
                                -------     -------    ---------   ---------
        Total operating costs
         and expenses         4,121,977   3,740,304   16,667,726  15,646,912
                              ---------   ---------   ----------  ----------
    Loss from operations     (1,409,349) (1,428,841)  (6,652,746) (5,946,419)
                             ----------  ----------   ----------  ----------
    Total other income and
     expense, net               (22,138)    (68,186)      27,463    (256,866)
                                -------     -------       ------    --------
    Net loss before income
     taxes                   (1,431,487) (1,497,027)  (6,625,283) (6,203,285)

    Provision for income
     taxes                      (36,602)     (3,500)     (26,102)    (15,500)
                                -------      ------      -------     -------

    Net loss                $(1,468,089)$(1,500,527) $(6,651,385)$(6,218,785)
                            =========== ===========  =========== ===========

    Net loss per basic
     and diluted common
     share                       $(0.05)     $(0.05)      $(0.21)     $(0.22)
                                 ======      ======       ======      ======

    Weighted average common
     shares outstanding      31,799,314  28,159,412   31,354,198  27,723,754
                             ==========  ==========   ==========  ==========

SOURCE Interleukin Genetics, Inc.