a life sciences company that develops and commercializes proprietary technologies and products for advanced microarray diagnostics, today reported its financial and operational results for the fourth quarter and fiscal year ended September 30, 2014. All figures in this press release are in Canadian Dollars (CAD), unless otherwise stated.
“Fiscal 2014 was a remarkable year for SQI, as we repositioned and diversified our product and customer focus with the result that we earned revenues from global pharmaceutical and biotechnology companies. Our success in validating our products is highlighted by six master service agreements, including four with top ten global pharmaceutical companies that generated revenue in the year,” said Andrew Morris, President and CEO of SQI. “These agreements, and the early development revenues, were the result of the successful evolution of our business to expand our revenue opportunities to include various high-value areas of drug development and DNA-based diagnostic testing. We delivered multiple customer products, won repeat business, and our expert teams always achieved our performance goals and delivered on promised timelines. We are well-positioned to place multiple platforms in 2015 and to drive on-going revenues from current and future products as customers utilize our technology more broadly across their business.”
Fiscal 2014 Financial and Business Highlights
SQI Diagnostics is pleased to highlight the following achievements from the 2014 fiscal year:
Recorded first revenues from sales to global pharmaceutical customers and from services for commercialization of DNA-based products and advanced revenue momentum through the year. Overall revenues were $119,000 for FY14 as compared to $3,000 in FY13. The loss per share for FY14 was ($0.11) versus ($0.15) FY13.
Signed six master service agreements in our drug development and DNA diagnostic sectors, successfully re-positioning the company for growth in new and large product areas.
Received license from Health Canada permitting the Company to market its multiplexed Ig_plex® Celiac DGP Panel for diagnostic testing in Canada.
Enhanced the Board of Directors with the appointment of industry veterans Peter Winkley to Chairman and Dr. Allan Pronovost to drive and strengthen commercialization strategy in the United States.
Sales, management and senior science teams presented at and attended several industry conferences and events in Canada and the United States to promote products and services.
Delivered on multiple projects to design and develop custom tests that enable drug companies to detect and measure multiple responses to their in-development drugs in animals and humans using a single test. SQI is actively negotiating with all of its current customers for the delivery of platforms, validation test kits and the on-going sale of test kits at volumes commensurate with the needs of their clinical programs.
Expanded the application of our technology into the molecular (DNA) diagnostics arena. The DNA testing markets we and our customers are interested in include human sepsis tests (between 2000 and 2009 the diagnosis of sepsis grew by 99% in the United States, according to the US National Center for Healthcare Statistics, translating to 4,600 new patients per day being diagnosed and treated in hospitals for this condition) and animal health testing (an estimated 60 million dairy-related mastitis tests per year – North America). These markets are currently underserved by cost-effective, automated DNA multiplexing technologies.
In the fourth quarter, the United States Food and Drug Administration (FDA) announced guidance that directly addresses our main product areas in our target drug development market. Management expects the market size to continue to grow and our products to be in high demand.
Successfully completed equity financings during the year for a total of $5.683 million through the issue of 11,365,000 units of the Company at a price of $0.50 per unit.
Commenced trading on the OTCQX under the symbol SQIDF in September to improve access and liquidity for investors in the US. The Company continues to trade on the TSX Venture Exchange under its existing symbol SQD.
Notable Events to Date in Fiscal 2015
Received notice that the FDA has cleared the Company to market its proprietary Celiac DGP Panel in the United States. This comprises four individual tests that are used to aid in the diagnosis of celiac disease. Celiac disease is a leading gastrointestinal illness reported to occur in 1 in 130 North Americans.
Announced a follow-on agreement and technology transfer that expands our partnership with a customer developing and manufacturing a 19-plex infectious disease DNA-based test in SQI’s state-of-the-art manufacturing facility in Toronto
Q4 and Fiscal 2014 Financial Results Overview
Revenues for Fiscal 2014 (FY14) came in strong at $119,000 as compared to $3,000 for the year ended September 30, 2013 (FY13). Remarkable revenue growth was driven by the progress made in our Drug Development Tools and Services (DDTS) business and is attributable to development projects with four main customers. Revenues grew sequentially in each quarter of FY14, as the Company signed additional services agreements and achieved success in its development projects for these customers.
