a life sciences company that develops and commercializes proprietary technologies and products for advanced microarray diagnostics, today reported fiscal and operational results for its fiscal third quarter, ended June 30th, 2014.
“During the third quarter we announced our fifth customer for our custom multiplex antibody assays, one of the ten largest pharmaceutical companies in the world. We also reported our second consecutive quarter of revenue from our Pharma customer base since we started commercialization,” said Andrew Morris, CEO of SQI Diagnostics. “Subsequent to the end of the quarter, we announced the appointment of Dr. Allan Pronovost, a thirty-year industry veteran based in San Diego, as a Board member and strategic advisor to the Company. As we gain increasing traction with Pharma customers and recognition grows for the strengths of our technology, we are focused entirely on advancing our US commercialization strategy.”
During the quarter ended June 30, 2014 the Company entered into an agreement with its fifth Pharma customer to develop and validate two custom multiplex anti-drug-antibody (“ADA”) assays. Subsequent to the end of the quarter, SQI provided the customer with initial data from the prototype development work, which management believes materially met and in certain important performance criteria exceeded the customer’s expectations. Further prototype development and validation work will continue over the coming months as business discussions also take place to explore additional projects from this customer on new, higher volume screening assays not yet in the Company’s product line-up.
SQI also continued to generate revenue from prototype assays development and validation work being undertaken with its other Pharma customers. While the generation of commercial revenue has been somewhat slower with our Pharma customers than expected, management believes progress in the Pharma business to be very good and that delays in the projects have been largely due to issues outside of SQI’s control or to expanded customer requests viewed as potentially very positive and to which the Company has been responding with its limited resources. Management expects these external issues to resolve by the end of the next quarter.
In addition, the Company continued to advance its pipeline of IVD assays, and is currently focused on securing regulatory clearance for its multiplexed Ig_plex® Celiac DGP Panel in additional jurisdictions beyond Canada, including the US.
During the fiscal third quarter, SQI recorded its second consecutive quarter of revenue resulting from product sales to drug development companies. Revenue for the quarter ended June 30, 2014 was $32,000 and for the nine months ended June 30, 2014 was $52,000. The Company reported no revenues in either the quarter or the year to date in 2013.
For the quarter-ended June 30, 2014, the Company recorded a net loss of $1,449,000 ($0.03 per share) compared to a net loss of $1,740,000 ($0.04 per share) for the quarter-ended June 30, 2013. The net loss for the nine months ended June 30, 2014 was $3,914,000 ($0.08 per share) compared to a net loss of $4,654,000 ($0.11 per share) for the same period last year. The Company implemented cost cutting measures in the second quarter of fiscal 2014 and finalized validation and verification work on the Celiac DGP panel in January of 2014, contributing to the decrease in net loss over the comparative periods.
R&D expenditures for the three months ended June 30, 2014 were $779,000 compared to $895,000 for the same period last year. R&D expenditures, excluding amortization and stock-based compensation, for the nine months ended June 30, 2014 were $1,957,000 compared to $2,228,000 for the same period last year. The Company temporarily reduced several R&D positions in fiscal Q2, 2014 to manage expenses.
Corporate and general expenses, excluding stock-based compensation, were $248,000 for the three months ended June 30, 2014 compared to $308,000 for the three months ended June 30, 2013. Corporate and general expenses, excluding stock-based compensation, were $728,000 for the nine months ended June 30, 2014 compared to $962,000 for the nine months ended June 30, 2013. The decreases are due to general cost containment efforts and staffing reductions.
Sales and marketing expenses primarily related to sales and marketing consultant fees and travel, and excluding stock-based compensation, totaled $134,000 for the three months ended June 30, 2014 compared to $88,000 for the three months ended June 30, 2013. Sales and marketing expenses, excluding stock based compensation, totaled $355,000 for the nine months ended June 30, 2014 compared to $299,000 for the nine months ended June 30, 2013. Sales and marketing expenses are higher for the three and nine month periods ended June 30, 2014 as compared to the same periods in the previous year primarily due to sales incentives provided to sales and marketing staff as a result of new customer contracts.
On April 10, 2014 the Company completed a public offering of 8,400,000 units of the Company at a price of $0.50 per unit for gross proceeds of $4,200,000.
At June 30, 2014, current assets were $3,301,000 compared to $1,724,000 at September 30, 2013. As at June 30, 2014 the Company had a $2,932,000 working capital surplus compared to a surplus of $1,270,000 at September 30, 2013.
As a result of additional cost reductions the Company has funds sufficient funds to meet its cash requirements for approximately the next seven months. The Company will continue to review its forecast revenue and expenditures, capital needs and financing options.
About SQI Diagnostics
SQI Diagnostics is a life sciences and diagnostics company that develops and commercializes proprietary technologies and products for advanced microarray diagnostics. The Company’s proprietary microarray tests and fully-automated systems are designed to simplify protein and antibody testing workflow, increase throughput, reduce costs and provide excellent data quality. For more information, please visit www.sqidiagnostics.com.
Investor Relations Contact:
Chief Executive Officer
416.674.9500 ext. 229
VP Corporate Development
James Smith 416.674.9500 ext. 241
This news release contains certain forward-looking statements, including, without limitation, statements containing the words “will”, “expects”, “intends” and other similar expressions which constitute “forward-looking information” within the meaning of applicable securities laws. Forward-looking statements reflect the Company's current expectation and assumptions, and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. These forward-looking statements involve risks and uncertainties including, but not limited to risks related to the failure to obtain necessary regulatory approvals, general economic and market segment conditions, and international risk and currency exchange, agreements and future agreements to sell our products, 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 kits, the acceleration of our revenue ramp, general economic and market segment conditions, competitor activity, technology changes and regulatory approvals. Such statements reflect the current views of the Company with respect to future events and are subject to certain risks and uncertainties and other risks detailed from time-to-time in the Company’s ongoing filings with the securities regulatory authorities, which filings can be found at www.sedar.com. Actual results, events, and performance may differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements. 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 laws.
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