TORONTO, May 10, 2017 /CNW/ - SQI Diagnostics Inc. ("SQI" or the "Company") (TSX-V: SQD; OTCQX: SQIDF), today reported its financial and operational results for the three and six months ended March 31, 2017.
SQI is a Toronto-based life sciences and diagnostics company that develops and commercializes proprietary technologies and products for advanced multiplexed diagnostics.
"We continue to add to our commercial successes," said Andrew Morris, SQI's President and CEO. "In the current quarter, we announced a new contract with a significant new diagnostic customer and we advanced the commercialization of other products in our pipeline."
Financial and Business Highlights for the Quarter
- We signed a significant new diagnostic customer with existing US sales. As announced in March of 2017, SQI has signed an agreement with an Irvine, CA-based pioneer in the field of predictive diagnostic medicine to transform this customer's multi-biomarker test into an SQI-based multiplex test, with kits to be manufactured at SQI's state-of-the-art facility in Toronto. In order to begin generating significant revenues, SQI needs to complete and validate the transfer of the 7-plex tests currently being run by this customer. SQI believes the technology risk for this process to be low - SQI has developed an existing product that will serve as a template on which to complete the technology transfer. Commercially, our customer is currently running tests for thousands of patients each month in its CLIA lab in California.
- We advanced the integration of our human diagnostics DNA customer at the large US reference lab where a large comparative study is to be launched in mid-May. For over a year, we have been working on product development, assessment, automation and integration of the sqidlite™ platform to address this customer's US reference lab testing needs. We are now at the point where our customer is launching a large product testing trial that we believe to be a final step prior to commercial launch. We believe that this will be completed in fiscal 2017 and that successful completion of this study will lead to commercial production of this product and recurring sales of kits in fiscal 2017.
- We completed the development program for a new pharma customer reported last quarter. We launched a new customer's product development program last quarter and completed it during the current quarter. This program is based on SQI's "off the shelf" test kit for testing 8 cytokines which are common markers tested during drug development. During the quarter, we established the performance of the SQI-developed test against a set of unknown challenge test samples. We are currently anticipating the customer's approval to begin production of the product for use in their commercial operations.
- We advanced additional customers along our sales pipeline. We attended the 10th Workshop on Recent Issues in Bioanalysis (WRIB) in Los Angeles CA., this quarter and added a number of what we believe to be high value pharma target customers into our pipeline.
Q2 2017 Financial Results Overview
Revenue for the three months ended March 31, 2017 was $251,000 compared to $280,000 for the same period last year. Revenue for the six months ended March 31, 2017 was $666,000 compared to $477,000 for the same period last year. During the six months ended March 31, 2017, the Company recorded revenue from the sale of a sqidlite™ platform as well the sale of custom kits. The Company continued to earn revenue from development projects in both its drug development and diagnostics sectors.
For the quarter, the Company recorded a net loss of $1,289,000 ($0.01 net loss per share) as compared to the net loss of $987,000 ($0.01 net loss per share) for the quarter-ended March 31, 2016. For the six months ended March 31, 2017, the Company recorded a net loss of $2,783,000 ($0.03 net loss per share) which is greater than the net loss of $2,345,000 ($0.04 net loss per share) for the six months ended March 31, 2016. The increase in net loss for the three and six months ended March 31, 2017 as compared to the three and six months ended March 31, 2016 is a result of higher product commercialization and development costs and the increased marketing costs associated with the shift to a more sales-focused company.
R&D expenditures, excluding amortization and stock based compensation, for the three months ended March 31, 2017 were $633,000 compared to $452,000 for the same period last year. R&D expenditures, excluding amortization and stock based compensation, for the six months ended March 31, 2017 were $1,425,000 compared to $1,165,000 for the same period last year. The increase in R&D expenditures for the three and six month periods is a result of incentive payments made to employees in the R&D group and expenditures on development work for two new projects started in fiscal 2017. Research and development expenditures focused on xPlex product development as well as an internal development project that, if successful, will significantly reduce our overall consumable kit costs. R&D expenditures were reduced in 2016 by SR&ED investment tax credits of $360,000 which represented tax credits claimed for the 2014 and 2015 tax years. R&D expenditures in 2017 were offset by SR&ED investment tax credits of $229,000 related to the 2016 tax year.
