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 third fiscal quarter ended June 30, 2015.
“Revenue continued to grow in the third quarter of 2015” said Andrew Morris, President and CEO of SQI. “While modest, this revenue is significant for SQI as it is the result of work on multiple projects for multiple customers across multiple applications of our technology, laying the foundation for future growth.”
Highlights for the Quarter
During the quarter SQI generated service-based revenues of $180,000 (nine months - $265,000) from multiple projects across multiple applications of our technology. Revenues also include services from running tests for customers at our facility based on the multiplexed tests developed under contract.
During the quarter SQI installed a fully automated sqidlite™ system at one of our big pharma customer’s US-based facilities to validate the performance of a 21-plex test developed for this customer. Successful final evaluation is expected to result in the purchase of the sqidlite™ system and the on-going sales of kits for use in the customer’s clinical programs. SQI is currently in discussions with this customer to initiate development services for one or more additional products in 2015 and 2016.
Bristol-Myers Squibb highlighted SQI’s immunogenicity testing technology in a presentation and a case study at the 9th Workshop on Recent Issues in Bioanalysis in Miami, Florida (“9th WRIB”), from April 13th to 17th 2015. The presentation given by Renuka Pillutla, PhD, Director, Bioanalytical Sciences – Biologics for Bristol-Myers Squibb was titled “Application of SQI Multiplex Platform in Immunogenicity Testing – Epitope Mapping and Isotyping.”
We continued to deliver highly positive results for a global pharmaceutical company previously referred to as Global Pharma 3 on the testing of its pre-clinical samples as a service in our facility. Samples tested over the second and third quarter of fiscal 2015 generated exceptional results in terms of agreement to the customer’s prior testing method using the SQI-developed multiplexed test that delivers all of the required results in a far more cost efficient manner.
During the quarter we continued to work on the technology transfer of a successfully completed assay with a biotechnology customer’s contract research organization, Algorithme Pharma. The validation process at Algorithme Pharma commenced in July of 2015.
During the quarter we completed a contract on behalf of a customer in the animal health market to convert three existing veterinary ELISA tests to the SQI platform. When supplied with blinded samples, SQI’s multiplexed tests achieved very high concordance with the individual predicate ELISA tests. Due to the successful results additional revenue is expected in fiscal 2015 to develop a second multiplexed test. SQI expects a broader commercial agreement with this customer for multiplexing a series of their tests as well as the sale of our automated systems required to run the tests which have been developed. This project is significant as it represents the opportunity to convert existing single plex tests in the animal health market to SQI’s multiplex technology.
We continued to progress our development work with our DNA customer. The first test being developed for this customer is a 31 plex DNA-based test used to detect infections in human blood. Management expects that a second test targeted at detecting infections in dairy cattle will be developed next.
On July 16, 2015 SQI raised gross proceeds of approximately $2.7 million through a non-brokered private placement of 5,130,000 units priced at $0.50 per Unit. Each Unit consists of one common share and one common share purchase warrant. Each common share purchase warrant entitles the holder to purchase one common share at a price of $0.65 for a period of three years from the date of issuance, subject to accelerated expiry in certain circumstances.
Financial Results Overview
Since entering the business of developing custom tests for pharmaceutical and biotechnology drug developers SQI has initiated projects with multiple customers and generated modest service-based revenues of $15,000 and $70,000 in the first and second quarters of fiscal 2015. In our third fiscal quarter of 2015 the Company generated $180,000 in revenues as compared to $32,000 for the quarter-ended June 30, 2014. Revenue for the nine months ended June 30, 2015 was $265,000 compared to $52,000 for the same period last year. The growth in revenue for the three and nine months ended June 30, 2015, while still modest, reflects development revenue from multiple projects across multiple applications of our technology. It also includes services from running tests for customers at our facility based on the multiplexed tests developed under contract. Our current quarter revenue also includes milestone payments earned at the end-point of multiple development projects. The next step with these customers is to establish SQI platforms at the customer’s laboratories for final evaluation and the generation of ongoing revenues from kit sales in future quarters.
For the quarter-ended June 30, 2015, the Company recorded a net loss of $1,571,000 ($0.03 net loss per share) compared to a net loss of $1,449,000 ($0.03 net loss per share) for the quarter-ended June 30, 2014. The loss for the nine months ended June 30, 2015 was $4,549,000 compared to $3,914,000 for the same period last year. The net loss was higher for the three and nine months ended June 30, 2015 as compared to the three and nine months ended June 30, 2014 due to additional expenditures to advance sales and marketing initiatives, increased investor relations and professional fees.
R&D expenditures, excluding SR&ED investment tax credits, amortization and stock based compensation, for the three months ended June 30, 2015 were $709,000 compared to $779,000 for the same period last year. R&D expenditures, excluding SR&ED investment tax credits, amortization and stock based compensation, for the nine months ended June 30, 2015 were $2,181,000 compared to $2,257,000 for the same period last year. R&D expenditures decreased by $70,000 for the three month period ended June 30, 2015 as compared to the three month period ended June 30, 2014. R&D expenditures decreased by $76,000 for the nine months ended June 30, 2015 as compared to the nine months ended June 30, 2014. Costs for the three and nine months ended June 30, 2015 included work on eight pharmaceutical customer projects and the advancement of three IVD assays in the pipeline. Expenses for the three and nine months ended June 30, 2014 included work on five pharmaceutical customer projects and costs related to the validation of the Celiac assay, which was approved by both Health Canada and the FDA in calendar 2014.
Corporate and general expenses, excluding stock-based compensation, were $541,000 for the quarter-ended June 30, 2015 compared to $355,000 for the quarter-ended June 30, 2014. Corporate and general expenses were $1,359,000 for the nine months ended June 30, 2015 compared to $998,000 for the nine months ended June 30, 2014. The increase in corporate and general expenses was due to strategic advisory and investor relations activities as well as to regulatory fees and legal costs.
Sales and marketing expenses were primarily related to sales and marketing consulting fees and travel related to selling activities in the quarter. Sales and marketing expenses, excluding stock-based compensation, totaled $208,000 for the three months ended June 30, 2015 compared to $134,000 for the three months ended June 30, 2014. Sales and marketing expenses, excluding stock-based compensation, totaled $566,000 for the nine months ended June 30, 2015 compared to $355,000 for the nine months ended June 30, 2014. Sales and marketing expenses were higher for the three and nine months ended June 30, 2015 compared to the same period in the previous year, primarily due to additional sales professionals hired in 2015, increased sales and marketing activities and the effects of the exchange rate with the US dollar.
As at June 30, 2015, current assets were $1,236,000 compared to $2,058,000 at September 30, 2014. As at June 30, 2015 the Company had a $533,000 working capital surplus compared to a surplus of $1,625,000 as at September 30, 2014.
Conference Call Details
President and CEO, Andrew Morris, along with Company management, will host a conference call Wednesday August 19, 2015 at 10:00 a.m. ET to review financial results and discuss business developments for the period. Details are as below:
|Conference Call Details:|
|Date:||Wednesday, August 19, 2015|
|Time:||10:00 a.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/about/investors and also at http://event.on24.com/r.htm?e=1034082&s=1&k=D2C225C39387ECA5E07301C04BC71407.
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
Chief Financial Officer
416.674.9500 ext. 241
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.
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