The net loss for FY14 was $5,460,000 ($0.11 loss per share) as compared to $6,207,000, ($0.15 loss per share) for FY13. The decrease in the net loss year-over-year was due to reductions in corporate and general and research and development expenses.
Research and development (R&D) costs, excluding amortization, stock based compensation and the SR&ED Investment Tax Credit were $3,014,000 for FY14 as compared to $3,320,000 for FY13. For the three months ended September 30, 2014 the costs were $757,000 as compared to $792,000 for the same period in 2013.
Lower R&D costs for the year and the quarter ended September 30, 2014 were a result of the Company completing its validation work on the Celiac DGP test in Q1 2014 with regulatory submissions following in Q2 2014. R&D costs in FY13 included significant expenditures on verification and validation studies for this test which are required prior to regulatory submission.
Corporate and general expenses, excluding stock-based compensation, totaled $1,459,000 for FY14 as compared to $1,605,000 for FY13. The decrease was primarily related to a reduction in administrative salaries and other cost containment efforts. For Q4 2014, these expenses totaled $461,000 compared to $371,000 in the same period last year, mainly due to severance costs incurred this year.
Sales and marketing expenses, excluding stock-based compensation, totaled $467,000 for FY14 compared to $442,000 for FY13. Costs were consistent year-over–year, although the Company added one sales professional towards the end of FY14. For Q4 2014, the expenses totaled $112,000 as compared to $143,000 for Q4 2013. The reduction in sales and marketing costs were primarily due to executive level support of the business development and marketing strategies as part of the CEO transition in Q4 2013.
Current assets at September 30, 2014 were $2,058,000, as compared to $1,724,000 in the prior year. Working capital at the end of FY14 was $1,625,000 compared to $1,270,000 at the end of FY13.
Fiscal 2015 Objectives and Outlook
Looking out into 2015, the Company’s main objectives include:
Building on the commercial success achieved thus far in demonstrating the superior value proposition that SQI’s proprietary technologies offer, we plan to win new customers and place sqidlite™ platforms within existing customers. These platforms are the basis for sustainable and on-going revenue growth through the sale of custom and other high volume test products run on these platforms. The Company currently estimates that each platform could generate up to $2 million in revenue when fully utilized.
Producing the best multiplexing products for our customers in each of our strategic markets. This includes demonstrating the service excellence achieved to date that has established SQI as a partner of choice for our drug development customers.
Growing the business within existing customers, who on a combined basis have over 130 drugs currently in development and are adding approximately 10 new products annually into their drug development pipelines.
Continuing to validate and clear tests in our autoimmune business to achieve a critical mass of tests and to open the door to large reference lab customers.
Selling more prototype products and services to drug developers and diagnostic companies as the entry point to position our technology as a platform they can use across their businesses.
Focusing on winning ancillary, high volume product business alongside our high margin, entry-point products.
Keeping the top of our sales funnel refreshed with new customer opportunities across all lines of business.
In each of SQI’s target markets, the Company’s products are targeted at reducing labour and cost through multiplexing, simplifying the testing process and reducing errors through automation, and shortening the time needed to produce an answer. In short, SQI’s technologies enable our customers to achieve their development goals with a solution that is cheaper, quicker, and more accurate.
Conference Call Details
President and CEO, Andrew Morris, along with Company management, will host a conference call today to review financial results and discuss business developments for the period. Details are as below:
|Conference Call Details:|
|Date:||Wednesday, December 17, 2014|
|Time:||4:30 p.m. ET|
|Live Call:||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 and also at http://www.newswire.ca/en/webcast/detail/1460787/1625451.
Detailed financial statements and the management’s discussion and analysis (MD&A) will also be made available on the Company website at www.sqidiagnostics.com and at www.sedar.com.
Investor Relations Contact:
Chief Executive Officer
416.674.9500 ext. 229
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.
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 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.