Corporate and general expenses excluding stock-based compensation, totaled $349,000 for the three months ended March 31, 2017 as compared to $392,000 for the three months ended March 31, 2016. Corporate and general expenses excluding stock based compensation, totaled $650,000 for the six months ended March 31, 2017 as compared to $787,000 for the six months ended March 31, 2016. Corporate and general expenses are lower over the comparable periods due to reduced administrative personnel costs and lower legal and investor relations costs. Management expects an increase in investor relations costs during the remainder of fiscal 2017 to align with our commercial progress and increased activities related to increasing investor awareness.
Sales and marketing expenses were primarily related to sales and marketing consultant fees and to travel related to selling activities in the quarter. Sales and marketing expenses, excluding stock based compensation, totaled $214,000 for the three months ended March 31, 2017 compared to $174,000 for the three months ended March 31, 2016. Sales and marketing expenses, excluding stock based compensation, totaled $523,000 for the six months ended March 31, 2017 compared to $327,000 for the six months ended March 31, 2016. Sales and marketing expenses were higher for the three and six months ended March 31, 2017 compared to the same period in the previous year, primarily due the addition of sales and customer service personnel and the payment of bonuses to employees.
At March 31, 2017, current assets were $5,195,000 compared to $4,244,000 at September 30, 2016. As at March 31, 2017 the Company has a $4,671,000 working capital surplus compared to a surplus of $3,420,000 at September 30, 2016.
Conference Call Details
President and CEO, Andrew Morris, along with Company management, will host a conference call to review financial results and discuss business developments for the period. Details are as below:
Wednesday May 10, 2017
5:00 p.m. ET
1-888-231-8191 (Canada and the United States)
An archived copy of the conference call will be available for 90 days on the Company website at www.sqidiagnostics.com/about/investors and also at http://event.on24.com/r.htm?e=1417487&s=1&k=EBAB4C8B4D3C0B7FB0D4263C284F7F54.
For more information, please contact:
Chief Executive Officer
416.674.9500 ext. 229
Vice President of Finance
416.674.9500 ext. 277
About SQI Diagnostics
SQI Diagnostics is a life sciences and diagnostics company that develops clinical grade multiplexed microarray and molecular assays run on its automated instrumentation for the pharmaceutical research, animal health, and clinical diagnostics markets. SQI develops custom research and diagnostic assays that are multiplexed; meaning the simplification, consolidation and automation of many individual tests into one. This increases sample throughput, reduces time, cost and chance for human error, and provides excellent data quality. For more information, please visit sqidiagnostics.com.
This press release contains certain statements including, without limitation, the words "may", "plan", "will", "estimate", "continue", "anticipate", "intend", "expect", "believe", "in the process", "benefits", "leading to", "position" "possible", "is subject to" and other similar expressions which may constitute "forward-looking statements" within the meaning of applicable securities laws. Forward-looking statements reflect the Company's current expectations and assumptions, and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. Readers are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements involve risks and uncertainties including, but not limited to: our ability to market and sell our products including our novel multiplexing technologies and detection platforms; our ability to maintain any technical or product advantages; the success of our Diagnostic Tools and Services business and our intent to build near-term revenue streams from this business; the successful regulatory filing and receipt of regulatory approvals for our later stage quantitative diagnostic consumable kits; adverse changes in general economic conditions; international risk and currency exchange fluctuations; competitor activity; technology changes; regulatory approvals and the impact of healthcare reform legislation; and, SQI's ability to raise additional funds in the future.
Such statements, risks and uncertainties are detailed in the Company's ongoing filings with the securities regulatory authorities, and are available to the public at www.sedar.com. The Company undertakes no obligation to publicly update or revise any forward-looking statements either as a result of new information, future events or otherwise, except as required by applicable securities laws.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE SQI Diagnostics Inc.